Sometimes your business model hasn’t disrupted the market the way you wanted it to, or maybe an altered iteration of your product would have been more profitable. Instead of scrapping the company and starting over again, you can – if it makes financial and strategic sense – ‘pivot’ the business model and value proposition and move them in another direction.
Keep your eye on long-term goals
There could be a situation in which your business is losing money and you don’t see improvement happening anytime soon. Or where investors aren’t interested, your employees aren’t excited, and neither are you. Or perhaps the market just isn’t ready for your product yet.
The company is going to have setbacks, so motivation should be drawn from your long-term goals. If you aren’t happy with where the business is headed, consult experienced businesspeople or a mentor on what the next step should be – and how to pivot successfully.
Get feedback from customers and test prototypes
Engage with consumers and find out what they want. If they are asking for something else, and consistently give the same negative feedback, then it is time to pivot.
A pivot can be driven entirely by customer demand; customers won’t buy what they don’t want. However, feedback must be garnered over a suitable period of time – say, six months to one year. Don’t rush into it based on the opinion of a few individuals.
Don’t pivot without tested prototypes and extensive feedback. It makes sense to pivot only if the new direction or idea can gain traction and become a long-term success. You need trial runs and research to determine whether that will be the case.
Remember that less can be more
Customers might only like and want a certain aspect of an offering. Take Instagram for example. It used to be called Burbn and once offered a whole lot more than a platform for sharing pictures. When the company discovered that people were using only their photo-sharing feature, they pivoted, scrapped everything else and decided to double down on that popular feature.
Another example is M-Pesa, a mobile payments service from Kenya. It started out as a complex microfinance disbursement and recovery platform, but Nick Hughes, the founder, eventually noticed that people were using the mobile wallet more than any of the other services, and in a way he hadn’t expected.
“So we scratched our heads and followed the data a bit more and kept watching,” he says.
He discovered that users found the mobile wallet convenient when it came to paying the microfinance group treasurers, but that they had also used it to pay friends and family within the test group.
“So of course a light went on – we cut out all that complexity in the microfinance loan system and went to market with a send-money-home, person-to-person payment platform… and the rest is history. We launched M-Pesa in 2007.”
Seize opportunities that arise
Groupon started as ‘The Point’, a fundraising platform for social good projects. When The Point started failing, Andrew Mason, the founder, took its ‘tipping point’ system – which for The Point was a certain number of signatures or money needed for a project to go active – and applied it to daily deals for goods and services. Today, the ‘tipping point’ works so that the promotion will only be valid if enough people purchase the deal off Groupon.
If you pivot into an entirely different iteration of what your company was, instead of using existing assets to serve a different market – then know that there are going to be major changes made to the core structure and business model.
Calculate whether taking up the opportunity will actually be beneficial. Is your staff on board? Are external forces like laws hindering the change internally? There are a lot of factors that can turn the opportunity into a trap.