What is a Pivot?

In basketball, a pivot is when you keep one foot planted while moving the other to find a better angle to pass or shoot. In business, it is much the same. You keep one foot planted in what you have learned, while moving the other to find a path that actually works.

A Pivot is a shift in business strategy to test a new approach regarding a startup’s business model or product. It is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, or engine of growth.

For a founder, a pivot is often an emotional crisis. It feels like admitting you were wrong. However, experienced entrepreneurs view a pivot as a sign of intellectual honesty. It means you are listening to the market louder than you are listening to your own ego.

It is vital to distinguish between pivoting and iterating.

Iteration is doing the same thing, but better. You change the button color. You rewrite the copy. You speed up the load time. You are optimizing the current strategy.

Pivoting is doing a different thing. You realize the customer does not care about the button at all. You change the target customer. You change the pricing model from subscription to ad-based. You change the technology platform.

If you are iterating when you should be pivoting, you are rearranging deck chairs on the Titanic. You are optimizing a product that is doomed to fail.

Eric Ries identified several types of pivots in The Lean Startup. Here are three common ones:

• Zoom-in Pivot: A single feature of your product becomes the whole product. (e.g., Flickr started as a game, but the photo-sharing feature was the only thing people used.)
• Customer Segment Pivot: Your product solves a real problem, but for a different group of people than you originally planned.
• Business Architecture Pivot: You switch from high margin/low volume (enterprise sales) to low margin/high volume (consumer app).

The timing of a pivot is dictated by your runway. A pivot is effectively a restart. You are throwing away work and starting over. This consumes cash and time.

If you wait until you have one month of cash left, it is too late to pivot. You are dead. You need enough runway to execute the new strategy and prove it works.

Founders need to be constantly evaluating their “time to pivot.” If the current data suggests the plan is failing, pivot while you still have the resources to survive the transition.

The hardest part of a pivot is not the strategy; it is the morale. Your team joined to build Vision A. Now you are telling them to build Vision B.

Some employees will feel betrayed. Some will quit. This is natural. To minimize the damage, you must be transparent. Show them the data that led to the decision. Explain why Vision A was a dead end and why Vision B has a path to victory. If you sell the “why,” the “what” becomes easier to accept.