What is pivoting? Why, When and How to pivot your startup?
What is Pivoting
YouTube turned out to be a huge success. The platform counts video views in billions. It wasn’t, however, originally meant to be the same site as we know it. Interestingly, it served for uploading videos with personal introductions, but the aim was to use the material for dating purposes. Yes, YouTube initially was a dating website. Not a very successful one. When creators noticed how little popularity it gained, they decided to use the one great technological feature they have and turn the site into something, seemingly, completely different. Uploading videos was the key, as for the dating part – not necessarily. They were smart and flexible about their business. When the idea didn’t take off they took what’s best from it and let go of some shortcomings. Now, after all these years, they still are the most successful online video sharing platform. It is also one of the most renowned pivots ever.
Pivoting is a startup-related term for shifting a business strategy in order to achieve a better product-market fit. It is a tool by use of which you see to your business flourishing through analysing the direct or indirect feedback you get, as well as your strengths, weaknesses, opportunities or threats. Pivot is about tailoring how your business operates and that can take you far from the initial concept.
We can differentiate numerous types of pivoting based on what are you going to change:
· Customer pivoting: redefining the target audience, narrowing or broadening your target audience,
· Product pivoting: focusing on the most appealing features, giving up on features that proved to be inefficient and unpopular, redesigning the visual or functional side, adding features to match your target audience, exploring the ways of tackling the same problem differently, turning one feature to a product itself
· Service pivoting: altering the way you serve your customers, how you handle customer service processes
· Marketing pivoting: changing the way you advertise your product, employing different communication, visual identity
· Market pivoting: employing a new revenue model, managing the costs differently, ensuring viability of your business, changing the market, reassessing your competition and making adjustments based on what you learn, changing your business model.
· Personal pivoting: when your goals and expectations have shifted, when you see an opportunity laying somewhere else.
· Growth pivoting: when your business is consistently slowing down you need to find a way for it to bloom – you don’t know yet what will solve that, but you are making your best in tailoring your business strategy to newly arising needs.
Pivots can be drastic but do not need to, they can include change of all the aspects above or just one of them. When things are not going as planned or when plans have changed do not hesitate and pivot your startup.
What a pivot is not?
Just to make it perfectly clear for many misunderstandings have emerged over the years. Sometimes pivot is associated with jumping from one business to another, but that is not what it is about. When you sell t-shirts and then switch to selling bikes, you are not pivoting, you are simply jumping/restarting.
Pivot is not a sign of defeat or a way to admit a failure either. It is not made out of desperation, it is made out of being smart about your business.
Pivot refers to changes that considerably affect the way your business operates. Making small adjustments or just growing are not the same thing.
When pivoting is needed?
Above all, pivoting is needed when you want to achieve a better product – market fit. What are possible scenarios that can indicate the necessity of pivoting?
▶ The target audience don’t respond
You chose your target audience carefully, after analysing the market and competitors. You were following all the guides and took the recommended steps. You probably even created a potential customer persona. Taking all these steps cannot guarantee that you will interest the group you planned. There is always a chance that you overlooked something or that the target audience expectations have changed. Maybe your product doesn’t resonate with them or they find it too expensive. But it doesn’t mean that someone else wouldn’t like it. On the other hand, if the chosen target audience is too broad – run the analysis and check what group is your biggest supporter – then maybe consider accommodating your product features/ business model/ marketing strategy to the needs of those who already like it (and can like it more).
▶ Only one feature gets attention/ is used
That was partially the case of YouTube. People enjoyed sharing videos, but they didn’t want to use it solely for dating. So let’s follow YouTube’s example and be attentive. Listen to the feedback you get and don’t be afraid to let go of certain features or basic assumptions. It is truly the time to swallow your pride and alter your product to fit the market.
▶ The market is full
The world of startups is a savage one, where you can easily get eaten by your competition. If you are consistently outperformed and barely making ends meet – then you should take a decisive step. You are about to start a drastic change including more types of pivoting than just one. It is going to be a bumpy ride, but if you act in time and find a way to differentiate yourself – it will be worth it.
▶ You have hit a plateau
Business is still going, but for how long? Things are fine, but they could be better, right? If you are experiencing a consistent slowing down of your business, then don’t wait till it shuts down for good. Ensuring financial viability of the startup should be your top priority and oftentimes waiting around for better days won’t solve your problems. When you cannot grow then take a look into every aspect that could be your setback (i.e. check everything and try to assess it as objectively as possible – if you can’t find what is at fault, then maybe try brainstorming or reverse-brainstorming with your team). Eventually you will find a way to blossom into a well prospering company, but that will involve smart pivoting.
▶ Your goals have changed
Growing both personally and as a brand may change your perspective. Without doubt, getting familiar with the market can open your eyes to new possibilities. Initial startup idea might have been different from what it should be (from the point of view of a now much more experienced entrepreneur). Don’t stick to the original plan just for the sake of it. For business to be successful there isn’t a place for stubbornness or being too attached to your starting assumptions. Frankly, flexibility and openness are your best friends. Changing your goals doesn’t mean that you failed. Whether you have achieved some of your previous goals or not, you don’t have to stick to them for the rest of your life. More importantly, if they turned out to be unsuitable for your business, don’t pursue them. Ticking off the boxes that don’t translate to your success shouldn’t take up your time. Bear in mind, that throwing away your plans and goals each month isn’t good either. The bottomline is – even if the new path might involve a bit of risk (I don’t mean obstacles that will take years to overcome!) consider what you might achieve. And remember, take action as soon as you can, but don’t be hasty in assessing your current situation.
▶ Shift in the market
Never has there been a more dynamic period in business than we see today. It is hard to keep up with development of new strategies or technologies. Nonetheless it is worth it. Don’t deprive yourself of great opportunities. Observe the market, your competitors, your customers needs and be alert to new technologies, as that might be your breakthrough. Heads up for business merges or spectacular fails.That’s where you can find new ideas, allies, investors or customers.With new technologies or even social events frequently come new niches which you can take over. In this case, again, you are under unimaginable time pressure. Assess the risks, opportunities, and take action as fast as you can.
How to pivot a startup
- Thorough analysis
Start by measuring your current performance and setting goals for the future that are compatible with your situation and experience. If one indicator proved to be useless then don’t go including it again in your plans. Wondering how to assess your strengths and weaknesses effectively? Start simple, by putting together a SWOT analysis from your point of view. You may find it useful to ask your coworkers to do the same. Then compare your work and take as much from it as you can. Now it’s time for you to reevaluate your point by including customer feedback. Go through reviews (even the nasty ones) and emails from clients. Try to find what your customers want and what they have been missing. If you have put different target audience in opportunities, then it is high time for you to analyze the group and the successful companies catering to them. Whatever you have set out to do, don’t forget about making a thorough analysis first (not while implementing changes!).
2. Take action as soon as you can
As was emphasized throughout the article, you have to act quickly if you want to turn your fortune around. If the customers are unhappy then change it before they start leaving (it would be much more demanding to acquire new customers after that). If your marketing strategy hasn’t worked so far, then don’t wait for people who will appreciate it (they may never come or come in small numbers). When you see that some processes are inefficient, don’t postpone making adjustments. Above all, keep your priorities straight.
3. Be observant
Stay close to your competitors and be up to date with market shifts. It may sound impossible, but try to simplify that. Set yourself some time everyday (or make larger reconnaissance twice or thrice a week) for market research. Take notes every time you do your research and run an improvement ideas book.
Startup pivot doesn’t result from a lack of perseverance, rather the opposite. Pivoting is the key not only to stay in the business, but to climb to the top. Hope it seems more achievable now that you read our article. Listen to your clients, employees,yourself and don’t scrap the work you have already done. Every stage of your life as a startup is a valuable one. There are definitely strengths you sometimes just can’t see from where you are standing 🙂