A business “Pivot’ can be viewed in a couple of ways. In most cases, a pivot could be a complete restatement of your business model. It is not a set of incremental changes to a product or service that result from your business analytics. Rather, it could be high level adjustment in strategy or execution that affects the entire business model.
Take for example, you decide to adjust or replace a couple of features in a suite of product/service features, that does not constitute a pivot. However, if you were to disband all of the features associated with that product or service to reorient your business case around one core set of features, that would be a pivot.
Additional points of view on a pivot is as a compass check that results in charting a new course in a new direction. In today’s technology advanced global society of uncertainty, businesses need to mitigate risk by nimbly moving toward a customer/product-market fit. If you are able to predict how much time it will take to make the adjustment, and move through the pivot, along with the opportunity cost associated with that pivot, then you can successfully determine the number of pivots that can be achieved with the remainder of runway that you have.
Lastly, another description is that “pivots” are Vision-Mission Driven, not Test-Driven.
Now lets take a look at the different types of “Pivots” that a business may consider
In this scenario, what previously was deemed a single feature in product/service becomes the whole product/service. This spotlights the value of “focus” and leverages a cost advantage by delivering the product/service more quickly and efficiently.
Satellite View Pivot
In the reverse of the previous scenario, there are times when a single feature product/service is insufficient and out of line with the customer segment; and cannot support or deliver value to the customers needs. This pivot was considered when the previous whole product/service became a single feature product/service of a much larger product/service.
Customer Segment Pivot
The customer always being right, especially when your product/service can attract real customers, but not the customers in the original vision of your product/service. In other words, it addresses a problem, but needs to be re-positioned for a more engaging customer experience. The result is a more appreciative customer segment, and a differentiated value proposition for that customer segment.
Customer Needs Pivot
Awareness Stage customer feedback in the “Buyers Journey” is a clear indication that the problem that your product/service has solved is not that important to the customer, or that the price-point is above their purchase threshold. This also requires re-positioning, or a completely new product/service offering, to find the customer problem worth solving that can still generate profit for the business case.
Business Platform Pivot
In this case a change from an application to a platform, or vice-versa. Our experience has shown that during the Concept-Ideation Phase, founders envisioned their product/service as a platform for future products/services, but did not at the time have an innovative application yet. The majority of the customer marketplace buy solutions, not platforms.
Business Architecture Pivot
Jeffrey Immelt, many years ago, observed while leading GE that there are two results oriented business architectures: High Margin, Low Volume (complex corporate systems), or Low Margin, High Volume (volume-centric operations). Even large highly capable corporations are incapable of executing both models at the same time.
Value Driven Pivot
This is the innate ability to monetize the product/service to generate ongoing revenue. Adjustments to the way a small business enterprise captures and creates value can have a tremendous impact on the business, its products/services, and its overall ability to market its products/services. Business statistics validate the fact that the “FREE” model neither captures or delivers any value whatsoever. The landscape is littered with the skeletal remains of non-value driven business concepts.
Driver Of Growth Pivot
As we have educated and trained hundreds of start-ups, more than ever of late they use one of three particular growth concepts: viral, sticky and paid exponential growth models. Choosing the right model makes all the difference in the world as to whether or not you are successful, and most importantly the pace and profitability of your growth.
Distribution or Sales Channel Pivot
Using sales terminology, the mechanics by which a company delivers its products/services to customers is called the distribution and/or sales channel. Channel pivots require unique skill-sets and resources in pricing, feature, and competitive positioning adjustments.
Augment SWOT With SOT
For Entrepreneurs and Founders, Smith Gruppe proposes that you should augment the age-old SWOT (Strengths Weaknesses Opportunities Threats) with SOT (Strengths Opportunities Trends) model.
We’ve observed for decades how start-ups eventually fall behind and lose ground because they are blinded by their current reality. In other words they fall prey to constantly looking inward at their company and industry challenges, or what we call “inside/industry myopia,” which stunts growth and causes paralysis.
Entrepreneurs and Founders should look at major trends, such as changes in technology, distribution, product/service innovation, forward and backward integrated links in the value chain, consumer and social behavior within customer segments, and economic developments.
You need to look beyond the competitor across the street to a company on the other side of the world that might put you out of business, or disrupt the industry and cause a major shake-up. Ask yourself if there is anyone on the scene that may change how everyone in the industry does business?
We encourage our clients on a quarterly basis to identify and list the four to six trends that could shake up their industry and put them out of business? From there identify the handful of strengths (core competencies) that they possess and align them with an industry trend that would lead to a “blue ocean” opportunity for themselves. An opportunity where they change the rules of the game to their extreme competitive advantage.