Sunday, February 7, 2016

To Pivot, or not to Pivot...that is the question!

'Pivot' implies strategic course correction. Its perhaps the most challenging decision for both startups and corporate innovation projects. Both entrepreneurs and intrapreneurs go through this dilemma some or other time. The dilemma is exacerbated when the situation do not seem that bad but is also not getting any better.

To make a good pivot decision, lets understand its business impact areas. From my experience, there are three distinct areas of Pivot:

  • Customer: A pivot decision may involve changing the customer segment itself. Eg: Selling it to an intermediary rather than to end consumer, Moving from B2C to B2B,.. 
  • Value offering: A pivot decision would be to rethink the offering to customer. Offerings generally evolve based on customer feedback. But sometimes one may have to change the offering completely. Eg: Selling platform rather than the content on it. 
  • Technology: The technology behind the offering may have to be changed sometimes. This is perhaps the most common pivot decision and logical to arrive at compared to the above two.

Pivots are necessary to identify the right approach to grow the business, whether its a startup or corporate business development. 

However, its the cost of Pivot that discourage people from doing it. How can we reduce the cost of Pivot? How can we take a peek in the future post Pivot?

  • One way to reduce the cost is to develop MVPs (Minimum Viable Product). Building an MVP over an existing product does not cost much. Sometimes MVP can be a mockup with less automation and more manual backend support. MVPs can be used to get feedback from new customers, get feedback on a new offering and/or a new technology. 
  • Also to reduce cost, Pivot needs to applied judiciously. It cannot be a blind exploration exercise or a leap of faith. To identify potential Pivot opportunities, a value mapping exercise on paper is useful, followed by taking the feedback from the customer. Its important to clarify with the customer his willingness to pay for proposed product/service.

Another hurdle for Pivot is more of human nature. To love one's ideas so much so to not consider Pivot as an option. I will not call it as human weakness because such passion is required for entrepreneurs and intrapreneurs to succeed. Its the role of mentors then to help them see the reason and guide them.

To Pivot, or not to Pivot?.. Is not a reactive approach, but a proactive question that needs to be asked from time to time, especially when in predicament by flat-lining sales/profit and a mediocre situation.

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