“To pivot, or not to pivot, that is the question:
Whether ’tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles.”
Hamlet, were it set in Silicon Valley, circa 2011.
Ah, the internet – how you hijack our vocabulary. A few years ago, “embedded” had connotations of journalists following soldiers. Today, it’s most associated with YouTube clips. Similarly, a pivot was something that I vaguely recall my basketball coach talking about. Today, it’s the repositioning of a company and without a doubt, 2011 was the year of the pivot.
Talk is Cheap
Let’s face it, despite the bravado and brashness, oftentimes Silicon Valley gets scared and zigs when it should zag. Lean Startup author Eric Ries popularized the term “pivot” but the concept has existed for years. Nokia used to produce rubber boots; today, well… that’s another story.
But the point is, while the concept of pivoting has become commonplace in startup lore, it’s good to separate the fad from the core concept to answer the question: “to pivot or not to pivot”?
You may be driven by success, recognition, respect, money, power or fame. Whatever the case, success is i) subjective, ii) relative and iii) fluid. In other words, i) we define success based on what drives us, ii) but we tend to measure it relative to other people’s success and over time, iii) we convince ourselves to change its definition, revising upwards or downwards, depending on the conditions on the ground.
Don’t Believe the Hype
While Silicon Valley is entirely free and encouraged to have its own set of values, culture and objectives, the 24/7 media coverage startups and entrepreneurs are exposed to gives all entrepreneurs a sense that unless your idea and company blast off, you should pivot. In that context, the mindset of “fail fast” is understandable given the herd mentality and impatient nature of VCs, but wrong when you consider that 1% of projects fit venture capital’s profile and 1% of those become moderately successful.
In other words, while money may accelerate a company’s ramp-up and growth, the reality is that teams needs to gel, products take time to develop and businesses have a natural life-cycle that can’t really be circumvented.
Exacerbating this, of course, is that technology companies tend to compete in a zero-sum environment where the #1 and #2 players create value for shareholders but all others are left standing when the game of musical chairs stops. Meanwhile, content companies tend to be long term bets anyway: Machinima is one of the larger content providers on the leading video platform YouTube, but it launched in 2000 (12 years ago!). Vice is now featured in the pages on Forbes but it’s been around since 1994 (it launched as a magazine).
Despite these realities, boards rush entrepreneurs to adapt or die without letting the child crawl, let alone walk or run.
Yes, Pivots May Work, Sometimes
To be clear, the extreme cases of Groupon and Fab are prime examples for why pivoting is sometimes the only solution to a stagnating or declining project, but those tend to be the exceptions and not the rule.
But Usually, You’ll Simply Just Kill a Good Idea Before Moving to a Fad
As such, before throwing out the baby with the bathwater, understand the following.
Rule #1: Pivoting is a Function of Your Employees
When you recruit engineers and programmers, you can point them in any direction and challenge them to solve a given problem. If you are a content company, you hire writers or videographers and are, as such, limited to remaining in the content business unless you really choose to blow up the building and start from anew.
However, you can’t assume that a team that has built a search engine can build a better social network. So don’t let the tech vs. content variable underestimate the inherent challenges with any pivot.
As much as I dread quoting Donald Rumsfeld, “you go to war with the military you have, not the one you might want or wish to have at a later time”.
Time is crucial in any company and hiring a challenge. If you have good people, it might be better to improve something than assume you need to nuke the joint.
Rule #2: Focus on A Different Target
While the concept of the pivot refers to a radical and transformative change in company direction, strategy, focus and product line, it’s important to note that to become successful sometimes what you need is to pivot what industry or clients you are going after, and not the whole company. You may be developing a product and aiming for a B2B application, but perhaps by making it go free and targeting a B2C audience it might prevail.
Rule #3: Timing and Externalities Matter More Than You Think
After 9/11, a lot of companies repositioned themselves to serve the national security and defense industries. They hit the jackpot. This isn’t so much chasing a fad but realizing that the broader macro environment and trends will affect your industry and company more so than you think.
Rule #4: Success Comes From Incremental Gains, Not Hail Marries
Apple is the ultimate pivot. Most of its revenues come from iPhone and iPad – products that didn’t exist five years ago! But it was all born from the iPod. So the best pivots are not overnight 180-degree turns but progressive shifts and extensions. They are now charging into the post-PC era, but it was all an extension of their core. Hulu, too, is pivoting before our eyes (as are YouTube and Netflix), moving from pure-play aggregators to creators of content. After all, at that velocity even a seemingly small shift in strategy leads to a large change in overall trajectory.
While it’s difficult to define “pivot” and impossible to predict its outcome, you can drown out the noise and clearly ask yourself: “what do I define as success”. Once you do that, the rest falls in place.
Photo credit: purplemattfish
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