Very often in business, companies will head in one direction and then realise that what they’re trying to sell and bring to market isn’t quite what the market wants or needs.
At the same time, however, they might also realise that a small or even a large adaptation or re-focusing of their product can indeed address the market’s desire, perhaps in a way no one has done before.
In Silicon Valley parlance, this realisation is known as the “pivot.” It just so happens that some of the most prominent household names in tech have come from such a process.
When the potential for a pivot is recognised, two things can happen: if a company is nimble and can adapt quickly, it means the niche they’ve identified is theirs for the taking. On the other hand if they’ve spent months on market research and analysis, and ask for two additional rounds of funding to make the product fully operational, then chances are they’re not going to have the flexibility or sheer guts to completely change course.
As we outlined in the last post, doing your chicken test early for a new product will help you spot any major problems that need to be fixed. Equally, it might also make you realise the potential for a pivot in your business strategy, which could be your fast track ticket to success.
It’s very easy for a dogged, determined entrepreneur to not see the writing on the wall coming and therefore be reluctant to make that fundamental change. They are often under pressure from their investors and thus, will be unlikely to even consider the luxury of taking the risk of changing course. I have encountered this situation several times while working with start-ups. Sometimes they have actually run out of money and gone to the wall before they re-start and appreciate the opportunity of heading in another, more rewarding direction.
However sometimes, swallowing your pride and acknowledging that what you set out to build might not come to fruition—but something else will—can lead to an unexpected success.
A prominent example of this phenomenon concerns the origin of the photo-sharing app Flickr. Flickr’s founder, Stewart Butterfield, actually developed a lot of the innovative features of the platform while trying to develop a computer game called Game Neverending. While this game was his passion project, it had gone through numerous rounds of fits and starts and ultimately, failures. It was looking ever-more-likely to not become a viable product that anyone would use. So Butterfield reportedly did something unexpected: at a conference where he was scheduled to speak about the software used to build his game, he and his team pulled an all-nighter to adjust the presentation to introduce Flickr instead.
Flickr’s groundbreaking features—photo-sharing on the cloud, the concepts of ‘tagging’ and ‘authing in,’ and restricting other people’s access to your photos based on how close they were to you—are all things we take for granted today across all kinds of other online platforms. But had Butterfield not seen the opportunity to take what he learned from one project and apply it to another, the way we use many internet services today might look remarkably different.
Another extraordinary example of a company which managed to pivot its business twice is the mobile phone maker Nokia. Starting out in paper and rubber to become the world’s largest mobile phone maker by 1998, Nokia rose to the dizzying heights of being valued at $250 billion with sales of almost $27 billion. However, with the end of the aughts and the rise of the smartphone, they failed to pivot for a third time and ended up being sold to Microsoft for just $7.2 billion in 2013.
Lest you think that this is an isolated phenomenon, other organisations who have undergone this quite literally “game changing” pivot include, Twitter, PayPal, Groupon, Nintendo, Instagram, Pinterest and major corporations such as Avon, Suzuki, Starbucks, Wrigley and HP.
I can’t state enough how important it is to pay attention—especially in the early days of your company—to the specific areas of your product or service that are successful or proving most desirable. Don’t become attached to your dream proposition when the market is telling you that it wants only a segment of what you’ve created. Dogged determination is a must for the entrepreneur, but there is a point where it becomes dangerous. Listen to your advisors, peers, developers, junior employees and partners; but most importantly, listen to the market!
Tip 5: If you recognise the potential to pivot, use it.
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