The Pivoting Playbook: How To Successfully Turn Adversity Into Opportunity Pivoting is painful, but failure can be agony.
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Startup funding in the Middle East continues to break records. In 2022, fueled mostly by deals in the United Arab Emirates (UAE), Saudi Arabia, and Egypt, new regional businesses secured around US$3.94 billion in funding.
There is a success spectrum for these entrepreneurs. A tiny minority may achieve global stardom; others may tick along at a steady pace, enjoying healthy growth. Unfortunately, even the steady growers are in the minority. The vast majority -up to 90%, according to some estimates- will fail.
Cash burning, unsteady markets, wily competitors- the reasons vary. But in many cases, failure could have been avoided if decision makers had been willing to go against the grain of their every instinct, dig in, grit their teeth, and do one of the hardest things a business founder can do: pivot.
In a previous article, I covered how to recognize the signs that pivoting is necessary. Perhaps your uniqueness has shriveled among market copycats. Perhaps your growth has hit a plateau, or a secondary offering is showing more promise. If you are lucky, and you operate in a supportive startup ecosystem like the UAE, then mentors, investors, and other advisors may issue warnings that allow you to see what is difficult for an insider to see. As I pointed out in my previous piece: pivoting is painful, but failure can be agony.
If Step One is recognizing the problem, then Step Two is doing something about it. Here are six things to bear in mind when pivoting.
1. Understand the business's strengths (and weaknesses) If playing to your strengths is good advice in private life, it has immeasurable value in business. If you know you must pivot, then understanding where you are will allow you to get to where you need to be. It is imperative to not throw out aspects of your strategy and operations that are still relevant. But if you know of challenges you have always faced, ignoring them when pivoting could mean that painful change got you nowhere. Perhaps the weakness is in the target market. Maybe the core offerings or business model need adjustment. Either way, you must know before you can put a single foot forward.
2. Don't forget the customer Talk to customers through surveys, feedback forms, or social media. Discern their needs and pain points. This exercise will either tell you that the core offering is not the problem, or it will tell you where, within the offering, change must occur. Don't stop there. You have customer data from tools like Google Analytics and customer relationship management (CRM) platforms. Use it. Analyze customer behavior, such as how they used the product or service, what pages they visited, and how long they spent there. Customer preferences will emerge. You can also monitor social sites to see what customers are saying about your brand. And you can set up beta communities to test your offerings and provide formal feedback.
3. Execute the mental gear shift Having gathered information about your business from your own analysis and consultation with customers, it is time to look at the operating market. It is critical to be open to painful observations. Businesses can be very personal to their founders, and it may be difficult for them to accept that the original premise on which early successes were based, no longer applies. Opportunities and challenges come and go. Consumer demand waxes and wanes. Markets evaporate. Also, having more staff and a history of operations means having less agility. But more stakeholders means more brains to pick and resources on which to draw. You have opportunities to snap out of tunnel vision and see strengths that were not around in the enterprise's early months. These strengths include your mentoring network- investors and other guides who want to see you succeed.
4. Keep it simple Pivots are sharp lurches into new (and perhaps uncharted) territory. This is challenging enough without trying to change everything in a single swing. Do not overwhelm employees and customers. Instead, focus on key, high-impact areas.
5. Don't forget employees Having decided what you are doing and how you are doing it, you must ensure that everybody understands their role and is comfortable with it. Change is a source of anxiety for everyone in the organization. You need each team member to be part of the change, if you are to be successful. You could set up a team of "change champions" dedicated to answering questions and assuaging doubts. FAQ resources will be popular with those that prefer self-service. Also, consider offering stakes in the company to executives you believe to be critical to the success of the pivot.
6. Aim to retain It is well known that the cost of acquiring a new customer is far greater than that of retaining an existing one. During the pivot, aim to keep existing customers. Whether you are a B2B or B2C business, a change in your operating model could mean significant disruption for customers, so present them with a clear transition plan to maintain trust and prevent an expensive (and perhaps even inviable) post-pivot acquisition campaign. However, brace yourself. The pivot will not appeal to everyone. You have to deal in facts. As long as you have consulted customers beforehand, and know how the majority feels, you can be confident that those expressing discontentment with new prices or useability do not represent your base. If you have done your homework, you will already know who these customers are, just as you will have identified those likely to benefit most from the pivot. Don't sweat the former, and reach out to the latter to ensure they regard the pivot positively.
Now, imagine you've got all of this done- now what? Well, remember that even the successful pivot does not mean "job done." Keep looking for the signs that a new pivot is necessary.
Remember: change is the only constant. You have to be ready.
Related: Onward And Upward: Four Pointers For Entrepreneurs In Emerging Ecosystems