If the quintessential American motto is “change is good,” then in the business sector, the pivot embodies the ultimate expression of change. I’m sure you’ve seen how business magazines feature entrepreneurs making pivots. The pivot is the new American myth, a swashbuckling action-adventure narrative that stars a Luke Skywalker archetype launching a start-up. If sales start tanking, our brave and brilliant entrepreneur-hero correctly diagnoses the problem, intuits the marketplace zeitgeist and engineers a flawless pivot that not only saves the company from bankruptcy but carries it to phenomenal success. Roll credits.
These heroes’ journeys are exciting and tremendously appealing—but reality doesn’t unfold like a movie. What’s lost in the rosy glasses is the cold fact that a business pivot is a complex process. Getting it right demands a deep dive into your data and data from your marketplace. What story does the data tell? And do you know what to do about it? Those are other requirements. A dose of good luck is the third resource you’ll need.
Here are some signs that a pivot might be in order:
- Insufficient customer base
- Weak brand equity
- Unsatisfactory revenue and profit
- Negative customer feedback
- Overwhelming competition
Where do you start?
It may take a couple of disappointing quarterly financial reports to convince you that a change must be made, and soon, to avoid getting trapped in a permanent downward spiral. Once it becomes obvious that corrective action is necessary, your first challenge is to identify which aspects of the business need to change and what might be left in place.
Resist the temptation to assume that major surgery—i.e., a pivot—is always the best remedy. Look at the data and choose the course of action that is the most specific, least disruptive and should have the best chance of successfully turning the company around. The purpose of your research is to discover and confirm growth opportunities and how to either successfully enter a new market—or hit the restart button on the market you’re in by refining your methods. Carefully research the size of potential new target markets, your access to those customers and the competitive landscape.
For example, as you analyze the efficacy of your marketing strategy, you may realize that some combination of ramping up your inbound marketing activities to increase outreach to target customers, reassessing your pricing strategy and/or upgrading pre- and post-sale customer services provided could make a substantial positive impact.
Once you’ve analyzed your business and marketplace data, you would be wise to review your company mission and vision statements. Before making any big changes to the purpose or mission of your enterprise, make sure that the new direction of your company will align with your values and guiding principles. Or will your pivot necessitate a rewrite of your vision or mission statements?
Pivot to solve a problem
Analyze your KPIs, with special emphasis on marketing data and revenue streams. Get input from your customer-facing team members and feedback from high-volume customers—both groups have wisdom to share. Every pivot is different, but every pivot must solve a problem. Following your analysis, you can develop your pivot strategy, the roadmap that defines the aspects of your business that will change and the aspects that can remain in place to support your new direction.
Your pivot plan will outline the steps you’ll take to execute this strategy. It should include timelines, resource allocation and key performance indicators (KPIs) to measure its success.
Encourage yourself to be confident once your decision is made. A pivot is a significant challenge, true, but it’s nevertheless a sign of robust strategic thinking and problem-solving. These are essential qualities to supporting the long-term viability of your enterprise.
Types of pivot strategies
Pivots offer customizable options—there is no one-size-fits-all template. Your company’s pivot may involve a group of small changes that together result in a significant positive impact. Conversely, your business pivot may be based on a very visible alteration in your signature product or service that precipitates a re-calibration of your brand and all the ways you market and sell it.
Five of the most common strategies:
- Marketing pivot: Signals a big change in your company’s core marketing strategy. Pivoting in this instance may include targeting a different audience, using more appropriate outreach channels, re-calibrating your use of inbound and outbound marketing techniques or adjusting the company’s brand voice and messaging tactics.
- Product pivot: Describes a change in the company’s product or service offerings. Pivoting a product may include altering the product’s ingredients, features or packaging. In a more dramatic approach, the defining characteristic of your pivot may be the introduction of new product or service lines to provide solutions that are more responsive to customer needs and priorities.
- Brand pivot: A branding pivot strategy entails one or more adjustments to a company’s characteristic image and philosophy. Pivoting a brand may include renaming the company (see Facebook to Meta), editing its mission to serve a new target market, updating the company tagline or refreshing the visuals (e.g., the logo and/or color scheme used).
- Pricing pivot: In this choice, a company may change the pricing tier in which it has previously operated. For example, a retailer that originally priced in the mid-market tier may conclude that economy pricing will better reflect the perceived value of its products. The expected outcome is a broader customer base that generates greater revenues and increased profits.
- Distribution pivot: Closing all or most of a business’s physical locations in favor of operating in the e-commerce sector is a bold example of a distribution pivot. The strategy involves changing how a company delivers its products and services to consumers. Pivoting your distribution model could include expanding into new geographic markets, adding or discontinuing retailer partners and introducing the franchise model.
Communicate and monitor
In advance of your venture’s pivot, encourage support by explaining the upcoming changes to stakeholders—employees, customers, investors. Outline the changes you plan to make and clearly articulate how those changes will benefit their relationship with the organization. Schedule videoconference meetings with each key constituency to discuss the pivot and make the case for why it is necessary.
Be certain that your explanation adequately answers the anticipated questions and potential concerns of each group. Consider creating a Frequently Asked Questions (FAQ) sheet for each stakeholder constituency. Finally, closely monitor the pivot’s progress as reflected in the KPIs you’ve chosen, as well as feedback from key members of your constituencies.
Want to hear about other entrepreneurs who made successful pivots? Read about these entrepreneurs pivoting to e-commerce.