The word pivot means to shift or change or bend. Additionally, in the case of a startup, to pivot means to change or shift strategies to better meet customer demands or expand the business. Pivoting in business entails a lot of planning and strategic elimination and the addition of policies. In this article, we will discuss why and how businesses pivot.
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What does it mean to pivot in life?
To pivot in life means an individual switching up their professional or personal lifestyle. Firstly, pivoting means shifting your focus from one sector of your life to another that has been neglected. In the case of millennials, this means to start looking after their personal lives by shifting focus from work. Secondly, pivoting has to be substantial, that is, the change has to be for good and it has got to stick. But to do that, we need to plan the process of pivoting much like in the case of businesses.
Usually, pivoting in life means you have got to do these three things- firstly, consider your values and check if your activities are in line with these values. Secondly, you have to recognize and reduce harmful behavior that negatively impacts your mental and physical health. Thirdly, you have to replace those negative behaviors with activities celebrating who you are.
What is a pivot in a startup business?
A startup business needs to consider a number of strategies before turning into a fully-fledged business. In this section, we will discuss one of those strategies-the pivot strategy, that ensures the business is not stagnant and is always flexible. When a startup decides to pivot, it usually means changing some of the core aspects of the product/service. Typically, pivoting is a long-term project as opposed to short-term changes that are not sustainable. It is done mainly to ensure that the business remains viable and profitable.
How to pivot successfully in a startup?
To successfully pivot in a startup you will need to consider these things listed below-
Firstly, you will need to determine whether it is the right time for the business to take on a great change. Since a huge change also means a lot of money spent, startups should always pivot when it is absolutely necessary. For instance, when you see no return on your investments and the revenue has been stagnant for a harmful amount of time. Also when there is just too much competition to expand the business.
Secondly, to successfully pivot you need to focus on one core feature of the product or service you’re providing. And make changes in that small but crucial area. Taking up too much at once will entail elaborate planning and devotion to resources you can’t afford. And the chances of it not working will be greater. So, plan the change by focusing on a singular feature that needs changing.
Thirdly, you have to rearrange your goals to align with your new pivoted business before you pivot. You have to change revenue goals and customer traction goals to suit your business. Comparing the achievements of your new business with the goals of your old business won’t be effective for growth.
Fourthly, always analyze what your competitors are doing. And like your goals, your competitors will also change which means you will have to scrutinize what your new competitors are doing before pivoting.
Fifthly, strategize before pivoting your business and make sure the product pivot aligns with all the core departments of your company. Always do product testing before pivoting and ensure that all the members of your company are on board with the process of pivoting.
Examples of a pivot strategy in a startup
There are numerous pivot strategies that a startup can follow. But you have to choose the most suitable way your business can be changed for the better. So, in this paragraph, we will discuss the different types of pivot strategies you can adopt.
Customer pivot problems
In this strategy, you will change the strategy of marketing your product. This means, your product will remain the same but try to solve different problems. As a result, you will have a whole new arena of customers along with the old base of customers. This strategy also needs the sales tasks to be distributed correctly. You will need to always be updated on the achievements of your sales reps to make this pivoting strategy a successful one.
Market segment pivot
In the strategy of customer pivot problems, we target the functionality of the product and try to change it in a profitable direction. But in the market segment pivot, we try and introduce the product, without changing its functionality in different segments of the market. Because if your product is not doing well it can be because you’re targeting the wrong audience.
The strategies mentioned before are great for startups. However, if your business covers multiple demographics, market segments or customer pivots might not work. In that case, you might want to change the technology of building your product to make it more marketable and capable of solving common market problems. This process has risk but also a greater chance of reward.
Product feature pivot
This is the perfect strategy for a startup to pivot. In this strategy, you alter some of the features of your product to suit the needs of the customers in the demographic that you are trying to conquer. This does not mean you have to do this in all the places where you are doing business in. This strategy is demographic-specific so is less elaborate.
Revenue model pivot
This pivoting model is based on the responses of the customers. In this strategy, you consider the reviews and criticisms of your customers and change the features of your product according to their needs. Because you want the customers to use the product regardless of their needs it is easier to just match their requirements.
Sales channel pivot for a startup
Sales channel pivot is hugely effective for new businesses and startups. To effectively employ this strategy, you need to leverage the e-commerce channel. Find the sales partner that suits your need. Because for startups products often don’t do well due to the lack of an efficient sales strategy.
Except for the sales channel pivot, most of the strategies here are focused on the product. But your product will sell better if you choose a more suitable service strategy for your target audience.
The importance of pivot in startup business
In the following paragraph, we will look at the reasons why pivoting is essential to your business.
Change is crucial
Not just in business but in the professional sphere and in the socio-economic domain everything is constantly changing. And your business needs to keep up with that. Even if your product has been a success for a time it needs to change to suit the needs of the audience. Apps like Twitter and Instagram were still uncertain of their future a few years ago. And now they are icons of the social-media industry. The social media industry is changing itself drastically every five years. To think any other business can survive without changing at a similar pace would be a mistake.
Expanding startup revenues with pivot strategies
Pivoting essentially means exploring new areas of industry, new markets, audiences, and demographics. So, naturally pivoting expands your business, creating opportunities to expand the revenue. It also creates opportunities to test out your product in new markets which help you understand which direction you should pivot towards.
Your company’s service or product may have been relevant and in demand when it started out. But often entrepreneurs realize that product Y is more relevant than product X, which they are currently providing. Same with services. As an entrepreneur, you have to recognize when your product/service is going out of date and pivot to suit the needs of the market. A business has to stay relevant. And even if its product is doing well the need for change has to be recognized.
Reinvigorating the business
Pivoting is the fundamental strategy to bring new life to a stale business. By implementing the different kinds of strategies we talked about in the previous section a business can reinvigorate itself and address the resting market data. By experimenting with your product you test the market for opportunities for expansion and increasing revenue. This entails quite a lot of risk but also gives you an advantage over businesses that are yet to have the database of the target audience from that specific market.
Startups should pivot only if it is absolutely necessary. For instance, if the progress is plateaued and there is too much competition to expand the business.
In a lean startup, pivoting means changing the existing business hypothesis and trying to prove a new one about a new minimum viable product(MVP), business model, and engine of growth.
A pivot strategy is a process implemented by a startup/business to ensure a shift in one of the core existing aspects of their product/service or business model or engine of growth.
To successfully pivot in a startup you have to choose the right time to pivot, analyze your competitors, focus on a singular feature instead of an entire solution, understand the new audience, and strategize fully before you make a move.