When corporate sales become stagnant, it is easy to see the growth that brought you to where you are. It is also easy to see that without the right decisive action, your firm will begin the inevitable slide into a sales dip. The challenge when viewing past and future from the vantage point of a plateau is to envision the strategic decisions and trajectory that can revitalize sales and keep the company profitable. One question your leadership team should ask is can you pivot your business into an upswing?
Most of us are familiar with the basketball maneuver called a pivot, in which a player keeps one foot stationary while changing direction with the other foot. Many are also familiar with pivot tables. A business pivot uses the same principal: typically when a firm discovers that their product or service does not meet the needs of their market. A pivot might be an appropriate response when a start-up discovers that they have either the wrong product for the right market or the right product for the wrong market. A pivot might also be the appropriate business strategy for a firm that has an obsolete product or a product that can be relevant to the market only with significant and thoroughgoing changes.
Although some business experts believe the pivot applies only to start-ups or tech firms, business pivoting has been a strategic move for businesses for a very long time. One need only think of Nokia’s history to understand that the pivot can make strategic sense for larger firms, as well. Nokia was a paper company in the beginning. A pivot made them a galoshes and rubber company. Another pivot made them a television company. Yet another pivot made them the leader in radio phones, and then in mobile phones. Because those phones use an undesirable operating system, Nokia may be on the verge of yet another business pivot.
Historically, pivots have been common in the manufacturing sector – although not typically called pivots. Manufacturing companies have often read the changing markets and re-tooled to provide new capabilities for changing market demands. Hundreds of technology and web companies have shifted their focus to a different market or to a different service for the same market.
When your company finds itself sitting on a plateau, knowing a downturn of fortune and a business dip is in the immediate future, a pivot might be the most logical strategic move. At the very least, it is an alternative to locking the doors and closing the business.
The need to pivot in a business is not a mark of failure. Rather, it signifies that the firm’s leadership is listening to the market and recognizing a change in demand or expectation. This requires a firm that has moved beyond entrenched beliefs that the old way of doing things is necessarily the best, or that a particular type of company should always remain the same. It requires a leadership team capable of setting aside ego and beliefs to embrace new ideas and lead the team in a new direction. Yet, the pivot is a very high-risk strategic move.
Any company considering a business pivot should take a brutally honest look within and ask very difficult questions:
- Are we considering what we believe the market wants, or are we considering a change that is instigated by customer feedback? There is a big difference between a market wanting something different but not able to tell you what it needs and a market that is clear and certain about its needs and wants.
- Is this a real business opportunity or an act of desperation?
- Do we have the resources to make this change? What is lacking?
- If there are multiple opportunities, can the leadership team agree and commit fully to a single direction?
- Can you bring your entire team on board with the new direction? What will you do about people who cannot wholeheartedly support the change?
- How will traditional shareholders and customers respond to the change? Keep in mind that a pivot reflects a choice. How will this choice affect your stakeholders, your customers, your suppliers, and your reputation?
- Can your leadership team handle the extreme risk, the uncertainties, the stress, and the need to respond and lead to market changes as they happen? Can your team plan and structure this kind of change while also being flexible and responsive? If not, can you bring in advisors to manage the pivot or guide you in doing so?
- Pivots are typically moves in which the failure of an idea will not bury the company. What will happen if you pivot in the wrong direction? Can you pivot again? Can you survive?
- Can you pivot and decrease development costs? Can you test your new idea within the existing business model?
- Are you responding to a market whim or a significant change in market need?
If you can ask these and other related questions of your firm and the leadership team and discover answers that support (and perhaps justify) a business pivot, the critical question may remain “Do you have the right leadership to make a complete change of direction quickly, efficiently, effectively, and decisively?” If your leadership team has deep commitments to the business model or the underlying business concepts and strategies that guide the firm today, it is entirely possible that this team will have difficulty leading the pivot. Do not risk the future of the firm, stakeholders, employees, and leaders until you are certain you have a team in place (even if that team is external) that is decisive and flexible enough to lead everyone through the process.
If you are considering a business pivot but you are uncertain if this is the best direction for your firm, Trilogy Partners can provide an objective analysis of your business options and the opportunities they offer. If you decide a pivot is the right strategic move, but you need leadership help, we can help by supporting your team or by managing the pivot for you. Call us to discuss your options.