Pivot / Pivoting

Pivoting in the startup world means that the company has switched to a completely new strategy compared to the previous one. In doing so, it drastically changes the company's product, the company's internal processes, its business model, its customer target group, or perhaps all of these together.

At first glance, the pivot may seem like a failure, but it is not. Rather, it is a realization, a new beginning. This is the process when the startup adapts its business strategy and business plan to external changes. He does this, for example, because something has changed in the industry, consumer needs or any other important factor that affects the company's operation. 

The most common case is when the startup collects a lot of real customer feedback in the early growth phase. In such cases, it may turn out that the original ideas, the value propositions of the MVP, are not exactly on target. In this case, channeling the feedback and validations can put the company on a more successful path.

Pivots are almost inevitable in the life of most startup. Change has become a natural part of the widespread startup methodologies (Lean, Design Thinking). All previous decisions and assumptions can be questioned. Goals can be adjusted based on growth and consumer needs. 

There are drastic pivots that fundamentally change the company. Such was the case with Instagram, which originally started as a photo-making app. Among the first functions, however, was the possibility of social media sharing, and very quickly it became clear that there was more imagination in this.

A pivot can cover virtually any fundamental change. This can be, for example, the way the product is manufactured, the marketing process and the consumer target group. The common element is always that the change affects the strategy of the company's operation, but is influenced by factors that are beyond the company's control.

A typical example of a pivot is when the importance of an existing function increases, which changes the entire product. A similarly common example is when a new target group appears among users and consumers. It can also happen that the product itself changes platforms: for example, a web page becomes software or vice versa. It may be that only the revenue channel changes drastically. An example of the latter case is when a media product that was previously based only on advertising revenue switches to a subscription-based model.

When is pivoting necessary? 

If a function or service within the complex product has spectacularly outstanding values. This segment performs better than the others. Then, in order to increase efficiency, the company concentrates on this and leaves the other parts. 

A pivot may also be necessary if the operation is not financially sustainable. This step may be justified if the market did not react as the company expected. If the competition regularly overtakes the company. In addition to all this, creative freedom allows pivoting even if the founders realize that they simply want to do something different.