The art of pivoting: When and how to shift your business strategy

The ability to pivot - to shift your business strategy in response to challenges or opportunities - could be a key element in your startup’s success.

In this blog, we explore some common reasons for pivoting and how to do it efficiently.

Why would you consider a pivot?

There are many reasons why you might want to rethink certain core aspects of your business strategy or model. They often fall into one of two categories: seizing an opportunity or responding to adversity.

1. Unlocking market opportunities

New opportunities emerging in your market might not be around for long. Staying alert and moving quickly to explore and take advantage of them can help you stay ahead of competitors and drive growth further down the line.

But it’s not just about reacting to the market to embrace immediate opportunities. A well-planned pivot also impacts your long-term strategy as it sets the strategic direction of your business, so it’s important to consider the potential impact of more gradual market fluctuations as well.

2. You're standing still

You may need to consider a pivot if your growth is slowing down or your numbers are standing still. You can monitor this by tracking metrics such as operating profit, gross margins, revenue and unit economics. If they're trending in the wrong direction, it might be time for a shift in strategy.

3. Responding to regulatory change

Changes in regulation can have a big impact on any early-stage venture. This may be a particular concern for tech-driven businesses, as regulations are always evolving to keep up with new technologies.

The legislation itself is outside your remit, so focus on what you can control and adapt to manage its effects.

4. Coping with competition

Competition is part of the game, and there will always be winners and losers when competitive markets approach a saturation point. A strategic shift at the right time can set you apart and attract customers looking for a new proposition.

Tech-focused sectors move quickly, and it’s important to build a business that is ready to respond strategically to competition rather than constantly reacting to changes in the market picture.

5. Underwhelming customer response

If a product launch has received a lukewarm response, it could be the market's way of telling you a rethink is required. Consider what you can learn from the experience and use these insights to plan your pivot.

How to pivot effectively

6. Establish clear goals and scope

Pivoting your business requires time and budget, and you should feel confident they're being used efficiently. This means having clear goals, so you can measure progress and results.

Another big consideration is the scope of the project. If this isn't well-defined, you'll risk wasting resources on activities that are out of step with your chief goal.

7. Act quickly

There's a good chance your pivot was motivated by potential for growth or a challenge that demanded action. Either way, acting swiftly and decisively is essential. By moving quickly, you could improve your chances of seizing an opportunity at the right time or effectively minimising risk.

8. Get the whole business on board

Pivoting could involve making some major changes to how the business operates. That's why it's crucial to get all staff at every level on board before moving ahead. Make sure everyone understands the thinking behind the shift and is fully committed to it.

Stories of successful pivots

9. Twitter (X)

The social media network started as an offshoot of Odeo, a podcasting tool, in 2006. When some members of the business spotted this new messaging service's potential for growth, they switched their focus to Twitter and the rest is history.

10. PayPal

PayPal was once Confinity, a tech startup that offered security software for handheld devices. The founders of the firm pivoted to a digital payments business model when it became clear there was limited demand for their initial product. PayPal now has 426 million active users.

11. Groupon

Groupon traces its roots back to The Point. The idea of this web platform was to use the collective power of a group of users to reach a common goal. In 2008, the company pivoted to focus specifically on securing discounts through group buying. Sixteen months later, it became the fastest company ever to reach a $1 billion valuation.

Final takeaway: An efficient pivot, at the right time, can set you up for success

A fundamental shift in how your business works is no doubt daunting. But factors like market dynamics, customer needs and competition could make change a necessity if you want your venture to grow.

Once you're committed to pivoting, make sure you act fast, set clear goals and get the whole business pulling together to succeed.

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