• Dave Bates

3 Mistakes To Avoid When Pivoting Your Business

Pivoting Isn't Just For Startups

Photo by Hans on Pixabay

“How do I know when to pivot?”


It is a question that business owners frequently ponder.


There are many examples of successful company pivots – from YouTube to Slack and others.


There are also lots of companies that tried to pivot and failed. We don’t hear a lot about those. CB Insights claims some research showing 10% of startups failing because of a “pivot gone bad”.


What is a pivot, anyway?


Lots of people have definitions of pivots. Some just think of it as adding something new to the product or service catalog. Others view it as an adjustment to a business process or customer segment.

During our recent pandemic, a lot of companies have been looking at what it means to “pivot” their business. Work from home strategies and business continuity plans are important. Every business should have them at some level. These are underlying structural supports that enable a business to continue when things are uncertain.


They’re not a pivot.


Eric Ries has popularized the term through his excellent book, The Lean Startup. Here’s how he defines a pivot:

A pivot is better understood as a new strategic hypothesis that will require a new minimum viable product....a special kind of structured change designed to test a new fundamental hypothesis about the product, business model, and engine of growth. (p. 177-178)

A pivot is when you’re about to make a change to the core of your business.


If you’ve been in business for a while, don’t be thrown off just because it comes from a book with “startup” in its title.


How do pivots go wrong?


Earlier, I mentioned the CB Insights study that listed the top 20 reasons startups fail. The number 1 reason? “No market need” Seventh in the list was: “Product without a business model”.


It may seem obvious that pivoting a product or service into a market that doesn't need or want it is a bad idea.


These aren’t just reasons startups fail. They’re also reasons established businesses making a “pivot” fail.


Want to avoid a failed pivot?


Whether you’re a startup or an established company, you should NOT start a pivot if one or more of these are true:

  1. If you don’t have a plan.

  2. If you’re fragmenting your focus.

  3. If you’re compromising for expedience.

1. If you don’t have a plan, don’t pivot


Failing to plan is (usually) a plan to pivot into failure.


No, you don’t need a 500-page business plan.


Yes, you need something more than a cocktail napkin or the back of an old coffee-stained envelope.


Remember Eric Reis’ definition? It includes that phrase “to test”.


Pivoting an existing business can often be more risky than pivoting in a startup. If you’ve been established for a while, you’ve probably got a decent reputation in the market. You’ve probably got staff and reliable suppliers along with your history of referenceable clients. Those are just a few of the assets worth protecting through a pivot.


You should be clear on who the pivot is for and what they get because of it. Once you know these two things, you can begin to put together some metrics for how you’ll know you’re making progress toward the goals.


What’s the smallest thing you can do that will help you know your ideal target is interested in the new offer? What comes after that, if the metrics are going in the right direction? And, after that?


High school chemistry class includes a model worth following. An experiment without a hypothesis and an experimental design approach is not an experiment – it’s just playing with chemicals. Just like chemistry class, all sorts of things can go wrong if you don't plan. They can still go wrong even if you do but why breathe toxic fumes just because you thought the need to put the test tube under the fume hood - and turn the fan on - was obvious? High school chemistry students aren't the only ones who forget things in their excitement to experiment with things.


Build a test that includes early warning systems. If something’s going wrong in the test, you’ll see it early and know what to do. This is one of the most important elements of a pivot.


Skip it, and you might pay with your business.

2. If you’re fragmenting your focus, don’t pivot.


Many business owners talk themselves into a “pivot” when the change is actually just a new line of business or new customer segment. There’s nothing wrong with adding new products, services, or customer segments.


A pivot is a bona-fide change to the core business. That definition we’re working with from Eric? It says “fundamental”.


If the fundamental change is likely to fragment the focus, it might be worth asking why.


When the core of your business is firing on all cylinders, pivoting is usually not recommended. For years, we’ve called that a “cash cow” business. Any change we make that pulls resources or focus away from a business’s cash pump is bound to have a negative impact.


Don’t confuse growth and diversification with pivoting.


When you identify a new opportunity, embrace it. But don’t sacrifice your cash cow and call it a pivot. Be sure you dedicate the money and other resources (time, staff, focus, etc.) to stand up a new thing.


Only when the existing business really isn’t working – at a fundamental level, is it the right time to be thinking about a fundamentally new way of doing things. A pivot.


You can think of it this way:


We were focused on this but, after some testing, we realize we need to be focused on that. Here’s our plan for validating the very first steps of our pivot.


# 11 in that CB Insights research? Yep, you guessed it. They fail because they "Lose Focus".

3. If you’re compromising for expedience, don’t pivot.


Compromise can be a powerful tool for success. It can also kill your business.


If your business is in a tough spot and pivoting into a compromise seems like the way out, don’t jump at it.


Similarly, if things are going pretty well but you can’t believe the opportunity that just came by – if you’ll only change a couple of these core things… don’t jump at it.


More often than not, a compromise isn't something you'd naturally decide to do. There's usually a lot of convincing of yourself, and possibly others, that this really IS the right thing to do. When this happens, most business owners are swept up in the possibilities and fail to plan properly (see #1) or sacrifice their focus (see #2).


These kinds of pivots often lead business owners and their teams into areas they don’t understand well. They consume lots of time and energy. They usually lead to painful experiences you wouldn’t choose to live through again. Sometimes, they kill the business.


If the core of your business is sound, invest there.


Even if it seems painful in the short run.


That doesn't mean doubling down on things that don't work. It just means that if the opportunity looks too good to pass up or if you’re in a tough spot and compromise looks like the only way out, it might be a signal to look for another option. For example, perhaps you can find a partner who knows the new space better than you. Getting a smaller piece of the revenue is likely to lead to a more profitable result – with less risk to your business.


Pivoting into a costly compromise isn't the only solution - even if it looks like it is.

Pivoting a new or existing business can often be the right thing to do. If you're willing to step into that decision with care and intention, it can be one of the best decisions of your professional life. If you're honest with yourself and open to adjusting your plan based on insights from others, you'll put yourself into the best possible position for success.


If you’re a business owner planning a pivot, or trying to decide if you need one, I’d love to hear what you think. Please fill out my contact form and let me know you'd like to chat about it.



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