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"We Might Need To Pivot..."

"We Might Need To Pivot..."

Choosing to pivot in your business

When starting a new project, the important question that’s rarely asked:
“What will we do if this doesn’t appear to be working?”
It’s crazy, because we know statistically that 80-90% of new businesses don’t succeed.
99.99% of plane trips are perfectly safe, but we still plan for an evacuation at the start of each flight.
One of the problems with traditional management theory is that it celebrates success, and blindly encourages perseverance in tough times.
That’s unfortunate, because it doesn’t describe how to persevere.

“Insanity is doing the same thing over and over again and expecting a different result”
In the vast majority of circumstances, continuing to do the same things won’t magically fix the problem, it will lose you more money and frustrate your team.

What we should talk about is persevering with the essence of the business, whilst letting go of some particular details.
It’s called “Pivoting”
Keeping one foot planted on the ground, then moving the other around to find a better position.

Pivoting your business

Marc Andreessen famously said:
“The pivot: it used to be called “The fuck-up.”

He also said:
“An awful lot of successful technology companies ended up being in a slightly different market than they started out in. Microsoft started with programming tools, but came out with an operating system. Oracle started doing contracts for the CIA. AOL started out as an online video gaming network.”

Pivoting is tough to swallow, because it starts by accepting the idea that:
“We won’t survive where we are, but we might thrive somewhere slightly different”

The process starts by acknowledging failure – something our brains are hesitant to do.
When you start your own venture, you pour yourself into every element of it.
When it doesn’t work, it’s hard not to take it personally.
We have to start by accepting that staying put isn’t an option, and that our hopes for this version of the business won’t eventuate.
This comes with the excitement of future success – there are several ways in which we can pivot, and there’s a good chance one of them will work if we think this through.

Choosing how to pivot

However, it requires a risk seeking disposition – a willingness to try something that might not work.
If you’ve just come from a failure, you’re probably looking to wrap your arms around something certain, something guaranteed.
Unfortunately, that’s just not possible.
Pivoting is stepping out of one hurricane, and into another.

In order to pivot, we need to speculate:
Which things are we going to keep, and which things are we prepared to change?
We’re not scrapping everything and starting a brand new company, just swapping out the pieces that aren’t proven to work.

How to pivot your business

For example:
“We have the right customer, but the wrong product”
We need to find the pain points that our customer truly cares about, something they can’t ignore.

“We have the right product, but we’re selling it to the wrong customer”
We need to think laterally about who has a valuable problem that we can solve, who will love what we can offer them.
This might be someone in another industry.

“We have the right customer and product, but we’re pitching it in the wrong way”
We know we can help people, but we need to change how we’re perceived.
This might be through a rebrand, redesign or a new campaign.

“We have the right underlying social intent, but the wrong program for creating impact”
We’re still driven to address this social problem, but we can find new ways of running our business, such as partnering with other groups, or trialling new interventions.

“We have the right underlying social intent, but we’re talking to the wrong donors”
We aren’t talking with people who can financially support our cause.
We need to find donors who are in a position to make a serious contribution, and find the things that motivate them.

“We have something valuable, but customers are put off by our pricing”
Pricing can be prohibitively high or suspiciously low, depending on context and your competition. Sometimes you’ll benefit from offering a lower price, other times a higher price signals higher quality.

You won't be alone:
Netflix pivoted when they moved from DVDs to streaming.
STREAT pivoted when they switched from coffee carts to cafes and a roaster.
Instagram pivoted when they cut out all of their app’s features except for photo sharing.
Ethical Property Australia pivoted from construction into tenancy management.
JB Hi-Fi is currently in the middle of a pivot away from CDs/DVDs – their streaming business hasn’t worked but their hardware business is going well.

Options for pivoting

Learning From Experiments
There’s a fantastic scene in The Office; Michael wants to jump from the roof of a building, onto a trampoline, to prove a point about mental health.
He and Dwight test the idea with a watermelon, which launches off the trampoline then shatters onto a nearby car:
Michael Scott: I don't know if I want to do this.
Dwight Schrute: You wanna do another test? I've got plenty of watermelons in my trunk.
Michael Scott: No. No more. The tests are going terrible. If we keep doing them, I'm not gonna want to jump. This is about doing, not thinking.

Michael’s terrible logic is surprisingly common.
Remember, experiments are your best friend. If your gut instinct is right, an experiment will back you up.
But if you keep getting disinterest from your customers, then it’s time to look for something slightly different.
By being proactive, we can spare ourselves a lot of wasted energy and emotional stress, and quickly find our real audience.

Try it for yourself. Ask your team:
Are our customers validating our current business model?
If not, which parts are being validated?
Which elements (product, price, customer, design) are up for grabs in a pivot? 
Using a Business Model Canvas, what would 3-4 different pivots look like on paper? 
How can we quickly and cheaply test our new assumptions?
If our tests come back with good news, are we prepared to try something new?

(If you’re using the Canvas, you’ll love my free Business Modelling eBook, full of tips for inventing and testing ideas that will change the world)

BMC Part Eleven: After Your First Model

BMC Part Eleven: After Your First Model

BMC Part Ten: Revenue Streams

BMC Part Ten: Revenue Streams