- When business growth slows due to various factors such as not having a minimum viable product or not finding the key hire, it might be time for a pivot in strategy.
- Key decision-makers in a startup have the benefit of flexibility in pivoting to a new strategy to achieve business goals or objectives.
- Knowing when to pivot is just as important as knowing how to pivot, as timing is everything when revamping strategy.
- This article is for key business decision-makers at startups who want to learn more about how and when to pivot business strategies.
When business growth slows, leaders face a critical dilemma: stay the course and see if their current strategy just needs a little more time or recognize that a change in direction is necessary for the business’s survival. Continually shifting strategy is a clear sign of panic, but knowing when to definitively change your strategy is what startup leaders call “the art of the pivot.”
“The art of the pivot is all about changing course in pursuit of the same original business goal,” entrepreneur James Reinhart told BusinessNewsDaily. “Pivots aren’t about moving from one business model to the next; they are about evolving the service delivery model, or the monetization or growth strategy.”
What is a pivot?
A common word among startups and small businesses, a pivot means to turn sharply without changing position so as to not give up any currently held advantages. When a business pivots, it could mean that they are changing something about their core products and services. Alternatively, it could mean that they are changing their branding strategy or their approach to recruiting and hiring. A pivot is usually a fundamental change by the business in some key function of its operations, and it might be done for a variety of reasons.
When to pivot in business?
You should pivot to better meet customer demand, shift your target audience to boost sales, or to accommodate major changes in your industry.
Plenty of good examples of pivoting could be found during the COVID-19 pandemic, as many businesses had to rethink their operations to survive. For example, the food and service industry pivoted to prioritize curbside pick-up and outdoor dining while their dining rooms remained closed. Similarly, events businesses shifted to virtual parties and conferences to keep revenue coming in while in-person congregation wasn’t possible.
Everyone knows that there will be startup challenges when launching and growing a small business. But it is when the challenge is threatening the long-term financial viability of the business that you should consider a pivot. Sometimes the market doesn’t respond the way you anticipate, and having flexibility to evolve with the times is a major key to success for all businesses. The most profitable and longest-running businesses have ensured their success by evolving with changes in their target audience and their products.
As CEO of apparel-resale website thredUP, Reinhart has mastered the business pivot. Since co-founding the company in 2009, he has seen thredUP through two major strategy changes to become the million-member fashion e-commerce site it is today. The only way Reinhart was able to guide the startup through these changes was to continually evaluate internal and external factors affecting his business, and remain flexible enough to adapt to them.
“To build a lasting business that delivers value to customers, you must have equal parts confidence and paranoia,” he said. “Most good ideas aren’t obvious, so be confident, and push the boundaries of the experience you’re delivering. But businesses have to be willing to constantly disrupt themselves to remain relevant. Be paranoid, and don’t tune out the world around you.”
Going back to your strengths, weaknesses, opportunities, and threats in your SWOT analysis is a great starting-off point to see where you might have missed some key information. Ideally you want to update your SWOT analysis every 6 to 12 months.
9 tips to pivot your business
Is it time for your business to make a strategy shift? Reinhart offered these nine tips to help you make the decision and smoothly execute your pivot:
- Understand your business’s strengths and weaknesses: You should have no problem listing the things your company does well, the things your company does poorly and the things that keep you up at night. Without this level of awareness and introspection, you won’t get the chance to evolve.
- Spark a wide internal dialogue: Innovation can come from any level. Encourage everyone in your company to look for external threats and opportunities by starting an internal and ongoing dialogue. Adopting a culture of problem-solving in your organization early can drive the mentality of habitual change toward success. Consider conducting employee surveys to gather feedback about what your workforce sees from their perspective, and schedule company leadership meetings to plot a new course together.
- Identify important threats and opportunities: Spend time in the depths of your user data, examine your conversion funnel, talk to customers in person, and track and analyze every move of your competitors. Try not to get distracted by the small stuff, and figure out which threats or opportunities are actually worth action.
- Evaluate pivot options: Once you’ve pinpointed a significant threat or opportunity that warrants a pivot, it’s time to start thinking about strategies. There’s likely more than one strategy to address the threat or opportunity you’ve identified, so list your options, and think through each scenario.
- Map out implications: Don’t make a decision without mapping out the implications before committing to a pivot in your startup. A core pivot will touch every aspect of your business. Map out what the redefinition looks like across process, profits, costs, brand, team structure, culture and more. A best practice when making company-wide changes is to talk to each department head personally and find out what he or she may want to know before putting your final vision into motion.
- Sell the pivot to your team: Successful pivots don’t happen without the full support of your team and investors. If you work with an incubator or accelerator, make sure that they understand why you are making that decision. Show data to help highlight that decision and how it will help them get a better return on their investment instead of staying par for the course. It’s important to explain the “whys” and not just the “whats.” Get everyone on board to share your vision.
- Sell it to your customers: Entrepreneurs often feel connected and a sense of gratitude to early adopters. Telling a supportive community that you’re planning to drastically change something they love is really, really hard. Be sensitive, but remember that you’re building for the next million customers, and you simply can’t please everyone. Be sure to openly communicate with them and provide feedback opportunities – such as customer surveys – for early adopters and power users, as they are the ones who use your products and services regularly. They might even have suggestions that you and your team haven’t thought of!
- Have a plan and execute it: Have an extensive plan in place with tasks, stakeholders, deadlines, clear customer communication, and short- and long-term goals. Ensure that everyone is aware of how the pivot impacts them and their role in the transition.
- Stay agile: Remember that the need to evaluate threats and opportunities is ongoing. You must be willing to constantly disrupt from within when external circumstances change. Stay aware of competitors and market conditions, and you’ll have no trouble redirecting again when the time comes.
Gather feedback from employees, customers, and investors to generate buy-in for your pivot. When you pivot, be sure to consider the competitive landscape and market conditions. Continuously reevaluate your strategies over time.
When your business is stagnating, consider pivoting
Sometimes pivoting can be critical to keeping a business on track, and failing to do so when the time is right is a common startup mistake. However, pivoting for the sake of pivoting won’t help your startup become financially viable either, so understanding timing and circumstance is critical. When considering a pivot, have a plan and execute, and remember to get feedback from all stakeholders to track the success of your new plan as it proceeds.