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.”
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.
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.
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:
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.
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.