A guide on business and product pivoting, how to pivot, and when to do it.

What is Pivoting and When to Pivot

Tamar Barlev

July 21, 2021 · 6 minutes

Pivoting in business is not unlike the famous scene in Friends: the gang carries a couch up a narrow square stairway and Ross screams “Pivot! Pivot! Piiiivaaaaaaht!” as the long, rounded couch gets stuck on the corners of the stairwell.

The thing—the product, the idea—that fit before just doesn’t fit as well anymore.

Sometimes, ventures don’t work out the way you planned. You could have done excellent market validation, invested in and developed a perfect MVP, and even gotten investment. And yet—the app isn’t gaining traction. Perhaps it’s losing users or you uncover new feedback and information as you test your original idea. Maybe there’s a new cause for potential growth that didn’t exist before. Well, that’s okay. That’s a pretty standard step in the process of building a product or maintaining its growth. So what do you do? You pivot (in my head its “Piiivaaaaaaht!”)

New ventures often face a ton of uncertainty. Even with the most thorough market research and assumption investigation, a founder has to do a lot of “strategy by thinking” rather than “strategy by doing.”  Often, this is due to resource constraints and just not enough of a track record. And sometimes, that “strategy by thinking” falters. This point is where pivoting enters the conversation.

 

Defining the “Pivot”

There are some sources on pivoting, but not a lot of research. So, we summarized a 49 page Wharton School of Business study—“What is a Pivot? Explaining When and How Entrepreneurial Firms Decide to Make Strategic Change and Pivot” (Kirtley & O’Mahony, 2018)—to give you a quick rundown on pivoting. We also added examples to illustrate the study’s points. 

We know reading scholarly articles isn’t everyone’s favorite pastime, but this one gave fantastic insight. So read on (I’ll keep it brief, I promise.) You’ll get a cookie at the end.

 

Strategic Change vs. Pivot

The study differentiated two terms: “strategic change” vs. “pivot.” A “pivot” was defined as an all-encompassing strategic reorientation, with ensuing reallocation and restructuring of activities, resources, and attention. The study concluded that a “pivot” is, in almost all cases, comprised of a series of “strategic changes”—not a single decision that resulted in a “swift pivot.” 

To avoid getting all science-y, we’ll speed the context up: this was a seven-year study on seven early-stage clean-tech and energy companies. In total, the companies faced 93 decision points that could have sparked a “strategic change” (a change of a strategic aspect). Only 21/93 strategic decision points resulted in a change but across six out of the seven companies. In the end, only three out of the seven companies decided to fully “pivot.” 

“Strategic changes” were defined as exits or additions elements of current product strategy. These changes result from “opportunity” or “problem” triggers—which are exactly as they sound.

“Opportunity triggers” being new opportunities discovered by customer and investor feedback, emerging needs in the market, new supply chain information, and tech innovation. In all cases, favorable information was responsible for strategic additions. 

“Problem triggers” are contradictory evidence to decision-makers’ beliefs—uncovered through product testing, feedback, industry insights, and macroeconomic events. In all cases, unfavorable (contradictory) information was responsible for strategic exits.

This new information could pose a risk (or benefit) to valuation, resources, product, and company success. Remember when we talked about the dangers of baseless assumptions in product development and market validation?? Yeah. That. 

 

Examples of Pivoting


Making one successful feature of the product into the main feature (or vice versa)

Opportunity trigger! One of your features is responsible for gaining most, or all, of your traction. That’s great! Stick with it. Reallocate your resources—human and financial—to focus on its development. 

Implementing a new business model (to increase $$)

A problem trigger: if you receive robust customer feedback that paying per interaction or worse than paying monthly, listen to them

Opportunity trigger! Perhaps you segment your target market further, and the data shows that a tiered monthly subscription is a strategy that would open the door to a whole new audience. Both are legitimate ways of pivoting your monetization and business strategies. 

Tech Pivots

Opportunity trigger! You discovered a new thing in development that reduces cost and increases usage and customer satisfaction?! Amazing! Pivaaaaht! (or implement an elemental strategic change—whichever term you feel like.)

 

When is the Pivoting Point?

Through the Wharton study data, it sounds like there’s almost an element of confirmation bias when decision-makers are faced with new information. For example, in only five out of the 21 cases in which strategic changes were made, strategic exits were made. Instead, the large majority of the changes were additions. This trend hints that we like information that confirms what we already believe—but that tendency won’t always yield the best business results

Thorough industry and competitive analysis, product testing, and investor feedback are necessary to make informed decisions. And if one gets contradictory information to the set of beliefs they carry, it’s important to calculate when to take it to heart. At least, as best as one can under uncertainty.

If a founder receives an informational trigger, they can:

  1. Forgo a strategic change and accept the potential negative impact of the problem trigger 
  2. Innovate and use it as an opportunity to keep and bolster their current strategy without making a strategic change
  3. Make a strategic change (exit or addition)

 

Examples: When to Pivot

Your product isn’t gaining the traction you expected, or growth plateaued

You’ve done your market validation and research and expect a specific growth metric, but you’re not hitting it? It might be time to reconsider your product or business strategy. Perhaps your pricing is too high, or maybe the workflow is not where it should be. 

Take the time to analyze the problem—via feedback and testing, for example—gather new information, and calculate whether investing in a strategic change might be worth the resources of a strategic change.

 

You’ve received new industry information

Okay—so maybe you created an app that brings magicians together to perform in flash mobs. But then a hypothetical pandemic hit (oy vey), or a massive scandal hits the magician community, and audiences are surveying as no longer in favor of the beautiful craft of magicianship. 

What now? How do you use what you already ideated and built while continuing to grow your user base? Creating an online conference platform? Rebranding as an “entertainer” flash mob, rather than a magic-specific one? Get creative, get feedback, and go for it. 

 

How Do Firms Change Strategically?

We’ve already mentioned the academic theory behind pivoting and strategic changes, as well as a few examples. But how do entrepreneurial firms successfully execute these changes?

 

Examples: Pivoting Strategy

Get feedback and listen to it

Again with the feedback! Feedback, feedback, feedback! It’s your most important point of information. And it’s why it’s essential to receive primary information and conduct proprietary research—and not just learn from widely available industry resources. Having your own product- and industry-specific information gives you a massive advantage over competitors who don’t have the information you do.

This is the time to not only “strategize by thinking” but “strategize by doing.” Conduct customer interviews, surveys, and questionnaires. Consult with product strategy experts and (potential) investors. And create and execute further, robust product testing, such as:

 

  1. Alpha Testing – internal product testing done by company employees
  2. Beta Testing – external testing done by a limited pool of actual users instructed to find problems with features, branding, and workflow
    1. Prototype testing – general user testing done on your MVP
    2. Usability Testing – in which users are instructed to complete pre-determined tasks
Competitive Analysis

Look at what and how your competitors (or incumbent solutions) are doing things—and how well they’re doing them. You can find some of this information through Google Analytics, 10ks, Gartner, and so on. What are they doing differently, and how are they performing?

If you notice your company is generally playing catch-up in the industry, it might be time for a strategic change. It might look like:

  1. developing new (more cost-efficient or user-satisfying) technology
  2. focusing on specific or new features
  3. Rebranding
  4. investing in organizational changes
  5. shifting to a different business model. 

 

Again, all of these decisions should be supported by well-calculated and robust information. Your pivot should offer greater growth opportunities and not just be random differentiation tactics. 

Don’t waste work you’ve invested in or technology you’ve already built

If you invested in developing a product that is built well, don’t waste it! Think of how you can shift it to still serve you, even in a pivot or strategic change of features, business model, or even technology.

 

Adapt to emerging needs

You’ve created this magician-gathering app, and all of a sudden, magicians around the world are using e-magic to enhance their performances. However, there isn’t one consolidated open-source community for magical technology. There’s your opportunity trigger! Run with it. Run with it like the wind, Forest. 

 

Alright. That’s enough for now. 

 

Sounds overwhelming, yes. But doing enough research and even having product strategy experts on your side makes it much more approachable. 

 

Wondering about pivoting or product strategy?

Looking to develop an application in Los Angeles, New York, or literally anywhere else?

Or have an app, but you’re in a slight pickle or looking to scale?

Have general questions about who we are and our authority on the subject? 

Contact us at GojiLabs.com.

 

                 – Goji Labs

About Tamar Barlev

Content Marketer and Copywriter based in Los Angeles. Passionate about the written word, indie-electronica, and parmesan.

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