Pivot or Perish: The Art of Adapting in Business

Have you ever been stuck in a situation and realized you needed a different approach? Let’s discuss a key move in the startup world - the pivot.?

Think of a startup as a group of adventurers searching for a treasure map - a business model that leads to success. A business model is just a fancy term for how your business makes money. But what happens when the map leads to a dead end? If you’re on a road trip and hit a dead end, you don’t keep driving, right? You change your route. That’s what a pivot is in the startup world. It’s a fancy term for changing your strategy when you realize something about your business model just isn’t clicking.

Eric Ries, who wrote “The Lean Startup,” asks a tough question:

What if we found ourselves building something nobody wanted? What did it matter if we did it on time and on a budget?

It’s a wake-up call. One of the top reasons businesses fail is because there’s no market demand for what they’re selling. Simply put, they’re offering something people don’t want or need.

So, how do you avoid this pitfall? Enter the “build, measure, learn” feedback cycle for continuous improvement. You build something, measure how it performs, learn from the results, and tweak your business model or strategy based on what you’ve learned. It’s a never-ending cycle because, well, learning never ends.

But what if you realize you’ve made some wrong assumptions? What if you find out you’re not understanding what your customers need or want? Or what if there’s a significant flaw in your business model that’s stopping you from succeeding?

Well, you’ve heard of the first law of holes, right? If you find yourself in one, stop digging. But there’s a second law: you’re still in the hole when you stop digging. You’ve got to figure out how to climb out. That’s where the concept of pivoting comes in. It’s a course correction, a significant change in strategy because some of your major business model assumptions are off track.

You could pivot by finding a new solution to your customers’ problem or a completely different one to solve. You could target a new customer, tweak your product or service to meet your customer’s needs better or find a new way to reach your customers. You could even change your pricing strategy or revenue model. The possibilities are endless.

Deciding whether to pivot or stick to your guns can be one of the toughest calls you make as an entrepreneur. There’s no guarantee that a pivot will work. That’s why staying focused on the “build, measure, learn” feedback cycle is super important. It gives you an early heads-up about potential problems so you can make the decisions you need to make before it’s too late.

Pivoting means you must develop and test a new set of assumptions when the old ones have been disproved. Just because one set of assumptions was wrong doesn’t mean your new ones will be right. You’ve got to keep building, measuring, and learning, even after you’ve changed your model.

There are loads of ways to pivot. Let’s break them down:

• Zoom-in Pivot: This is when a single feature of the product becomes the whole product. For example, Flickr started as an online game. One feature of the game let players upload and share photos. It turned out to be the best part of the game, so Flickr changed its strategy to focus entirely on photo sharing and storage.
• Zoom-out Pivot: This is the opposite of a zoom-in pivot. The whole product becomes just a feature of a much larger product. This might make sense when customers value your product, but they want it to be part of something much bigger.
• Customer Segment Pivot: This is when you decide to go after a completely different group of customers. For example, a product initially designed for students might pivot to target teachers instead.
• Customer Need Pivot: This is when you keep targeting the same customers but change your strategy to meet a different need for them. For instance, a food delivery app might pivot to grocery delivery to meet a distinct need of the same customer base.
• Value Capture Pivot: This is when you change your pricing or revenue model to capture more value or drive faster adoption. For example, a product that was once sold for a one-time fee might pivot to a subscription model.
• Engine of Growth Pivot: This is when you change your customer acquisition strategy to drive faster or more profitable growth. For example, a company might pivot from a viral growth strategy to a paid advertising growth strategy.
• Channel Pivot: This is when you change how the product reaches your target market. For example, once sold in physical stores, a product might pivot to sell online.
• Technology Pivot: This is when you decide to deliver the same value proposition to your customers but do it in a new and different way. For example, a company might pivot from a hardware product to a software product.

You have to come up with a new set of assumptions, which must then be tested. You should be ready to pivot again if necessary.

Most entrepreneurs and investors talk about a company’s cash runway - the number of months it can keep going before it runs out of money. But another way to think about your runway is the number of times you can afford to pivot before your business runs out of money and time or until you and your other stakeholders run out of energy or passion for the business opportunity.

Howard Tullman, a big shot in the Chicago tech investment scene, often talks about the need for startups to pivot. He says it’s important to know the difference between pivoting and twirling. He thinks a pivot can’t be more than a sharp 90-degree turn. And if you’ve pivoted more than two or three times without finding a viable path forward, you have a problem. You’re not pivoting; you’re twirling. It might be time to realize that the hole you’re digging is only getting deeper.

Eric Ries also said:

Ask most entrepreneurs who have decided to pivot, and they’ll tell you they wish they had done it sooner.

The lean startup methodology is chock-full of important concepts like pivoting, the “build, measure, learn” feedback cycle, and the pivot or persevere decision. These concepts are crucial for any entrepreneur navigating the challenging landscape of startups. So, keep learning, keep testing, and don’t be afraid to pivot when necessary.

What about you? Have you ever had to pivot in your business? Share your experiences in the comments below. I’d love to hear your stories.