Piloting the Pivot: Why and How Your Business Must Change
By Emily Paterson
In a constantly changing marketplace, businesses prepared to change themselves are at an advantage—but only if they do it well and in the right measure.
Rebooting your business model is not something to take lightly, but often it’s the only way to thrive—or even survive—in a competitive and unpredictable marketplace. Self-described serial entrepreneur, author, and strategic advisor Nevin M. Buconjic says, “a pivot becomes necessary when a product or service reaches market, and it becomes clear there is no demand or uptake.” He adds that, “before considering a pivot or reboot, a company must try to determine what the exact problem is and see if they can make changes to overcome the particular challenges.”
Your pivot strategy will depend on a range of factors, from the age of your business to the viability of your products. “The best starting point,” says Buconjic, “is to focus on your company’s business model. What needs to change for the business to generate greater revenues or attract more users?” Below are some common scenarios for when—and how—to reboot your business.
Buconjic, a leader within startup communities, offers that the “lean startup” concept has become so popular because businesses recognize the value of being pivot-ready. “It dictates that businesses should create a minimum viable product, a working prototype,” he says, “and then talk to potential customers quickly and often to refine the product using their feedback.”
The tech world is filled with examples of this strategy; in fact, social giants Twitter, Pinterest, Instagram, and Flickr are all the result of re-imagined business plans. “They started out as something completely different and were altered after their founders realized the original concepts were failing or focusing on a market that was too small,” says Buconjic.
Successful businesses with a few more years under their belts may find their services or products gradually falling out of favour with consumers. Buconjic cites Blackberry as a prime example of a mature company that failed to react to a changing market quickly enough. Once recognized as the fastest growing company in the world with 20 percent of the global smartphone market, Blackberry failed to react effectively to the rise of the iPhone. “Consumer preference for touchscreen devices with more multimedia capability led to their spiralling decline,” he says. It’s a mistake the company never recovered from. Today, Blackberry lays claim to only a 0.3 percent market share.
Keys to a successful pivot
As Blackberry’s case proves, consumer preference can quickly make or break a business. Understanding your customers is crucial. “One of the most common mistakes business owners make when reworking their business plan is not talking to customers or users to get their feedback,” says Buconjic. “Are there minor changes you can make that would avoid a complete overhaul? Ask your customers,” he suggests. “They are a wealth of information.”
“When writing or updating a business plan, consider all direct competitors—as well as indirect ones or substitutes,” says Buconjic. He cites the example of a computer camp he launched years ago. There were no other computer camps in the area, but other kinds of camps and activities did make up indirect competition. “Understanding this made a big difference in our marketing and promotion,” he says. “It gave us the ability to differentiate our offerings and better compete in the market.”
Re-examining your business model
Whatever the size, age, or circumstances of your company, re-examining your business model periodically is crucial. Sometimes you may only find the need for a little fine-tuning. But if your customers are dwindling, or if they never appeared in the first place, it might be time to make your proverbial Blackberry a little more like an iPhone—before it’s too late.
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This post was written by larry