Instagram wasn’t always what it is now. It started as a not-so-successful alternative to the check-in app Foursquare and ended up as a world-famous photo-sharing social network. Maybe in the future, we’ll see another Instagram-like startup pivot. Will it be its final form and purpose?
Pivots don’t have to be a disaster for your company. On the contrary, this is often the only option to steer your startup on a more promising path. It doesn’t matter at which stage of your business development you develop an idea of pivoting — this strategy can be your lifesaver.
But how can you tell if your company needs a pivot? Which factors to consider? And if it is necessary, how should you go about it? We'll answer all these questions in this article. So read on to discover everything there is to know about pivoting your business model.
Assume you devised the perfect startup idea and put it into action. But something went wrong along the way. So, what’s the next step? Surrender? Of course, not. Try pivoting your business.
If you advocate for the lean startup concept, you are probably familiar with the term ‘pivot.’ However, there are a lot of people who are not sure what pivot means in business. Anyway, a bit of clarification never hurts. So what is a startup pivot?
A pivot in the startup business model is a shift in business strategy to account for new consumer demands or other aspects that affect a firm’s success. And here, we are considering only those aspects that do not depend on your company, so all you can do is adapt to them.
How do you know when to pivot your business model? Note the following factors:
Entrepreneurs launch startups for more than just the noble purpose of bettering people’s lives. Another goal they pursue is to generate revenue. Consider pivoting if your business isn’t profitable because you’ve chosen the wrong monetization model.
Your startup exists in the real world. Therefore, you cannot ignore the circumstances. Be prepared to raise your standards and ensure your startup is relevant.
If your product does not fit into the market and does not meet its requirements, you should consider pivoting your startup. Here, you’ll need to change your business model: consider another target market, offer your audience new product features, etc.
Don’t be concerned if your product has received a poor public response. You now understand what your startup is missing. Analyze the lacking elements and turn your business in the right direction.
Any digital startup must operate at a high level. Consider pivoting if your concept greatly surpasses your technological capabilities. It is better to develop fewer but higher-quality features.
Assume you launched a startup and then discovered you picked an industry you don’t enjoy or understand. Consider areas where your product may still be handy and pivot your business.
If you decide to pivot your startup, remember several ways to do this. But before we go through the types of pivots, let’s look at the pivot pyramid. It is a convenient scheme that you can use to make changes in your business for further growth.
This pyramid involves five stages of pivots: customers, problem, solution, technology, and growth. You can use each of these steps for a startup business pivot. Let’s find out more about them:
1. Customers
They are the basic layer of your startup, so all subsequent stages do not make sense if you have not decided on your audience. In this initial phase, you may pivot by changing the core demographic.
2. Problem
Would you like your startup to solve an artificial problem or a problem that doesn’t exist? Probably not. So, it makes sense to make a pivot at this stage.
3. Solution
You have already decided on the target audience and the problem your product will solve. But how exactly will your startup address the selected issue? If your solution does not match the demands of your clients, or the market already has better options, come up with something innovative.
4. Technology
It is the backbone of your product. Even if all of the preceding stages are flawless, it makes sense to consider a pivot if your technology is outdated.
5. Growth
Every startup dreams of expansion; therefore, growth is a reasonable top of the pyramid. If you have a solid product but believe there is potential for improvement, consider pivoting it.
Now that we know all the stages where you can make a turn with your startup let’s look closely at the types of pivots.
It is the easiest and most typical way of pivoting your business strategy. In this situation, companies slightly alter their course without changing markets.
This strategy is considered a safer bet but does not ensure success. As a rule, companies rarely gain a market advantage because they do not open a new segment of users and do not look for areas for expansion.
Let’s go back to the Instagram example. Do you know how it got popular? Its creators recognized that the app’s photo-sharing functions were the most favored feature. So they accentuated sharing photos and transformed the service into what it is today.
Repositioning means reinventing and disclosing new elements of your product to your target audience. You have two options for doing so:
Now, look at your specific situation. If your present startup is not a disaster, you have the opportunity to preserve and enhance it. On the other hand, if your business has failed, it may make sense to go back to square one and apply your previous experience to a new project.
It is the most extreme thing you can do to pivot your startup. First, you start with developing a podcast app, and then, boom: “why not try making a grocery app”? This pivoting type entails giving up on your earlier concept and focusing on something entirely different.
You already know the three types of startup pivots. Yet, that knowledge is not enough to change the course of your business. So how to pivot startup strategy? There are several steps you can take to pivot software startup. Here they are:
If you want to pivot a startup, you must have compelling reasons. At this step, you should determine the challenges you’ve come across.
So, you’ve recognized the difficulties that your startup has experienced. Sometimes these issues are beyond your and your team’s control, such as a crisis or a pandemic. Yet, if you discover flaws in your product that you can address, that is excellent. At this stage, you must identify these flaws.
You may have also realized that you lack specialists for successful pivoting. This step entails reviewing your team structure as well.
At this step, you analyze the weaknesses you found earlier. Then, you will determine how to compensate for your limitations and transform them into strengths. Outsourcing specialists will help you with this by bringing an independent viewpoint.
All previous steps were more about a business strategy than your product development. Now it’s time to consult with your software specialists because it is necessary to determine the technologies you will use in your product.
This step assumes you already know your audience, what will impress them, and what technologies you will use. Thus, you should already have a clear strategy with timelines for pivoting your startup.
Finally, you may start creating your product’s MVP and launch it on the market. This way, you can see if your solution reaches your customers and if the pivoting startup process was successful.
After analyzing the above steps, you may conclude that pivoting in a startup business strategy is relatively simple. Sometimes, it could be. However, you should remember that usually, it’s a responsible and complicated process. Therefore, here are some strategies you can apply to ensure the smoothest pivoting possible.
That’s particularly vital advice if you intend to reinvent your product. First, focus on the functionality already in demand among your target audience. Then, rethink your business approach and only implement what works.
If you decide to change the course of your startup, your investors and all stakeholders should be aware of this. You can even engage them in discussions to find the best way for your startup deployment.
If you alter the direction of your business, especially if you change the niche, you may require more expertise. Immerse yourself in a new field, and hire relevantly qualified specialists.
If you see that your startup needs a pivot, don’t waste time. Your new business strategy may become outdated if you act too slowly. So, as soon as you’ve smoothed out your pivot — get to work immediately.
Running your startup is stressful, and additional changes may seem unbearable. Nevertheless, the failure of your company would be considerably more dramatic. So, be ready for changes and stay confident in dealing with them.
Do you still doubt the pivot startup business model’s ability to assist you in any way? Let’s learn from the best. Companies have done it before, they are doing it today, and you can do it too. We’ve chosen the finest examples for you:
You are right: Netflix is an outstanding streaming service and yet another excellent example of online business pivoting. It has something to do with watching TV series, doesn't it? What do you think of when you hear of this brand??
A few years ago, the company was focusing on delivering DVDs. However, it is clear that fewer and fewer people are using DVD players now, so this business model had to evolve. That’s how Netflix ended up making its series.
What do a twittering bird and the podcast service have in common? Twitter, of course! Initially, the social network for microblogging was called Odeo, and it was supposed to provide access to podcasts. However, the story of Twitter turned out differently. It has evolved into a venue for political and social activity.
This chatting platform generally originates from the video game Fates Forever and has long been associated only with the gaming industry. However, its founder Jason Citron decided to turn the program into a powerful communication tool at some point. Now, this software is used for online conferences and other communication purposes.
There are several alternatives to the standard startup business pivot. Let’s take a closer look at the most significant ones:
If things don’t go as smoothly as you would like, don’t panic. You may not even need to pivot your startup. Instead, ensure your product's value is in line with market trends. See what message your brand conveys and adjust it if necessary.
This strategy is suitable if your startup is doing well but has reached its limit. Of course, you do not want to close down the company, but you still have the desire to grow.
The spinoff brand can be your solution. Start a subsidiary to expand your services or reach a new audience.
If something went wrong with your startup, maybe, you have veered from your original concept at some point. First, examine your mission strategy to see where you did wrong. Then modify your plan and continue to evolve.
Now you know that pivoting is not a bad thing for your business. On the contrary, it can solve many problems and even become the path to your company’s success.
The best part is that you may pivot your startup at practically any point of development, from customer research to technology and growth strategy selection. You can even change UI/UX design, adding photos with the best quality, and it can be the game changer you need!
If you feel that your business has come to a standstill, don’t worry. Try pivoting your startup with the help of our experts. We are keen to work with new companies, and we can surely assist you with your startup.
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Kamal Rastogi is a serial IT entrepreneur with 25 yrs plus experience. Currently his focus area is Data Science business, ERP Consulting, IT Staffing and Experttal.com (Fastest growing US based platform to hire verified / Risk Compliant Expert IT resources from talent rich countries like India, Romania, Philippines etc...directly). His firms service clients like KPMG, Deloitte, EnY, Samsung, Wipro, NCR Corporation etc in India and USA.
