For the second year now, many businesses have had to pivot to adjust to changing needs in their business environment. This has been necessitated by the pandemic worldwide. Many have found themselves operating in uncertain environment and not sure what will work.
Its easy to associate pivoting with Startups. But the reality is that all organizations benefit from change. Its never a sign of weakness but a way to consider what else your organization can do that can be valuable to your customers.
The pandemic has shown the need for organization to pivot towards the new reality in changes to organization structures, working remotely, consumer perspective and maintaining social distance. All these changes have caused disruptions at workplaces. This makes the use of technology no longer to be viewed as optional in business operations.
Pivoting can therefore mean two things to a business:
One would be changing a strategy without changing a vision. Sometimes, all it would take is changing how your product is perceived so that your idea gets across to your audience. An example would be slack that was a gaming company. It was created out of necessity for a productivity tool for the organization. They later launched for other organizations and that’s how its become successful in the Saas business.
A second way would be a complete change in vision. This brings to mind the company Flickr. Originally its vision was to create an online game company. When things didn’t work out, they changed into photo sharing company. A change in their vision has been a successful pivot for them.
What would make it necessary to pivot?
- A project or service might not be working out for 6 months or more. There is no visible growth for the company.
- Services or products have become obsolete. New products or services might then be required to meet the changing market needs and provide customer value.
- Your perspective has changed. It made sense to you initially but after testing your hypothesis, you see there is need for change in vision.
- Any product or service does have its life cycle. The company might have enjoyed success for a time or even some years. It eventually reaches maturity and its at a plateau.
- You might have launched your product or service at the market. There is a need its meeting at the market. But its very limited response form your market place.
- When there is just too much competition from your particular niche.
The benefits of pivoting would be
1. The change in the businesses being necessary to help with getting over a difficult period. There are some manufacturing organizations that changed to making masks when the pandemic hit last year. This helped them meet demand in their respective countries.
2. For the business to eventually pursue the sustainability and other disruptive aspects that can help it maintain a lead in the market.
3. Being able to introduce new revenue models to increase productivity and profitability.
4. To be able to focus on different set of customers by positioning into new market.
5. The ability of the company to turn a feature a product into the product itself resulting in a simpler more streamlined offering.
With all these benefits in place, Why then would some hesitate to pivot?
- It would look easy to cut your losses and move on when things don’t work out. But the reality is many find it hard to let go. Especially investments that have cost them alot of money. Even if its not making financial sense to them.
- Change is never easy. There is reluctance to change mindset and reinvent the business. Especially when you are sure your hypothesis made sense. The type of feedback from users might not be enough to convince you of the fact that your product or service is horrible.
- You might be aware of companies with products or services that have taken years to break-even. They seemed not to do well but eventually, they were successful. This might give you the motivation to hang in there longer than its necessary.
The way one chooses to pivot your business can make all the difference. It is important to pivot only when its necessary. Its best done with considerable planning and thoughtful execution. When companies are able to anticipate the market needs and respond accordingly, this becomes vital to the business’s survival.
Customers are always demanding for new and better products. A delay in changing with market demands can be disastrous as there are new products created by both existing competitors and new entrants into the market place. They can be disruptive to the norms of doing business as you have accustomed yourself.
Markets have been disrupted at an alarming rate, as digital disruptors are everywhere. They quickly respond by attacking a single aspect or weakness in a company’s product. Then they proceed to improve upon it as they create their own solution. More like taking an idea and running with it.
If a company fails to keep up with changes, it might end up being harmful to your company’s health. After a successful attempt, the disruptor might eventually move on to attack the next part of your company’s blind spot in the market. The disruptor might proceed to repeat the process as in the first attempt and it ends up having its next success against your company.
Survival from this kind of competition would mean eliminating whatever constraints you from successfully working to be a disruptor rather than the one being disrupted.
Pivoting then becomes necessary for your survival. You can easily run into problems that would have been avoided had you chosen to stay the course.
To compete successfully in the ever changing market, its essential to ensure you have the best product/service that is of the highest quality. The prices also have to be competitive.
The marketing message needs to be understood with your target market. Finally, these products need to reach the intended customer in the best way possible.
There are main departments in organization that might need pivoting in a way that helps restructure the company for success:-
1. Accounting/Finance Department.
The success of this department can be measured in its ability to efficiently use and stick to its annual budget. Its usually set in a way that it remains the same until the next financial year.
In the traditional way of doing things in a business, this is recommended. The only problem with this is that funds may then end up being committed to products of low value to the customer. Forcing the business to set lower prices that yield lower profit margins.
The challenge is for a company to pivot successfully. Hence, finance should be in a position to fund products and features for which customers are willing to pay for. The business can then set prices that give a better profit margin. This is much better than wasting money on efforts that will not deliver the highest value to customers.
This ensures that beyond just cost saving for the department, they end up investing in the right thing increasing profits and value.
Funding decisions in your company therefore needs an operating model that allows for innovations to be financed.
By having the company’s spending aligned with the right product investments, these decisions should not be rigid. They need to allow for a change.
2. Marketing Department
If you’re always playing catch up with the competitors, there is definitely a problem that needs to be addressed.
This can happen when you always end up promoting things after they are already adopted in the market. The competitors have attractive offers in the market that you have to constantly counter. Your marketing message is also drowned by the competitors.
To successfully pivot, it would be important to critically look at how your marketing is done.
If you have heavily relied on traditional channels of connecting to the customers (brick and motor), trade show offices, call centers, catalogues and in fieldwork. Pivoting during the pandemics might mean incorporating Ecommerce websites, mobile apps and social media.
There are many people involved in a sell process. They can be working as customer service, telemarketers, field sales people or even those on the retail floor.
They all directly engage with the customers. This then gives them a better understanding of what the customer wants, the products or services that are successful or not in the market and why this happens.
The challenge lies with the fact that they can only sell what the company has to offer. That might mean pushing whatever is offered without being afforded the opportunity to have an input and influence on any improvement or ideas.
Since marketing channels will provide a current and clear understanding of what the customer actually wants and needs, finance can make better funding decisions and become more confident that they are investing in the right products.
The company needs to then defend against competitors by staying ahead of unexpected emerging business disruptors by better understanding how customers use your products.
Instead of focusing on the company and departments winning, the new pivot is how the customer can win. The company’s purpose becomes providing the base for holding the customer and to provide value.
By having the customer as the main focus in your business model, it will then mean to pivot successfully, focus on meeting their needs and responding with considerations.
Further Reading
Achieving Business Agility: Strategies for Becoming Pivot Ready in a Digital WorldBook by John Orvos
Digital Marketer 