Small businesses, as Tom Peters points out, are less innovative (Peters, 1994). Their successes get in the way of their need to change. They continue down the same path, day in and day out, operating on the idea that “if it’s not broke, why fix it?” All the while the market is diminishing, the competition is increasing market share, and the product is no longer serving the needs of the customer. It can be a slow and agonizing death for a small business. Too often, entrepreneurs do not realize the need to change or “Pivot” a facet of their business until it is too late, and this may be a factor in the high rate of small business failure.
For most entrepreneurs, a “Pivot” typically means a rethinking of the original business model. If what once worked is now failing, it seems time to move on to a different plan—a different way of generating money. It can be an anxious time, but it does not have to be a time of despair for an entrepreneur. Instead, it should be a time when the entrepreneur reexamines the business assets—both physical and human—to look more broadly for solutions to customer problems (Spoon, 2012). The Pivot, then, creates an opportunity to refine and refocus the business on the customer needs, values, and expectations. It does not always mean the entrepreneur should blow the business up and start over.
The initial thinking behind the Pivot is that of forced entrepreneurial innovation and, as we have explored in a previous post, a key purpose of entrepreneurial innovation is to improve the delivery of a product or service to the customer—to improve customer satisfaction—then the outcome of innovation for the entrepreneur is an economic improvement. Why, then, would an entrepreneur not continually evaluate the venture for opportunities for “micro-Pivots” to the business and operations to keep the customer at the center of the business? Arguably, these micro-Pivots (i.e., continual innovation) may have cost factors associated with them; however, there should be offsetting new revenue over the long-term (Shumpter, 1939). Each micro-Pivot should have a financial payoff. Regardless of the cost associated with any level of innovation, improving the relationship between the customer and the venture, or more specifically the customer and the product or service offered, will without question improve the economic viability of the business.
What once worked, will not always work. Entrepreneurs often forget this. That “passionate attachment” to the initial idea that gave birth to the business is too often insufficient to keep the company viable in the face of increasing competition (Peters, 1994). The skills and abilities required to get a business off the ground are not necessarily the same skills and abilities that are necessary to keep the business operating successfully. Many entrepreneurs do not have the capacity to transition from the start-up phase to ongoing successful operation--that is, a business that is continually profitable. For those who do, the key to that success may be as simple as “always be Pivoting.”
Take a good look at your business. What “micro-Pivot” might you make today that would improve your relationship with your customers? Are you willing to do it?
Peters, T. (1994). The Pursuit of Wow! Every Person's Guide to Topsy-Turvy Times (1st ed.). New York: Vintage Books.
Shumpter, J. (1939). Business Cycles: A Theoretical, Historical and Statistical. New York: McGraw-Hill Book Company. Retrieved from http://classiques.uqac.ca/classiques/Schumpeter_joseph/business_cycles/schumpeter_business_cycles.pdf
Spoon, A. (2012, August 10). What 'Pivot' Really Means. Retrieved February 7, 2017, from inc.com: http://www.inc.com/alan-spoon/what-pivot-really-means.html
Image Source: Getty Images, Alberto Ruggieri