Pivot is a complex word as it sounds yet it is very simple to understand. However at times it is mistaken as simply change in method of doing business. It is not the case. Pivot really means you are changing the course of the business in terms of
- Radical change in business model
- Expanding a new business vertical which is quite different than the existing one
- Shutting down a division or business line and shifting the focus
- Due to technological advancement shifting the complete face of the existing product resulting in to change in the target consumers..
These are some of the examples which may fall under the word called Pivot in business world. Pivot mainly happens in startups and SME business. It does not mean that large business houses do not do pivot.
At the outset lets make it very clear that making a pivot does not mean that the business has failed or it is a defeat of the leadership. On the contrary it should be looked at as a daring step towards the business and leadership is willing to do pivot for better profitability, better market and new geographies. It is also done to save the business as such and do a complete course correction.
What is the right time to do pivot ?
There is no exact time or triggering event that has to occur to do a pivot. It is completely situational and opportunistic.
Management has to use the foresight and see if the existing business same is bleeding and to what extent it can sustain on itself. Leaders may think of doing a pivot if the existing product is becoming obsolete due to new technology or it may happen that during the course of their journey they realize that it is not heading towards the big picture as they have anticipated.
Sometimes pivot in a business is necessitated because existing business line is simply bleeding and if not stopped then it may simply threaten the existence of the company itself.
It takes enormous courage to do the pivot and management has to ensure following
- They have enough management bandwidth to handle the pivot.
- Since the pivot has to happen simultaneously with existing business , they have to ensure that the transition happens smoothly.
- Management has to ensure that pivot is well planned and lot of R & D has been done about the potential success possibility. This is especially true when the pivot is being done due to existing business suffering large cash losses.
- Management needs to be fully committed towards the pivot since they have to also transition people from one business to other business or even get the new team on board or in to new geography.
However one can not generalize if pivot is a sure way of success especially in start-ups and SME but a lot depends on the management and leadership. It is extremely difficult to do a second pivot in the same business and within the stat up life cycle or SME since entire giant elephant has to be moved through the direction and it is not easy.
Pivot is actually very wise and strategic act of leadership wherein the management has not only recognized the existing problems but also found out another business model in order to take the ship to its final destination. Last word of caution on pivot is that it is extremely difficult to turn back once the pivot is done since large amount of resources would have been already diverted and turning back would amount of waste of time and money.
People who have done the pivot and steered the company out of woods are sure praiseworthy and bold leaders.