Aidi — Pivoting Strategically: Knowing When, Why, and How

“A pivot is a change in strategy without a change in vision.” – Eric Ries

Building a startup is very personal. It is a thrilling journey with many uncertainties, adventures, and growth opportunities. However, there comes a time when you hit a roadblock along the way and need to make decisions to ensure your business stays relevant and successful. At points like this, most founders decide to PIVOT.

What Is a Pivot?

A pivot is a strategic shift in your startup’s direction. It could either be a strategic shift in your business model or product to accommodate changes in the industry or any other factor(s) that impacts your value proposition. Pivoting is not a sign of failure; rather, it’s a survival skill that allows you to adapt to changing circumstances, stay relevant, and ultimately thrive. 

Pivoting in business could mean changing a product entirely to a new one to fit industry changes, turning a feature into a product because of the market demand, expanding a product to cater to more needs in the market, changing your target audience entirely, and so on. However, as a founder, how do you know when it’s time to pivot?

When You Need to Pivot

Before deciding to pivot, you must have noticed some signs and factors in your business that indicate you need to make that strategic change. Note that you should not decide to pivot because Company XYZ is doing it or has done it. It must be a well-thought-through decision because if not done rightly, it can cause your business to crumble. Here are some key signs and factors that indicate a pivot might be necessary:

1. Stagnating Sales and Growth: When your business/product experiences stagnant or declining sales, it’s a red flag🚩. This could mean that your product no longer meets market demands, or competitors have intensified their game. When your unique value proposition is no longer unique, it means it is time to explore other options to remain relevant.
2. Difficulty Attracting or Retaining Customers: If acquiring new customers becomes a difficult battle or existing ones start leaving, it means your product no longer resonates with your target audience. You can do a market survey to find out what’s lacking and what you can leverage, then build on that.
3. Feedback from Customers and Employees: If consistent concerns or improvement suggestions arise from your customers or employees, consider them seriously. Sometimes, these might be hints on how to pivot your business model/product successfully.
4. Technological Changes and Industry Shifts: The business landscape is ever-evolving. Technological advancements and industry trends can render your current model obsolete. It is important to stay agile and ensure your business model is adaptable.
5. Financial Strain: If your business is constantly facing financial challenges despite putting your best efforts into making it work, it might be time to explore alternative business models or streams of revenue.

Why is a Pivot Necessary? 

• It allows your startup to adapt to changes in the industry, ensuring your product/service remains relevant and meets the evolving needs of the market
• It enables you to re-align your product more closely with what your target customers truly want
• It creates a new opportunity for you to learn, iterate, and improve on your product/services
• It enhances efficiency, productivity, and overall business performance.
• It creates an opportunity for you to come up with a unique value proposition.

How to Pivot Successfully

1. Rely on Data for Decision-Making: It is important to rely on data and analytics to make informed decisions. You need to have ample data on market trends and consumer behavior to identify loopholes and opportunities before deciding to pivot.
2. Customer Feedback: Ensure to engage your customers through surveys or one-on-one interactions to understand their evolving needs and preferences, and to guide your decision-making.
3. Iterative Testing: As important as it is to do research, you also need to carry out market tests on your new product to see its adaptability, acceptance, and relevance in the market. These insights will also guide you in knowing whether it’s worth it or not before committing your all.
4. Team Alignment: Ensure to carry your team along every step of the way. Make sure your team is properly aligned with the decision to pivot, and that there is transparent communication in the transition phase.
5. Rebranding & Marketing: If you are going to be making changes to your business model, it is important to let your audience know the new changes you will be making. It is also important to carry out a product rebranding and adjust your strategy to fit the new model.

Some Real-Life Examples of Companies that Pivoted Successfully

1. Instagram: Instagram used to be called Burbn. It was an app for location-based check-ins, but it wasn’t gaining traction. After a while, the founders realized that the photo-sharing feature was more popular with their target audience, and they immediately changed the whole product to focus solely on photo-sharing.
2. Netflix: Netflix used to be a DVD rental business. They used to mail DVDs to their customers when DVDs were still a thing. After a while, the market shifted towards digital content and  DVDs started becoming outdated. Netflix knew they had to change their business model, so they wisely pivoted to becoming a streaming platform. Today, they are one of the biggest in the world.
3. Twitter: Twitter used to be called Odeo. It was originally designed for podcast discovery, but Twitter pivoted when iTunes dominated that space. As a result, they became a microblogging platform that changed how we communicate.
4. Slack: Slack started as an online gaming platform called Glitch. The gaming platform did not perform as well as the founders envisioned as they were not getting enough traction. However, the founders noticed that the players liked to communicate through the messaging feature on the app while playing games so they decided to turn Slack into a communication platform that we have today.

As a startup founder, you need to be vigilant and pay close attention to the signs. It might take you a while to realize and you might struggle with the thought of starting all over, but that’s okay too. These companies highlighted in the examples all went through the pain of letting go and starting again, and today, they’re all the better for it. Remember, building a startup is personal so you need to always be honest with yourself to admit when something is not working and needs a change.