Many companies will undergo transformation of some kind in their lifetime. According to software pioneer Mitch Kapor, 15 to 20 per cent of businesses have undergone a radical change, which has seen them completely refocus their efforts. But how do you do it? Read on for four steps that will make pivoting your business easier.
1. Evaluate your business regularly
It’s important to be aware of how things are going in business. The fact that you might need to consider a change of direction shouldn’t come as a surprise – you should be well versed in what is happening in your business.
Upon evaluating his business, Boatyard founder Nathan Heber saw that his idea for a peer-to-peer boat rental platform was too niche. “I quickly learned that [it] was not going to provide the scale I wanted to achieve with my business. Additionally, other peer-to-peer boat rental start-ups launched around the same time and what was already a small market began getting crowded,” he says.
“With Boatyard, I had a concept that I wanted to turn into a 100 million dollar business. However, as development progressed, it became evident to me that this was not going to happen with the business I was creating. I had to make the difficult decision to go back to the drawing-board.”
2. Develop a plan and define what success will look like
Once you’ve identified that your business needs to pivot – for whatever reason – you’ll need to come up with a plan as to what you’re going to do.
Neil Patel, co-founder of QuickSprout, Crazy Egg and Hello Bar, recommends coming up with a record of all the possible plans for reaching your goal, before settling on the approach that you’re going to take. Then, he says: “Get as detailed as you think would be helpful. If you want to write an entirely fresh business plan, that might not be such a bad idea. Remember, however, that this could be one of many pivots that you make.”
Once you’ve worked out what you’re going to do, you need to define what success will look like for this new idea. Patel says: “Watching the numbers is the only way you will know whether or not to pivot again. Which numbers do you watch? This step should inform you.”
3. Manage the risk
Any pivot is going to come with some level of risk so it’s important to mitigate that as much as possible.
Aaron Scwartz, CEO and founder of Modify, has two ways to mitigate the risk of pivoting: “Test the new model within your old site. Instead of investing in coding an entirely new experience, choose the expediency of retaining the same brand and technology back-end,” he says.
“Create a defined time period to figure it out. We chose to give the new model a one-month test, and no employee was allowed to put more than 25 percent of their time into this. Similarly, you should try to know very quickly if the new model merits meaningful investment.”
4. Get your team on board
Your pivot will not succeed unless your team is on side with it. You need to take the time to communicate with your team exactly what the plan is and how it’s going to affect their work.
“Pivots are disruptive to any organisation, and they're only successful if your teams are on-board,” Tom Drummond, CEO of Heavybit Industries, says. “Great managers will use pivots as an opportunity to create a more open dialogue with their teams and increase overall trust and employee workplace satisfaction.”