The real entrepreneur is usually viewed as “someone with a big vision, and a stubborn determination to charge straight ahead through any obstacle and make it happen”. Is that so in reality? The vision part looks fine, but stubbornness is of a specific kind. Mature and successful entrepreneurs know that due to the extreme uncertainty of a new product/service usually many corrections are required in the course of the project. The challenge “when to change your direction and when to persevere” is reiterated. Actually the start up runway is not money but how many pivots the start up can still make. Pivoting in the right direction as early as possible is what makes the product and project lean. Pivots come in many different flavors, each designed to test the viability of a different hypothesis about the product, customer, technology, business model and engine of growth. Here are the summary of top-10 pivots to take (by Eric Ries (c)):
– Zoom-in pivot: what previously was considered a single feature in a product becomes the whole product.
– Zoom-out pivot: sometimes a single feature is insufficient to support a customer set, and what was considered the whole product becomes a single feature of a much larger product.
– Customer segment pivot: the product attracts real customers, but not the ones originally supposed to. So repositioning and optimizing for a more appreciative segment are needed.
– Customer need pivot: the customer feedback indicates that the problem solved is not very important, or money isn’t available to buy. This requires repositioning, or a completely new product, to find a problem worth solving.
– Application-to-platform or vice versa pivot: many founders envision their solution as a platform for future products, but don’t have a single killer application yet. Most customers buy solutions, not platforms.
– Business architecture pivot: two major business architectures are: high margin, low volume (complex systems model), or low margin, high volume (volume operations model). Both can’t be operated at the same time.
– Value capture pivot: changes to the way a startup captures value (i.e. monetization or revenue model) can have far-reaching consequences for business, product, and marketing strategies. The “free” model doesn’t capture much value.
– Engine of growth pivot: the most popular primary growth engines are: the viral, sticky, and paid growth models. The right model picked can dramatically affect the speed and profitability of growth.
– Distribution channel pivot: these pivots usually require unique pricing, feature, and competitive positioning adjustments.
– Technology pivot: a way to achieve the same solution by using a completely different technology. This is most relevant if the new technology can provide superior price and/or performance to improve competitive posture.
Also, an interesting observation: “Ask most entrepreneurs who have decided to pivot and they will tell you that they wish they had made the decision sooner.” So the valuable guideline of thinking and acting for all the start-ups is to design a product with the smallest set of features to please a customer base, move it into the marketplace quickly, test and measure the reaction, detect the pivot spot and iterate on this basis.
What’s your interesting experience in making pivots? You are welcome to share your stories here.
Business Development Manager