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Netflix, Instagram, Slack. These three companies have one thing in common: Their initial business plan wasn’t sustainable, and they became the formidable companies they are today because they chose to pivot in a new direction.
Pivoting in startup culture is a strategic business decision to shift course to capitalize on a new need in the market that your product or service can meet with calculated changes. Doing so successfully requires high organizational adaptability and flexibility to achieve long-term success.
In a business world that is constantly fluctuating, pulling the plug when things don’t go as planned is an easy out. However, successful entrepreneurs and investors who truly understand their markets can see innovative ways to meet new opportunities by tweaking current business models.
Is it time to pivot in your business? Let’s see when it makes sense, how to do it well and what it looks like in both success and failure.
Related: Knowing When — and How — to Pivot Is Key to Your Business’ Survival. Here’s What You Need to Do.
Time to make a change
I have lost track of how many businesses I’ve seen with everything set up for success, only to have the market pull the rug out from under them. Even the most business-savvy and meticulously prepared ventures can be surprised by economic changes.
From market shifts to new technological advancements to drastic economic hits, numerous external factors can force companies to consider pivoting their business model. Internal factors such as plummeting performance metrics or shifts in consumer behaviors may indicate it’s time to change.
The truth is that few successful businesses got to where they are today following the same strategic plan they started with. While always maintaining your core values — what makes your company unique — keeping your organization agile is essential. You should always prepare to make a necessary shift that will keep your company relevant and financially stable.
Decision time
Recognizing the need to pivot and deciding to execute are two different things. There are many factors to consider, and several stakeholders will likely need to sign off. That’s why conducting extensive market research, data analysis and forecasting is essential before deciding next steps.
Some businesses might be experiencing a rough patch that will even out with a few tweaks and perseverance. For others, a drastic overhaul of their business model may be necessary for survival. There’s no instant solution or easy answer. A decision of this magnitude requires due diligence and belief in your team and product.
A great example of pivoting based on informed decision-making is Netflix.
Initially, it was a mail-order service for DVDs in the early 2000s. Even though it had a corner in the at-home entertainment market, it felt the strain of growing competition. While executives had their eyes on the current industry trends, they also saw an entirely new, untapped market to conquer.
In 2007, it launched its streaming platform, where many of the same movies and shows they sent in the mail were now ready to enjoy on demand. They pioneered the streaming revolution and continued to adapt as they began developing new and original content.
Yes, many others eventually followed suit, but the point is that Netflix executives understood the market and their company so intimately they knew when it was time to pivot and executed it in a way that disrupted their industry and kept their company’s profits rising.
Successful implementation
The next phase of the pivot is setting everything in motion. Implementation can be one of the most challenging aspects because your business will likely face scrutiny and backlash from all angles, including the inside.
This is the phase where clear, effective communication becomes critical. You will feel resistance from your employees who are uncomfortable with change. Stakeholders who weren’t involved in the decision will feel slighted. Industry pundits may think this change is outlandish. Your company’s messaging and resolve must be unwavering regardless of who says what.
If you’ve done the proper research, considered all the options and scenarios and have buy-in from the appropriate parties, no other forces should change your stance unless there’s a legitimate threat to your business’s future.
Communicating this shift from the point of empathy and care while respectfully sharing the need for a pivot and how it will work is essential to keeping the process steady. Pivoting your business is never easy, but planning and implementing the process effectively can be successful.
There are no guarantees
Notice how I said it “can” be successful. Like your initial business plan, it could still fall flat even if laid out and executed perfectly.
The unfortunate part of business is that there’s always risk involved. Nothing is ever promised. Yes, pivoting could save your business from failing — or it could lead you down a path that seems promising but is yet another dead end. If that’s the case, learn from it. It could mean the end of the line or another detour on the road to your company’s true potential. Regardless, don’t let a single failure go by without gaining insights for improvement or wisdom for what does and doesn’t work.
Failure feels miserable, yes, but it’s an incredible teacher. Even if your pivot is successful, that doesn’t mean you won’t have to stay on your toes, ready to adapt as the market changes again. No business is ever safe. Industries shift. Competition grows fierce.
Never stop innovating. Don’t get comfortable. Keep your eyes on the path forward, watching for whatever obstacle is next.
Change isn’t a bad thing. Pivoting isn’t a sign of weakness or failure. The leaders who are open to change of direction tend to be most successful. They’re the ones who are vigilant and ready to pounce on the next opportunity before anyone else knows it’s there.
Stay flexible, be ready to adapt and when the time is right, pivot well.
This article is from Entrepreneur.com
