Pivot Like a Startup: How to Know When It's Time to Change Directions

Business.com / Starting a Business / Last Modified: February 22, 2017

Does your business need to pivot? It’s not just for startups and the high-tech industry: changing direction can help you succeed.

 Does your business need a “pivot?" The term is attributed to Eric Ries, who contends your business model needs to change direction—and, indeed, may indeed need to change direction several times—but the changes are built what you’ve learned from previous attempts. 

“Over time, this pivoting may lead them far afield from their original vision, but if you look carefully, you'll be able to detect common threads than link each iteration,” Reis says.

Consider Hewlett-Packard, for example. HP was the original garage start-up—it literally began business in a one-car garage in Palo Alto, initially as a maker of electronic test equipment. Since then, HP has undergone a number of pivots, evolving from a handheld calculator and measurement instruments business to a computer and printer/scanner manufacturer and business technology systems provider.

Now it’s splitting into two separate companies, one to focus on consumer computers and printers, the other on corporate and hardware services operations.

It’s a case of evolve or die. If you aren’t responding to changing market conditions, you end up extinct. Remember Netscape? (You don’t remember Netscape? Well, that proves the point, doesn’t it?)

Sometimes a Pivot is a Reinvention

HP’s pivots are to areas at least recognizably somewhere in the neighborhood of its original business. Some others are less an evolution than a reinvention. Instagram was originally Burbn (and, yes, named after the whiskey), an app for users to check in with one another and post pictures of meet-ups.

As reported by Megan Garber in The Atlantic, the app was overly complicated and people weren’t using most of the features. What they were using, though, was the photo sharing capability. 

Instagram’s CEO, Kevin Systrom, describes the pivot this way:

It’s about going through false starts…Brbn was a false start. The best companies in the world have all had predecessors. You Tube was a dating site. You always have to evolve into something else.

Lest you think that pivoting is only for startups in the fast-paced high-tech industry, chew on this: back in 1891, William Wrigley Jr. was giving away sticks of gum as in incentive to buy his soap and baking powder products.

When Wrigely realized his customers were more interested in the gum than what he was actually trying to sell, he pivoted (though the term had yet to be invented) to manufacture what became an iconic brand.

Related Article: 5 Changes Instagram Should Make to Cater to Marketers

How Do You Know When to Pivot?

Below are some key indicators that it might be time for your company to consider a pivot.

Gee, this isn’t working the way we expected.

Revenues are down, no one is really excited about what you are doing (both your employees and your customers), things in general just don’t feel right. Time to take a look at what is working, and jettison what’s holding you back.

Something you are doing is getting more attention than everything else you do.

See the example of Snapchat above. There’s no better business plan than giving customers what they want. “You pivot when you see some element or subset of your product that is getting way more traction than what you thought was your core use case,” notes Jeremy Lieu.

Your customers are asking for something else.

Sunil Rajaraman, founder of Scripted, tells ReadWrite that his company originally started out providing free screenwriting software in hopes of convincing producers to buy its screenplays. “Levi’s came to us and said, ‘Hey, you have a ton of writers on screenwriting software platform (50,000 at the time), can they work on non-entertainment industry projects?’”

The answer was yes and now Scripted is a content provider. “Our pivot was driven entirely by customer demand for our product,” Rajaraman says.

There’s an opportunity.

It’s not what you thought of as your core competency. But it is something you can do. And it does represent significant potential for revenues and growth. But it means re-focusing your resources from the primary mission. Could be time for a pivot.

Investors aren’t interested.

Bernard Moon notes in VentureBeat that if, after dozens of investor meetings, you aren’t getting any funding and, on top of that, you’re getting negative feedback on your product or target market, consider pivoting. “As my father once said, business is like poker. You have to know when to fold.’”

Related Article: The New Normal: Pivoting Your Marketing Strategy to Target Omni-Channel Shoppers

Like any business decision, it takes a combination of careful thought and receptiveness to conclude you need to make a pivot. But as Winston Churchill said, “It is no use saying, ‘We are doing our best.’ You have got to succeed in doing what is necessary.”

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