In movies, television shows and magazines, entrepreneurs are idolized and presented as individuals with laser-focused plans who are willing to work through obstacle after obstacle to make their big vision a reality. While most entrepreneurial success arises from an understanding of where you are and where you want to be (i.e. the big vision), this emphasis on stubborn determination is a bit overblown and, frankly, bad for business.
The truth is: great entrepreneurs must be willing to change. The really good ones understand that new businesses and products are unreliable, and they will likely need to change their idea at some point in the future. In the startup world, we refer to these changes or strategic shifts as “pivots.”
The Principles of Pivoting
Abandoning an idea can be hard—sometimes nearly impossible. We’ve likely spent thousands of hours and (probably) dollars building this idea into a reality, so admitting it’s failing can be hard. However, it can be the most fundamental decision we make when launching our new businesses or products. We need to learn from our customers’ feedback—whether it’s from physical interactions or purchasing power—and adjust accordingly.
Some of the most powerful companies in the world set aside their fears and embraced change in their most nascent stages. Instagram began as a check-in gaming app before pivoting and becoming the most widely used photo-sharing app in the world. Twitter originated as a podcast search and subscribe service. And Youtube? It began as a video-dating app before noticing the large amounts videos their customers were uploading and streaming.
So, how do we know when a pivot is necessary? How can we ensure it will be successful?
If you are starting your own business, it is almost a certainty that you are go-getter. Some of you may have had sales. Most have likely raised capital. Some may have even been featured in magazines or quarterly publications and viewed as success stories.
But, somewhere along the way, we had a breakdown. It happens.
What we can’t do is be too stubborn and stuck on our original plan to make an adjustment. In fact, the instinct to know when to pursue a pivot can be more important than the idea we began with. Scott Jacobson, managing director of Madrona Venture Group in Seattle, claims in an article for Entrepreneur,
“As you listen to customers and see how they experience your product, it's not uncommon to have to consider the fact that you may not have nailed it on the first go, and be open-minded to a pivot.”
Be open to the change.
Next, assimilate to your new situation. Sit down and review everything. The harder you work now, the faster you will be back to profitability.
It is likely that at some point—if it hasn’t happen already—you will have what's called an “AH-HA” moment. Something is working, but in our scrambles to market, grow, sell, brand, re-brand and build, there’s a good chance we missed it.
In my several years of providing mentoring and guidance to early-age startups at SparkLabKC, I have observed several different approaches in these situations. Let’s examine a few:
- “Zoom” Pivot: These can go one of two ways, but the guiding principles are the same. You have reviewed your results and sales and noticed that one particular aspect is either driving or inhibiting your product's success. In a “zoom-in” pivot, you identify one single feature or aspect of the business and make it the new focal point. In a “zoom out” pivot, you realize that your main feature has not resonated the way your market analysis indicated. Therefore, you need to examine a wider array of features. A study completed by Fortune Magazine revealed that over 40% of failing/failed companies admitted to creating products that the market didn't demand. Regardless of how great we THINK one feature or another is, let's look at the data and let the the numbers guide us.
- Segment Pivot: The product solves a problem. It has attracted actual customers, but maybe your sales are lacking. Sometimes, you’ll notice that your original customer segment has changed. Lots of early stage startups will allocate a large percentage of the marketing to the customers they originally envisioned. However, only after they fail will they notice that they had a valid idea but were overlooking a significant customer segment. The pivot here is simple. Get the right product, which you have, in front of the right people. The fact is: the market is a fickle place. In all likelihood, the target customers we envisioned when we launched may be completely different now.
- Tech Pivot: Some startups need to consider changing from platforms to applications. In a world where everyone is familiar with platforms like Facebook, Twitter and Snapchat, everyone seems to think they have the next great platform. The truth is: people pay for solutions. Pricing your product too high essentially means you're pricing yourself out of the market. Run the numbers. Spend some time in R&D. Explore other technologies. In 2009, there wasn't a single ride-sharing application on the market. Almost overnight, Uber took the physical act of flagging a cab and made it digital and more efficient. If you can use technology to provide a more competitive price or a better competitive advantage, it may be time to try a tech pivot.
That laser-focused, straight-line-to-success image of entrepreneurship in the media simply doesn't reflect the reality of startup life. No product is going to please every customer, and, for the most part, no product will ever be used by everyone. So don't let your adherence to your original idea spell your doom. Adjusting to the fickle and chaotic nature of the startup ecosystem is necessary to survive. Using these tips can get your business back on the correct track.
Have your own stories or suggestions about “pivoting?” Tweet them to us @EidsonPartners!