“Don’t lose faith guys, we’ve got a great name. We’ve got a great team. We’ve got a great logo, and we’ve got a great name. Now we just need an idea. Let’s pivot!!”
- Jared, Silicon Valley, TV Show
Have a purpose, find the path, and navigate the pivot.
On a fundamental level, a pivot is 'a change in direction.' In the business vernacular, a pivot is loosely defined as 'a significant change in strategy without a vision change.'
Today's entrepreneur savvy social media-driven business landscape has dramatically overused the term watering it down to the point of meaning to make any simple adjustment.
Originally used to denote a significant transition for a business, specifically a startup, the utilization of "pivot" refers to redirecting an ineffective business model and defining a multiple business transition to one much more efficient, productive, and conducive to sustainability.
Whereas today, for example, the term is used to explain a nuance as simple as a change in the number of posts per day on social media. A simple adjustment is not a pivot by any means and only a difference in deploying a single tactic within the overall strategy.
To paraphrase the legendary general, Sun Tzu, employing strategy without tactics is the most passive way to gain customers and grow your business. Tactical implementation without a plan leads to spending marketing dollars resulting in low sales, declining ROI, and accelerating business failure.
A pivot is not a single tactic but a 90-degree shift to a set of tactics to achieve a specific outcome.
A real-world example of an authentic pivot was Charles Schwab, when they foresaw that the future of the brokerage industry due to the internet was an opportunity and made the pivot to online stock trading.
To do this, they created a separate Strategic Business Unit, SBU, and the employees making the transition over to the new business unit was made for walking across the Golden Gate Bridge and back to the office to mark the event.
The Charles Schwab pivot meant that a client no longer had to wait several days to physically speak with a broker and then for the broker to make the call in to purchase or sell the stocks. The customer could now conduct transactions online, which attracted new customers activating sustainable growth.
When to Pivot?
In referencing the above essential elements, a business should remain in a favorable position to grow. If not, it is time to pivot and improve the various aspects of the company.
For example, the failure of Blockbuster to make the pivot online was catastrophic in hindsight; however, all the new information, market trends, data, and availability of new technology was the same for them as anyone else.
If Blockbuster would have made a pivot online before Netflix and did it better at the time, the world would still have Blockbuster and may not have ever heard the name Netflix.
They were in an optimal position to embrace the innovative technology of the time and pivot to online streaming; however, they chose to double-down on the physical DVD medium, their champion product, and ignore what the data, trends, new information begged them to do.
When a company invests in product development before it has identified a market, there is no new customer buy-in, subsequently followed by loyal customers abandoning the brand to discover other initiatives, innovation, and convenient technology. The situation should require an executive team to continually evaluate the applied analytics, patterns of data, and high-quality data sources to ensure a pivot is necessary.
As demonstrated by Blockbuster, the number one reason businesses fail –
is because their product or service does not have a market.
To answer the question - When to pivot?
The question requires the ability of business owners or executives to connect with data models to enable market trends and quantitative analysis relevant to establishing market position, new initiatives, and competitive innovation, which together formulate a market shift. The importance of data relates to the ability to expedite answers, direction, and preparation to market disruption while advancing a strategic pivot.
This will inform that they are either losing market share or an innovative technology looms on the horizon destined to change how business is done in the industry, disrupting the current business model. This is known as a disruptive technology. This is an excellent sign to implement a smart pivot as soon as possible. Be first to market. Be Charles Schwab and Netflix, don't be Blockbuster.
When a product or service is fully loaded with bells and whistles at the initial launch, there may not be enough customers who embrace it, and the company would have spent much more money in development than necessary and will likely have missed the mark of incorporating a sustainable solution that incentivizes growth.
The purpose of any business is to prove viability, which influences sustainable growth. The process includes developing and revealing an MVP, Minimal Viable Product, as a new version or a completely new product to ensure product-market fit by maximizing validation with early adopters.
By developing and deploying the MVP within a given product life cycle to a market, the company can collect and analyze crucial data on how to further develop the next generation of the product or services, hence the consistency of a sustainable business model.
Check out this online class addressing Business Management.
For more information on developing a sustainable business model strategy, please reference our Blog, Business Development Strategy: Theory to Application, and give us a call with any questions you may have.
1-833-BAM-IDEA (226-4332) or (512)736-1931 or email: info@bamconsulting.com