Written by Clairine Runtung
Simply put, “pivoting” in startup means a change in plan, usually related to business model, when the startup’s initial strategy is not working.
As an entrepreneur, you should get yourself familiar with what pivoting is. Normally, it is a process that occurs from finding a product-market fit. That said, sometimes pivoting implies changes to a few different sectors within the business, or changes to a new business as a whole. For example, a smaller pivot could be moving from reservations to search directory, which happens in the case of, an F&B directory, content and reservations platform based in Jakarta and other big cities in Indonesia. On the other hand, a bigger pivot could be when it shifted business plan from being a consumer activism site “The Point” to a group buying discount site we all know as Groupon.
The Point: The old days of Group-On
Pivoting happens more often than not. In fact, almost all unicorns, the likes of, , , pivoted. The process can be an accumulation of deep-breath moments and hardcore brainstorming for you and your team, but it is part of anyone’s journey when growing business. It is therefore imperative for startup companies to be learning machines and to understand what future development is needed to be able to achieve its long term vision.
Does it matter?
Yes. Flexibility and adaptability are keys for entrepreneurs to take their startups forward. While passion and determination are attributes that are essential in order to drive a mission and a vision to their full potentials, they are most likely left unchecked when the business plan is being made. Interesting observation was done previously — Startup Genome Report, a report that is part of a larger project that dives into the very anatomy of what makes Sillicon Valley startups successful (or not), highlights that start-ups that pivot once or twice raise 2.5x more money, 3.6x better user growth, and are 52% less likely to scale prematurely than start-ups that pivot more than 2 times or not at all.
You see, by “executing” the pivot, you can actually test and refine your hypothesis and initial visions in a systematic and “real-time” way. Your chances of success will increase as you gather empirical evidences based on tweaking your business plan. These empirical evidences usually come from customers’ feedback combined with the actual objective, messages and solutions that you are offering to the market. ChubbyBrain.com, a blog dedicated to providing entrepreneurs with discussion and food for thoughts, highlights that tunnel vision and not gathering user feedbacks are fatal flaws for most startups.
Measure how customers respond, or in other words, gather your user feedbacks!
It may be nerve-wrecking, but it is not a disaster
Most importantly, you should not see pivot as a failure despite feeling confused, unsure, or afraid of the change in plans. If you are an entrepreneur, most likely you are someone with a vision and a stubborn determination to charge ahead through any obstacle and make things happen. Both traits are great, and of course, much needed. However, keep in mind that there is a thin line between wanting to persevere and willing to be opened to changes by means of developing a better and more successful startup.
The art of pivoting: plan versus reality
Observe, test, alter, grow
Needless to say that as time changes, technologies change and markets change. The take away is, as an entrepreneur you should get familiar with “pivoting” and view it as a growth process rather than a failure. Always remember that you are not alone in the game — even Amazon pivoted a number of times, including the decision sell hardware such as Kindle, before it is able to grow to where it is right now. As soon as you see that your product is not getting a response in the market, think about what changes might be necessary. Do not let inertia or stubbornness limit your ability to change your business model. There is no golden rule to determine the decision to pivot, but it is important that you measure your hypotheses and be ready to alter the way you do business should the need arise for you to do so. Last but not least, do not ignore your customers. If your target the correct customer segment, individuals within this group are ultimately the ones who can give you the most valuable and objective feedbacks.