What we're talking about
A business pivots when it makes an important strategic change to the product or service it provides to better meet the demands of the market. The usual aim is to increase sales revenue; in some drastic cases, it's just about survival. Pivots can be major, like changing the entire business model, or something more minor, like focusing efforts on one product line.
First popularized by US business owner and writer Eric Ries' Lean Startup methodology, and his suggestion that early-stage businesses should be constantly iterating based on customer feedback, pivoting has since taken on a wider relevance. It doesn't need to be a core part of your ethos but, every now and then, you may well need to alter your direction – based on changes in consumer demand, new opportunities or external circumstances.
Why it's important
To stay in business and be profitable in the long run, it's extremely likely you'll have to pivot; and probably frequently. Consumer behavior changes, new competitors arrive on the scene, new and exciting opportunities present themselves. How you do it, and when, is critical. Unless external circumstances force you into one suddenly (see: Covid-19), pivots need to be carefully thought through and planned – and typically led by what your customers are telling you.
A big change to your strategy will require meticulous restructuring and reorganization everywhere else in your business. It may also require a major injection of funds to finance it. Make the wrong move, or even just time it wrong, and the success of your business is at risk.
Things to note
Get familiar with the signs. There are negative and positive cues to indicate it's time for a change. Causes for concern might be a stagnation or loss in engagement, sales or repeat custom; results you've predicted not materializing; the emergence of new competitors; and reduced demand due to external factors, like an economic crisis. Positive cues include landing upon a new idea or opportunity that makes more sense than your initial one; seeing a specific product or service consistently outselling the rest; increases in revenue or team size that broaden what you can do; or the identification of a new target market.
Pivots come in different shapes and sizes. Just as there are many signals that it's time to pivot, there are many ways of doing so. A solid starting point is the 10 core types of pivoting as defined by Eric Ries, which range from zooming in on one product feature to using new technologies. Though these suggestions are fairly major pivots, minor tweaks might be all you need to reignite your business. That could range from redesigning your website to embarking on a product line extension.
You can lean on your customers. One way to mitigate the risks of a pivot is to involve a smaller segment of your customers in the process. Testing ideas, concepts and new products or services with a smaller group will give you valuable insight – and help you avoid any catastrophic mistakes.
Communication is key. From the start to the end of the pivoting process, small businesses need to bring their customers, staff, investors and other key stakeholders along with them and communicate the necessary facts and nuance with honesty. Those that rely on you may be confused by sudden changes, so take account of their feedback in shaping the new vision. A pivot is also a good opportunity for positive PR – so think about how you'll spread the word before the pivot occurs.
How to prepare for a pivot
1. Get a grasp on threats and weaknesses. Take a thorough look at your business and how it's currently performing. Start with key performance metrics to see where your business might be struggling. Then speak to your current customers via user research to understand their needs and wants. Combining this with your own knowledge, write down a list of weaknesses. Then, list your key external threats – and any way in which they'll exacerbate your weaknesses.
2. Think about your opportunities and strengths. That process should (hopefully) have shown some signs of strength, too. Note these alongside any other major assets you perceive your business has, from specific products and customer feedback to your team's capabilities. List your opportunities – most of these should hinge on pre-existing strengths, but you should also consider advantageous external circumstances, too.
3. Draw up some options. Get your team together and lead an idea session. At this point, you should be generally considering ways your business can improve rather than explicitly thinking about pivots. One approach to aid this process is to come up with a list of assumptions: listing what you already know about your customers (and the evidence you have), what you believe about your customers (and how you can test that), and what you have no idea about (that you can explore).
4. Work out what's viable. Consider the resources you have available. How big a change can you afford to make? How urgent is it? What level of expertise and capacity exists within your team and are there any big gaps? You might drill down into any major ideas here: one approach is to use the STEEPLED framework to understand what would happen if you made a specific change.
5. Speak to future customers. If you're planning on targeting new customers, it makes sense to get a deeper understanding of them. You could host research sessions or go online to get a sense of their unmet needs and the competitors they shop with. This process should also alert you to any competing products or services and other barriers to entry that you may not have accounted for.
6. Re-evaluate. Given what you now know – alongside any new options that have presented themselves – evaluate the pivoting options available to you. Consider the ramifications of each option: how it would affect the different departments of your business; what level of investment it would require; how long it would take to implement; and how you could repurpose current strengths and resources. Consider each alongside your business' core goals and principles. Ideally, you're looking for a majority buy-in.
7. Prepare to test, learn and iterate. Design research – one of the core principles of pivoting your product or service – is never ‘done’. Prepare to continue to engage with your users throughout, and be ready to change direction when the situation arises.
• A constant awareness of threats and opportunities is key for any small business. Pivoting is about exploring these, and altering your direction accordingly.
• A successful pivot requires keeping close to your customers – and really understanding their evolving wants and needs.
• Pivoting requires constant flexibility. Keeping up with customer behaviors and wider trends means you need to stay agile and flexible if your pivot doesn't work out or things change.
Perspective. From shipping company FedEx, here are four tips on how to pivot your small business from David Zamarin, founder of DetraPel, which makes a protective coating for fabrics.