Pivoting is part of the entrepreneurial journey, but it's hard to know when it's the right time for your company to make a dramatic turn. Sometimes, admitting that your last "big idea" was a bust and it's time to pivot can feel like giving up. And, even if you're sure you are making the right decision, you and your business will still need to cope with the major changes introduced by a fundamental course correction.
Most smart pivots occur when leaders realize that one area of their business is outperforming the others. Rather than clinging to old ideas, these leaders bravely choose to play to their strengths and focus on what is working. Such changes are far more successful than desperation pivots that attempt to save a company with a Hail Mary pass.
While pivoting can work, it should still be approached with care. Make sure you've exhausted the available options in your current business model, and do the necessary research before committing to a significant change in direction.
Pivoting isn't right for every situation, but many struggling businesses have won big with seemingly small changes. Once you've decided a pivot is in your company's best interests, follow these steps to ensure you're shifting in the right direction.
1. Concentrate on what works.
When deciding how to pivot, consider the strengths of your existing company. Could a currently minor aspect of your business become a primary revenue driver? That's how one company derived success out of a failing multiplayer game called Glitch. Although the team knew that Glitch was a flop, they also knew users loved its chat feature. CEO Stewart Butterfield recognized that other companies might enjoy the same ease of communication, and he pivoted the company to create that product.
That company, Slack, was valued last year at more than $7 billion.
Slack's example shows how a small win can become the foundation of your company's future. If you're looking to change your business, think about areas in which it already excels, and go from there.
2. Keep your investors in the loop.
One of the challenges of pivoting is telling investors that you plan to go in a different direction. These stakeholders bet on your original idea, and it can be unnerving to tell them that their bet may not be paying off as expected. But this hard conversation cannot be avoided.
"If you pivot--as we all do--that's fine," says Chris Bray, founder and CEO of Bray Innovation Group. "However, make sure to discuss revised proof points with your investors so they buy into the company's new direction."
You can certainly succeed by changing course, but if you want a good chance, you'll need investor support--and maybe even additional funding. So, be direct, share your plan to change the business and convince them their investment is still in capable hands.
Caren Maio, founder of Nestio, showed the value of this direct approach. When the time came for her startup to pivot, she immediately approached one of her biggest investors to inform her of the decision to change course. The investor was on board with the new plan, explaining that she'd initially invested not in the specific product, but in Maio and her leadership team. Being upfront with your investors is the best way to keep their trust.
3. Stick to your decision.
When you take your business down a new and unexpected path, the decision itself may not be as important as your commitment to execution. Focus your effort on the new direction and resist the urge to revert to your initial idea.
Remember that a successful pivot requires buy-in. While the decision typically comes from the top, the change of course can only succeed if everyone follows the plan -- from the biggest investor to the lowest-level employee.
When Avishai Abrahami, co-founder and CEO of Wix, decided his company would go from being a Flash website builder to an all-inclusive HTML5 platform, the move was considered controversial by some members of his team. But he held transparent conversations about the new direction and explained why the company would pursue it. In the end, some of the best new ideas came from people who had initially challenged the pivot.
Once you've decided that a pivot is the right move for your business, be bold about it. Focus on what your business does best, be honest with investors and employees, and don't look back. With a lot of effort and a little luck, you might just join the ranks of companies that have pivoted to get to the top.