Pivoting: Finding a New Way Forward
Pivots no longer have the bad reputation they once had, but entrepreneurs shouldn't use them as an excuse for failure either
A pivot is a significant change in the product, target market, or another essential part of the venture. Startups pivot when it becomes apparent that the company's current path won’t deliver it towards its end goal. In recent years, these pivots have become so prevalent they have gained legitimacy and are no longer automatically associated with failure. Sometimes it seems that entrepreneurs simply like to tell people that they pivoted even if they didn’t need to, as though a successful pivot attests to the strength of the project and the team, and to the entrepreneurs' ability to adapt to a changing reality.
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I’ve often seen entrepreneurs choose a pivot instead of investing more effort in their current direction. This decision-process is rarely a good sign for the success of their project. A solution as elaborate and dangerous as pivoting should only be implemented as a last resort. Additionally, a pivot could be nothing more than a cover story for failure, allowing a project to vanish quietly.
However, when a pivot is done for the right reasons, it could spell out triumph rather than failure. The need to make a pivot is not always the result of a mistake or a lack of entrepreneurial experience. Often, it’s the result of external factors such as changes in the target market, in the regulatory environment, or the emergence of new competitors.
Whatever the cause of a pivot, an entrepreneur's best bet is to do it quickly, efficiently and as early as possible to minimize the damage caused by loss of time and money, a collapse of faith from investors, and missed opportunities. In order to identify a need to pivot at an early stage, it is vital to know what the pivot timeline is, as well as the types of potential pivots. Here are some examples:
1. Product Pivot - You hit a technological barrier. The product does not solve the problem you tried to resolve. Or any other problem for that matter.
2. Target Market Pivot – The product works, but the pricing or some other factor does not match the target market. You’ll either need to find a different market for the product or find ways to lower, upgrade, or modify the product to suit your users.
3. Business or Legal Pivot – The product is great, users are satisfied, but your business model doesn’t work. You might have discovered some legal obstacles you didn’t know about, or your investors might be demanding higher profits.
As an entrepreneur, you should strive to make sure your project is "pivot-friendly." For example, the narrower your product or service is, the easier it will be to make the changes and the better the process will look to customers.
Investing sufficient resources in the collection and analysis of user feedback will also promote early detection of necessary pivots. Great entrepreneurs know how to mine consumer feedback for solutions.
This post was originally published on TheOnlineStartup.
Adv. Zachi Zach is a lawyer and a mentor in the online industry, specializing in online gaming, adtech, ecommerce and other online related fields. Among others, Zachi serves as Of Counsel to the law firm of Pearl Cohen, an international law firm with offices in the US, Israel and the UK.
Zachi is also the author of The Online Startup blog: www.zachizach.com.