Pivoting with Purpose: When and How to Change Your Business Direction
In the business world, change is the only constant. As markets evolve, customer preferences shift, and technologies advance, entrepreneurs often find themselves at crossroads. The product or service that was once groundbreaking might now be obsolete, or the business model that was generating profits could now be leading to losses. This is where the concept of ‘pivoting’ comes into play. Pivoting means making a fundamental change to your business, but doing so with clarity and purpose.
Recognising the Need to Pivot
- Feedback from Customers: One of the first signs that it might be time to pivot is consistent feedback from customers about the same issues. If they’re repeatedly asking for features you don’t have, or they’re not satisfied with a core aspect of your product, it’s time to listen.
- Dwindling Sales or Profit Margins: If the revenue has been consistently declining or profit margins are shrinking, it’s a clear indicator that the current business model or product might not be sustainable.
- Emerging Competition: If newer players are entering the market and quickly gaining a significant share, it means they might be offering something you’re not.
- Technological Advancements: If a new technology can deliver the same value as your product but more efficiently, it might be time to rethink your offering.
Steps to Pivot Successfully
- Research & Validation: Before making any drastic changes, conduct thorough market research. Understand what the competitors are doing right, gather feedback from existing customers, and potentially conduct surveys or focus groups.
- Financial Assessment: Pivoting usually requires resources. Do a thorough financial analysis to understand the costs involved in the pivot and ensure you have the funds to cover it.
- Engage Your Team: Pivoting impacts everyone in the company. Engage your team in the decision, gather their insights, and ensure they’re on board with the new direction.
- Start Small: Before overhauling the entire business, test the new direction on a smaller scale. This could mean launching a new product feature for a subset of customers or trying a new business model in a limited market.
- Continuous Feedback Loop: As you pivot, continue gathering feedback. This will help you make course corrections along the way.
- Communicate with Stakeholders: Keep your investors, partners, and customers informed about the pivot. Transparent communication helps in building trust and gaining support.
Famous Examples of Successful Pivots
- Netflix: Originally, Netflix was a DVD rental-by-mail service. As technology and customer preferences evolved, they transitioned to streaming online content, and later into producing their own original content.
- Nokia: Before becoming a telecommunications giant, Nokia’s primary business was in paper products, rubber, and cables. They pivoted multiple times over their long history before settling into mobile phones and, more recently, network infrastructure.
- Groupon: Groupon started as a platform called “The Point” designed to rally people around social causes. However, they transitioned into the online deal-of-the-day model that they’re known for today.
- Shopify: Shopify began as an online store to sell snowboarding equipment. Realizing that the software behind their online shop was more valuable, they pivoted to become a platform for others to set up their own online stores.
- YouTube: YouTube began as a video dating site called “Tune In Hook Up.” When that didn’t catch on, they transitioned into the video-sharing platform we know today.
- Play-Doh: Before becoming a beloved children’s toy, Play-Doh was originally a wallpaper cleaner. When coal heating was replaced with oil-based heating in homes, the wallpaper cleaner was no longer in demand. The non-toxic nature of the product made it suitable as a safe modeling clay for children.
- Flickr: Flickr started as an online role-playing game called “Game Neverending.” One of the game’s features was a photo-sharing tool, which became so popular that the company decided to pivot and focus solely on it.
These examples show that sometimes the original idea or product might not be the most successful one, but with adaptability and a keen understanding of market needs, companies can pivot and find immense success.
When you’ve poured your heart and soul into a business idea it’s understandable that you might not want to let it go, even if it’s not performing as well as you’d like. It’s important to remember that changing your business direction is not a sign of failure but a testament to your business’s resilience and adaptability. It’s about recognising when the current path isn’t leading to success and having the courage to forge a new one. When done with purpose and backed by data, a pivot can breathe new life into a business and set it on a path of renewed growth and success. Remember, it’s not about abandoning your vision but refining it to align with the realities of the market.