Successful Pivots: What does it take?

We continually hear phrases like “new normal” and “pivoting” but what do they really mean to us? Is it just a new lexicon to add to our already cluttered to-do list or have you actually revised the strategic playbook to respond and even capitalize on the latest trends caused by disruptions??

Necessity is the mother of invention. Never has innovation been more important. Most organizations have had their hand forced, left with no choice but to respond to environmental and health challenges in the last few years. The question is, was it considered a temporary change or an opportunity to rethink the future? In a recent article titled, “The CEO agenda in 2022: Harnessing the Potential of Jolts ” published by McKinsey and Company, it was said that “Innate to any crisis is the potential to fundamentally reshape a person, an economy, and possibly an entire society.” While near-term uncertainties may pose risks for growth, they also unlock the opportunity to capitalize on these tidal waves of changes to transform business models and build new growth.?

So, what does pivot really mean? Webster calls it a “marked change.” In business, some use it to refer to a temporary or short-term change, necessary to respond to adverse conditions (such as working remotely because we must). However, if viewed strategically, it can transform the future of your business. It is the ability to re-think how to serve the fundamental need that the business was founded to address. Strategy or purpose rarely changes. Your business may be founded to “lift the spirit/DEMDACO,” “strengthen personal relationships and connections/Hallmark, Inc.,” “provide health care services to a particular segment/MD Anderson Cancer Center,” “manage leakage of fluid systems/Swagelok,” “help people get work done from anywhere/Zoom,” etc. But instead of focusing on evolving how we deliver against the need, often leaders get caught up in how to operationalize it, and the daily tactics and systems created to accomplish it, making it difficult to evolve from the status quo.?

While we currently feel overwhelmed by uncertainty, now is an excellent time to strategically pivot. Just as with the recession in 2008-2010, permanent changes in value systems occurred resulting in new behaviors and user requirements. Those companies that played offense (along with defense) outperformed their peers in recovery and acceleration.?

A strategic pivot means providing the same service or benefit but delivering it in a different way through new products and services (we are seeing many product companies bundle them with services to differentiate from competitors), through new processes of engaging customers (often incorporating a new level of technology and transparency), through a re-imagined customer experience (with more and faster service offerings, interacting with customers differently and on a deeper level, appealing to customers social values, etc.).?These are strategic pivots that solve real problems that the current model no longer addresses effectively. To be successful in creating a strategic pivot an organization must:

?1) be able to think “outside-in” and view their company as the market does—its strengths and its gaps—creating an honest appraisal of how they perform against alternatives.

2) be creative problem solvers who are innovative and can apply ideas from other industries and companies to their situation, asking questions like “what if?”.

3) be able to execute their ideas, aligning systems, operations, and resources with the direction, forming the strategic playbook.

4) be effective at engaging stakeholders that can take the idea from concept to reality.

Having defined a pivot and identified what skills are required (internally or hired), let’s address what a successful pivot looks like. A colleague of mine, Greg Hatten, owner of Creative Business Initiatives, who often partners with me to produce the deliverables above in a pivot process, shares some of his client’s recent pivots.?

Card Isle?is a 6-year-old print-on-demand greeting card company that found a niche with Florists who wanted to offer greeting cards as an upsell to their floral arrangements. The pandemic and the behavior it drove created an opportunity for savvy companies to pivot. As they evaluated options it became clear that digital delivery was becoming a way of life for food retailers (see chart below). Equally clear, not EVERY product in the grocery store was easily translated into the digital shopping experience.

Casualties for food retailers are greeting cards, impulse items at the check stand and new products hoping to gain “trial” through in-store shopping, many of which are high margin. Food retailers realize there is an opportunity to improve the profitability of their digital market baskets by finding new ways to deliver these categories.

Card Isle had the solution ready to go having perfected the seamless integration of a digital greeting card department directly onto the e-commerce platform for over 400?florists?and many pure play e-commerce retailers around the country.?Their “virtual” card department with over 25,000 creative cards is organized in the same way a greeting card department is laid out in traditional retail stores which makes it very intuitive and easy to shop for consumers. Once a consumer selects, and personalizes it if they wish, the cards are printed on site in-store making it easy for a store clerk or “picker” to add the card to the market basket.

Pivot:?Recognizing an opportunity to diversify channels of distribution, they allocated resources and pursued a new initiative to expand their distribution in a time of retail uncertainty. When most companies were playing “defense,” Card Isle played “offense.”

Result: Card Isle recognized the opportunity, made the decision to pivot from a single channel of distribution and began introducing this digital card department to food retailers in mid-2021. They formally introduced their concept at the National Grocers Association trade show in Las Vegas and quickly turned heads. Food retailers, wanting to reclaim one of the most profitable categories in their store, saw this as a perfect pivot. Within four months of the NGA introduction, they have commitments from four traditional leaders in the food retail business that plan on offering Card Isle on their websites in time for Valentine’s Day 2022.

HyaGlo by Cogent?makes products for skin care based on a concentrated hyaluronic?acid formula which helps restore and rejuvenate skin by adding moisture to dry, over-washed, over-worked hands. With most of their distribution concentrated in the specialty channels of vitamin stores and health food outlets, they relied on a broker network of?independent sales reps for the majority of their “brick and mortar” sales. When the pandemic hit, their “pivot” was threefold:?

1) They completely switched their sales model from a broker network with independent sales reps (who, because of COVID, were no longer traveling to stores to make sales calls and were working their territory via phone and email) – to a direct sales force with a higher functionality call center and a direct connection with retailers via phone and email.

2) They changed the look and feel of their skin products with new bottles, updated packaging and marketing messages targeted at customers who need their products to help protect and heal their skin which dries out quickly with increased hand washing due to COVID precautions.

3) They consolidated?their ecommerce business, cleaned up their network of sites offering products on?Amazon, and enforced policies and price points to leverage the benefits of promotions and marketing initiatives on Amazon. They are expanding their channels of distribution in the near future.

Pivot:?Bold action in a time of uncertainty to reorganize the sales strategy, rebrand and repackage their premier products, and consolidate Amazon e-commerce business.?

Result:?Sales to brick and mortar took a slight dip of 5% in 2020 but profitability on those sales increased by over 10% by eliminating sales commission to their third-party independent sales force. In addition, relationships with retailers deepened by shifting to a direct sales model allowing for clearer communication, more successful promotional opportunities, and better feedback. Rebranding and repackaging their products with a more upscale look, positions HyaGlo as a more upscale brand at a moderate retail price in a crowded category dominated by large brands with inferior products. Consolidating over fifty online customers selling HyaGlo products on Amazon to a single customer resulted in a 5% increase in sales with better control over marketing, promotions, and pricing.?

Everly Well?is a home diagnostics company founded by?Julia Cheek?who’s had great success offering consumers reliable home tests for a variety of health and wellness issues. Most popular tests include Food Sensitivity, Metabolism, and Women’s Health. Within the past few years, several major brick and mortar retailers have recognized the trend for home diagnostics and have added whole sections of shelf space for a variety of health care kits. Test kits are purchased at retail, samples are self-collected at home, and the results from accredited labs come with recommendations for better health management.?

With foot traffic down in most brick-and-mortar stores lately, EverlyWell recognized the need for an easily?accessible, reliable, and FDA approved COVID Test. EverlyWell developed one of the first home test kits for COVID. At first, the test was only available on their website – direct to consumers. That has recently expanded to a number of retailers who were willing to offer the test to consumers as a public service – no one in the supply chain receives any profit from the test.?

Pivot:?When most consumer products companies put a hold on new product development, EverlyWell went the other direction and created a home test kit for COVID as a line extension to add to their growing portfolio of health and wellness test kits.

Result:?Responding to a health need in a time of worldwide medical distress helped further brand credibility for EverlyWell and continued to establish it as a responsible and ethical health and wellness testing option.?

To accomplish these pivots, companies had to think differently about their business and define their potential, not just incrementally improve. The entire trajectory changes as they rethink the possibilities, identify scalable opportunities, and move quickly to ensure that others don’t bar the way or limit the options by coming too late to the party. If you’d like to read the rest of Greg’s article,?click here.

Some of my clients’ pivots include:

• Adding service facilities to serve end users vehicles and not limit themselves to providing the parts to do so.?
• Transforming from a printing company to an Intellectual Capital company that prints. They gather information from an industry sector through printed orders, aggregate the data and sell it back to clients.?
• Bundled services with products to improve differentiation, position themselves as industry leaders, increase breadth of offer, while eliminating direct price comparisons on products. How are companies making this work? Learn more in this?article. ?

One more recent hometown example comes from H&R Block under the innovative CEO Jeff Jones. They just announced their launch of a mobile banking platform. Spruce is intended to help anyone struggling with spending, saving, planning, and borrowing. The launch was in partnership with MetaBank. It was developed in-house but supplemented with outside contractors, enabling it to launch in a little more than a year. Jones says, “Our team has done something many people didn’t believe we could do. This is a really proud day for our team, which launched this product in record time and did something the company has been talking about for many years.”

What did these strategic pivots have in common?

1. They took advantage of current market conditions and looked outside the scope of their current sandbox.
2. They acted fast—at least relative to other industry players to ensure their options were not limited. Remember it is a tightrope between acting too fast in which case adjustments may be required but acting too slow and you may be closed out of the opportunity by others who move faster and limit your options.
3. They enlisted the right resources—internal skills, partners and creative problem-solving experts to help them solve challenges they haven’t seen before. A recent survey by Innosight found that 72% of global leaders agree they need to transform their core offer or models—but most don’t. They cite their main obstacle as lack of resources which can be translated as lack of commitment to change.?

The way Greg and I see it is business leaders have no choice but to embrace disruptions and change, assimilate recent technology, and respond to changing value systems of customers. Strategic pivots?are?our future—and the future is NOW! It is time to determine your organization’s potential in three to five years by understanding and adapting trends that can help your organization transform and capitalize on the future. As Wayne Gretzky said, “We need to “skate to where the puck is going, not where it has been.” Embrace 2022 with a growth mindset and rewrite your playbook.?

Share your pivot story with us?here.

Have questions about your pivot? Greg and I are happy to help!

Margaret Reynolds?is a strategic growth catalyst that helps clients define the potential of their business and determine the most effective way to achieve it. She is an expert at accelerating growth for her clients by bringing an “outside-in” point of view that sees opportunities where others don’t. The teams Margaret works with surpass their own expectations with regard to solution identification, profitable growth and organization alignment. Her strategic processes are designed to overcome the most common obstacles that cause organizations to stumble in implementation. 100% of her clients have offered to refer her to others. Margaret is a veteran of Hallmark Cards, Inc where she was a General Manager and then Chief Strategy Office. She is the author of two books,?Reignite: How Everyday Companies Spark Next Stage Growth?and?Boost Your GrowthDNA: How Strategic Leaders Use Growth Genetics to Drive Sustainable Business Performance.??Read more here.

Greg Hatten?is an international expert in helping new and existing organizations launch new solutions through distribution channels in the United States. Greg’s experience in getting solutions “user ready” is backed by a successful corporate career in marketing, focused on building profitable revenue. Known for creative thinking and “outside the box” problem solving, he has a reputation for adding value as a trend watcher, a thought leader and an influencer. Currently one of his projects, is leading an initiative to build a world class Children’s Discovery Center in St. Joseph, MO with an underlying theme of Health and Wellness education for both children and adults. His background is in the consumer product area with retail distribution stemming from a long career as V.P. of Sales at Hallmark Cards and Chief Merchandising Officer at BiMart out in the Pacific Northwest.?Read more here.