5 Reasons Why Pivots Are Crucial to Today's Businesses
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What do Starbucks, Twitter and Nintendo all have in common?
They’re all companies that pivoted their initial focus into something new, eventually becoming industry giants. Starbucks started out selling espresso machines, Twitter was a platform for finding podcasts, and Nintendo produced all sorts of different things (such as vacuum cleaners!). By changing focus, they were able to pivot into the successful companies we know today.
Pivoting was first introduced by entrepreneur Eric Ries in 2009 and is defined by the Financial Times lexicon as a shift in strategy.
Starbucks, Twitter and Nintendo are extreme cases, but in reality, pivoting exists on a sliding scale. On the high end, a business may change its focus to become something completely new. On the low end, research may help to identify a different target audience or a possible new product line.
Pivoting, large or small, is crucial for every business for several reasons:
1. Everything is changing at a rapid pace, and the world of business is no exception.
Just a few short years ago, apps such as Twitter or Instagram were flying under the radar, and now they’re industry icons. If entire industries such as apps and smartphones are evolving at a rate of five years, it’s foolish to think any business could move slower and be successful. Keeping up with the changing world is crucial to the success of a business, which means keeping an eye on trends in the industry and pivoting accordingly.
2. Pivoting can create opportunities to expand revenue.
Whether it’s exploring new markets, services or products, pivoting can help create opportunities to expand revenue. Research and analysis are key here.
Test out what’s working and what’s not, do research and use data to help make decisions. Zoom in on what’s working and pivot toward it. Pivoting toward new markets, services or products is a great way to build on the foundation a business already has, expand revenue and bring more profit to the organization.
3. It’s easier to stay relevant.
A services company may realize X service is no longer in demand, unlike Y service which is. Remember, business is about finding a need and filling it. Pivot toward the more relevant service.
A great example would be an ad agency pivoting away from print or banner ads and toward content marketing or programmatic ads. Don’t necessarily jump on the bandwagon for every new trend that appears, but follow audiences and adjust strategy to stay relevant to them.
4. Some of the best ideas/realizations come after testing different things.
Business is all about trying new things, moving forward, studying data points and seeing results. Part of this process involves making conclusions about what works and what doesn’t. This often requires business owners to pivot. These choices aren’t always easy (change rarely is) but are often better for the business in the long-run.
5. It can reinvigorate the business.
Pivoting is a great way to bring new life to the business. All businesses must evolve if they want to stay current with their audience and competitive within their industry. Becoming stagnant or irrelevant is one of the worst things that could happen to a company, and one of the best ways to avoid this is through the strategic use of pivoting.
Finding a new way to target an audience or a new product to offer can kick-start a business that might otherwise be fading.