Embracing Change: The Power of Pivoting in Business
Change can be intimidating, especially when it comes to business. One of the most significant changes that a business may face is the need to pivot.
A pivot defines the process of changing direction when the current strategy is not delivering the desired results. It’s a key term in The Lean Startup by Eric Ries. He writes, “The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop”.
“Ask most entrepreneurs who have decided to pivot, and they will tell you that they wish they had made the decision sooner.”
- Eric Ries, The Lean Startup
While pivoting is often associated with startups and as a buzzy Silicon Valley term, it's important to understand that pivoting is not just about doing a 180-degree turn or completely abandoning your original vision. Incremental changes to your business model, strategy, or organization can also be considered a pivot, even if they are relatively small in scale.
The ability to pivot and adapt is essential in all businesses. It allows you to respond to market trends, customer needs, and internal developments. Thus, it's more about finding new ways to achieve your goals.
Business pivot examples
A lot of companies have started out with one thing in mind and then turned into something completely different.
Twitter started as Odeo in 2005, a podcasting business founded by Evan Williams. However, when Apple iTunes moved into podcasting around the same time, Odeo found itself stuck and had to pivot quickly. One of the engineers, Jack Dorsey had developed a messaging service for instant updates. Another employee, Noah Glass, came up with the name Twttr. When Twttr first launched, not everyone was convinced. A TechCrunch article questioned the privacy implications of the idea and called Twttr “a total snoozer.” The team continued to pivot to fully embrace the 140-character approach, and the rest is history.
Other startup pivot stories:
YouTube launched as a video-dating website with the slogan “Tune in, Hook up.”
Instagram was originally called Burbn, a Foursquare look-a-like app that allowed users to check in at their favorite spots. It also allowed users to share photos. As it became clear that sharing photos was the most popular feature, the company pivoted to Instagram.
Slack pivoted from Glitch, a multiplayer online game, to an enterprise messaging app.
Netflix started as a DVD-to-mailbox service and then pivoted to become a streaming platform, which completely transformed the entertainment industry.
While pivoting is often associated with startups and younger companies, the reality is that pivoting is important for businesses of all sizes and stages. As industries and consumer preferences evolve over time, it's essential for established companies to stay agile and responsive to these changes.
In fact, many mature businesses have successfully pivoted and reinvented themselves over the years to stay relevant and competitive in an ever-changing market. For example, Nokia, a company that has pivoted several times during its 157 years.
Nokia
Nokia, the once-legendary phone maker and producer of the most indestructible electronics ever (shout if you ever owned a Nokia 3310), has pivoted more than once. The company started in 1865 as a paper manufacturer on the banks of Finland’s Nokianvirta River, which inspired the name Nokia.
In the late 1800s, one of Nokia’s founders recognized the opportunities created by moving into electricity generation. In 1898, Nokia made a technological leap by diversifying into rubber boots. Nokia continued to diversify into new product lines, including electricity generation and cables.
Nokia went on to become the titan of mobile communications. In the 1980s, it launched the world's first automated cellular network system and was the first to allow international roaming. This served as the basis for 1G.
Nokia launched its first mobile phone in 1987, the Mobira Cityman 900; despite weighing about 0.7 kg and selling for over $5,000, it was a huge hit. Nokia continued to thrive, and by 1999, the company’s profits reached $4bn, and they seemed unstoppable. Even in 2007, when Apple launched the first iPhone, Nokia still owned 50% of the market.
In November 2007, despite the growing competition, Nokia's dominance in the mobile phone industry was still considered unchallenged, as noted in Forbes' article, "Can anyone catch the cell phone king?" However, just a few months earlier, in June 2007, Apple introduced the first iPhone, changing the trajectory of the industry forever. Nokia had developed a prototype phone with a large display and touchscreen several years before the iPhone debuted but killed the concept for fear of it being a flop.
Today, Nokia has pivoted its business strategy once more to offer advanced technology and network solutions to clients globally. Recently, Nokia unveiled a fresh corporate logo, underscoring its dedication to delivering innovative B2B technology solutions.
What happens when you fail to pivot?
Facit
Facit AB was once a Swedish multinational corporation that manufactured and sold mechanical calculators and other office equipment. Founded in 1918, it quickly grew into a global giant, with offices in 16 countries and over 10,000 employees. In 1970, the company reached its peak with more than 14,000 employees worldwide. However, a year later, modern Japanese-made calculators started to seriously disrupt the industry, instantly making Facit's mechanical calculators obsolete. As a result, Facit went out of business virtually overnight.
One of the main reasons Facit failed to pivot was due to the company's reluctance to embrace new technology. Management remained wedded to the idea of mechanical calculators, even as the rest of the industry was moving towards electronic solutions. Additionally, the company had a rigid corporate culture that stifled creativity and innovation. There was little room for experimentation or risk-taking, which made it difficult to pivot quickly and effectively. In Swedish business theory, this is called "the Facit trap" (Swedish: Facitfällan), referring to the inability to follow a technology shift, even if skill and money are available.
By the time Facit realized its mistake, it was too late. The company had lost its market share to competitors who had successfully pivoted to electronic calculators and other office equipment. Despite attempts to pivot, such as acquiring a computer company and branching out into new areas, the company ultimately failed and was forced to file for bankruptcy in 1998.
Stories like Facit serve as a cautionary tale of the importance of pivoting in business. Even established companies with a long history of success can falter if they fail to adapt to changing market conditions and embrace new technology. Pivoting requires flexibility, creativity, and a willingness to take risks. Without these qualities, even the most successful companies can fall by the wayside.
Types of pivots
There are several types of pivots that a business can make depending on its circumstances. A few examples are:
Customer pivot: involves changing the target customer segment for a product or service. For example, a company might shift from targeting young adults to targeting middle-aged professionals.
Product pivot: involves changing the product or service itself. For example, a company might shift from selling a physical product to a digital one.
Technology pivot: involves changing the underlying technology or platform that a product or service is built on. For example, a company might switch from a proprietary platform to an open-source one.
Business model pivot: involves changing the way a business generates revenue. For example, a company might shift from a subscription-based model to a pay-per-use model.
Market pivot: as Marc Andreesen wrote: “The #1 company-killer is lack of market.” A market pivot involves changing the product, marketing strategy, website, or sales efforts to reflect a new or different customer segment or a larger opportunity in a different market.
Geographic pivot: involves changing the geographic focus of a business. For example, a company might shift from targeting customers in one region to targeting customers in another.
Pivoting requires careful planning, analysis, and execution. Businesses must be willing to let go of their old assumptions and embrace new strategies and ideas. It's essential to gather feedback from customers, partners, and other stakeholders to identify the right direction to pivot. It's also important to communicate the change to stakeholders clearly. Customers, employees, and investors may be resistant or confused about the change, so it's crucial to provide a clear vision and roadmap for the new direction.
Finally, pivoting requires a willingness to experiment and learn from failures. Not every pivot will be successful, and it's essential to be open to adjusting the course based on feedback and data.
Final thoughts
As businesses continue to navigate through an ever-changing landscape, one thing remains certain: change is inevitable. While some may resist change, it is often necessary for companies to adapt and evolve in order to remain relevant and competitive. At its core, change can bring new opportunities for growth and innovation. Embracing change means being open to new ideas and perspectives and being willing to take risks. By doing so, businesses can unlock their full potential and position themselves for long-term success. Change should not be feared but rather embraced, as it is the key driver of sustained success for any company.
At SAGA, we understand the importance of pivoting and embracing change in business. That's why we work closely with our clients to help them navigate change and leverage it as an opportunity to grow and evolve. We help our clients identify areas for improvement, develop customized strategies, and support their teams through the implementation process. We understand that change can be challenging, and we provide the support and guidance needed to help our clients navigate through it successfully. Whether you're a startup or a mature business, pivoting can be the key to unlocking new opportunities and achieving greater success.
Here's to embracing change and making the most of every opportunity.
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I’m Marianne, Co-Founder of SAGA based in Stockholm. You can reach me by replying to this email or find me on Twitter or LinkedIn.