An introduction to Pivoting

The way businesses have been dealing with the COVID-19 crisis is by pivoting to business models conducive to short-term survival along with long-term resilience and growth. 

Pivoting is extremely critical for short-term survival and long-term growth. This article introduces pivot as a concept and how best to apply it. 

Pivot Definition

A pivot is a kind of change designed to test a new hypothesis about a product, business model, and engine of growth. 

For example, Spotify pivoted during the Lockdown, offering original content in the form of podcasts. This pivot saw Spotify users uploading over thousands of podcasts in just one month. This pivot has a sustainable growth strategy in which copyright holders enjoy healthy margins. 

To further boost this pivot, Spotify signed The Joe Rogan Experience podcast to be exclusive on their platform. This will lead to an increase in subscriber numbers and also, inspire original content producers. 

Many organisations pivoted during the Lockdown to ensure their short-term survival. The tricky part is pivoting in such a way that it leads to thriving in the long-term. 

Types of Pivots

Focused Pivot 

This pivot is when a single feature of a product becomes the whole product. At a company level, this pivot is when a company reduces the number of products it offers, bringing focus to a few great quality products. 

Range Pivot 

This pivot is when a single feature is insufficient to support a customer set. At a company level, this is when a set of products are designed carefully to offer a larger value.  

Segment Pivot 

This pivot is when a company changes its customer segment target for an existing product, solution, or service.  

Need Pivot

As a result of getting to know the customers extremely well, this pivot is based on solving a problem. 

Business Pivot 

In a business pivot, an organisation changes its fundamental business model. 

Value Pivot 

This pivot refers to maximising revenue by changing the way a company captures value. 

Growth Pivot 

A growth pivot is when a changes its growth strategy to seek faster or more profitable growth. 

Channel Pivot 

A channel pivot is a recognition that an existing product or solution could be delivered through a different channel with greater effectiveness. 

Technology Pivot 

A Technology pivot explores the hypothesis of whether the new technology can provide superior price and performance compared with the existing technology. 

Platform Pivot 

This pivot refers to pivoting your organisation or product into a platform, where other people create value on it.

Conditions for Successful Pivoting

Creating the right conditions for successful pivoting is critical. First, a pivot must align well with the new trend created by the pandemic, including flexible working, social distancing, shorter supply chains, and the accelerated use of technology. 

Second, a pivot must be an extension of an organisation’s current capabilities, neither undermining its strategic intent nor jumping into a new field with no experience. 

Third, pivots must offer a sustainable path to profitability, one that preserves and enhances brand value in the minds of consumers. 

The above conditions are evident in many organisations who have successfully pivoted. 

Pivot Portfolio

Establish a qualified set of hypothesis, that I also refer to as a portfolio of pivots or experiments. Ensure these projects are prioritised and managed by a growth board and growth team, something similar to a project management office. A portfolio of pivots will guide the innovators on what to work on next. 

Execute a pivot with precision

Why now? Having a compelling reason to pivot is crucial. It could be technological advances, a global crisis, new regulations, or the lowering barrier to entry that may create a new opportunity. 

Who is the customer? Defining who the customer is and how will you find them. We must be clear on who the customer is. 

How will you beat the competition? Display a great competitive advantage. Being the first mover means you will attract the early adopter who won’t necessarily attract mainstream customers. 

Is it aligned with your company’s strategy? Answering this question quickly, with a shared leadership vision, helps justify investment and resources a pivot requires. 

Does your organisation have a mindset of an entrepreneur? Having successful innovators will improve the success rate of pivots. 

How will it make money? Consider a realistic price point and whether the bottom line contributes significantly or not. 

Have you validated the problem? Speaking to potential customers and testing your offering will help you answer if you’re solving a real customer problem. Remember that customers are great at telling you what they don’t like about an offering when you present it to them. 

Do you care about it? If it does not excite you, how will it excite your customers or your fellow work colleagues? Believing in the direction a pivot will take your organisation provides that internal motivation to lead the way. 

Measure Pivot Progress

Two frameworks help enable successful pivoting; 

Objectives and Key Results (OKRs) is is a collaborative goal-setting tool used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how an organisation tracks progress, create alignment and encourages engagement around measurable goals.

Innovation Accounting is a method for measuring progress when all the metrics such as revenue, customers, ROI, and market share are zero. It provides a framework of leading indicators, each of which predicts success.

Continuous Transformations

Successful pivots grow into new teams and divisions within an organisation and become great success stories shared with the whole organisation to inspire future innovators. Pivots create a pathway towards continuous transformation for an organisation. 

Without pivoting correctly, enterprises will be the victim of either hoping that the next pivot will magically materialise or never picking a single direction long enough to find out if there’s anything there. 

The right thing to is understanding the type of pivot, having a great portfolio of experiments to execute that is aligned with company strategy, apply the right conditions, have experienced internal innovators and then pivot.