The pivot … the agility to change direction, to move from mediocrity to magic
March 24, 2016
The ability to “pivot” your strategy, maybe to reinvent your entire business, is essential to being able to survive and thrive in fast-changing markets.
We used to define a clear vision, develop a long-term strategy, then move ahead with clarity and confidence. We used to be able to take the past as a guide to the future, then extrapolate forwards. We used to boldly launch our new ideas, determined to deliver, and reluctant to change.
Today’s markets don’t allow such certainty, or blinkered determination. Success lies in the ability to stay agile, to keep testing and learning as we go, to keep a vision in mind but strategy fluid. And most of all, be willing and able to change direction, when or before we have to.
Small businesses are like speedboats, they can chase new opportunities as they emerge, but they can equally move away and to somewhere better, as soon or before they need to. Big companies are more like supertankers, finding it much harder to change direction, hence the need for structural and strategic agility.
In recent years, the best pivots can be seen in digital start-ups. They have adopted a new mindset in everything they do which gives them this agility. They are guided more by a purpose to make life better in some relevant way, rather than by the rigid structures of a product or process-based strategy. They are typically much more virtual, sourcing capabilities rather than developing them in-house. They are much leaner in their implementation, fast and experimental, constantly testing and learning.
- Facebook famously began life as Facemash, the slightly questionable comparison site developed by Zuckerberg for people to vote “hot or not” between two pictures. Whilst he caused uproar amongst Harvard’s female students, he soon pivoted to a path that made him $50 billion.
- Instagram was originally called Burbn, a location based service similar to Foursquare, whether you could share your whereabouts and even earn points for hanging out with friends. Then it realised the $20 million power of the images people were sharing, and changed direction.
- Flickr used to be called Game Never-ending, a massively puller multiplayer game with roleplaying around 2002-2004. Key to the game was the sharing of images which it then realised was much simpler and profitable business. Flickr was sold to Yahoo for $40million in 2007.
- Pinterest started life as Tote, helping people to explore online retailers and sending them updates about prices and availability. It realised users were mainly using the site to build and share ideas lists, and soon shifted course to focus on “pinning”.
- Groupon began as a platform for social action called The Point in late 2007, asking for commitment only when the movement reaches a certain tipping point, before reinventing itself in the crowd-based local coupon business. Now worth $25 billion.
- Ushahida started as an African elections monitoring service, a grassroots response to the unconnected infrastructure of local markets, before growing into a crowdsourced news aggregator which it has become much more successful.
- Twitter emerged out of a mediocre podcasting concept called Odeo that was outshone by iTunes. Having struggled to stand out, the team soon realised that people were communicating in ever shorter messages, but still wanted to speak out to the world. The 140 character tweet was born.
- PayPal started out as Continuity, a cryptography company designed for exchanging money over PalmPilots (remember them?!). It didn’t work, but Peter Thiel, Elon Musk and team soon identified a more lucrative market for taking credit card payments. Sold to eBay for $1.5bn.
- YouTube founder Steve Chen spent his early years trying to make the site work as a video dating portal, before realising that people simply wanted to share videos for entertainment. Eventually he sold YouTube for $1.65bn to Google.
This leaner approach allows them to be much more responsive to change in markets – to anticipate changes in consumer aspiration, competitive challenge or economic turbulence. It allows them to react much faster. It also enables them to detect when ideas are not working well, and what tweaks or more significant changes are required to do better.
Sometimes a shift in strategy, not in everything but in certain aspects can be significant. Like in engineering, a pivot is a fast and decisive change, executing a sudden shift in strategy that turns hundreds of followers into millions of fans, an evolving idea into a billion-dollar company.
The ability to pivot, be it a subtle shift in direction, or a radical reinvention, is essential to scaling start-ups into commercial businesses.
Fail early and cheaply is a start-up mantra. Use prototypes to learn from customers, such as a paper-based process before investing in detailed coding, a Powerpoint before a website, testing with Google Adword before spending more. And keep learning from customers – insights about why some customers don’t currently get or want your idea, or exploring their real problems and aspirations more deeply.
Find well established partners to co-brand with, reaching out to their audiences, transferring equity from their brand, or maybe creating a better solution. Watch emergent behaviour, particularly people who adapt products for other uses, like engineer codes that become texting, or scarves that become snoods. And above all, stay passionate. If you aren’t truly excited about a concept, it’s unlikely your customers will ever be. Find what really excites you, and the people who will be excited by you.
Even the classic brands of today had to pivot to where they are today.
- Wrigley’s gave away free gum whilst selling soap and baking powder, but found people liked their incentive more than the product.
- Avon has a similar history, a door to door bookseller, that gave away perfume samples to attract women, before moving to a door to door cosmetics retailer.
- Nokia started out as a Finnish forestry business, before moving into shipbuilding, and then into plastic (and wellies!), and then to electronics, most famously mobile phones, and now networks.
- Sony’s first product was a rice cooker, and then an electric blanket. From homewares, they quickly moved to personal electronics, with global success.
- HP focused on industrial solutions before finding consumers, although most recently it has swung back to its origins and separated its business.
- Starbucks focused on selling coffee beans until Howard Shultz visited the coffee houses of Italy, and came back inspired to create his “third place”.
These companies had the focus to find their space, the boldness to shift from their existing world to the better world, and then shaped the market in their own vision.
Explore more about strategic pivots, in the Business Innovation Program which brings together all the relevant concepts to create better strategies and growth for your business:
- Future scanning – finding the best opportunities for growth
- Growth strategies – making the right choices, and defining the limits
- Design thinking – deep diving to find new insights and ideas
- Lean development – fast experimental development and delivery
- Business model design – innovating the whole business to deliver
- Customer value propositions – focusing on the right customers right
- Minimal viable products – starting from the basics then building up
- Virtual ecosystems – bringing the right partners together collaboratively
- Agile leadership – staying strong and directional, flexible and fair
- Exponential growth – turning ideas into fast and profitable growth
Find out more about the Business Innovation Program