Concept: Pivot Business

Skill Goal: Be able to alter a business model to achieve product / market fit

“Successful startups change directions but stay grounded in what they’ve learned.” – Eric Ries

  • A pivot is changing one aspect of your business model while keeping other aspects constant.
  • The decision of what to change is based on market feedback. Aspects that have been validated by market feedback are kept constant.
  • Although anything in a business model can be changes and therefore pivoted, the concept is normally associated with a search to find product / market fit.
  • Types of pivots include:
    • Product Pivot
      • §  Can we solve the problems of our target market with a partly or entirely different product?
    • Customer Need Pivot 
      • §  Can we use the same solution or technology for a different customer problem within the same target market?
      • Also sometimes referred to as “a problem looking for a solution.”
    • Market Pivot
      • §  Can we apply the same solution or technology within a different market with the same problem?
      • §  Subtypes include “Customer segment pivot,” “Business architecture pivot,” and “Platform pivot.”
    • o   Zoom Pivot
      • Can the solution / product be focused on fewer or a singular use case?
      • Can the solution / product be broadened to a broader or greater number of use case?

Example: Zoom-In Pivot
Paypal originally supported payments via PDA as well as the web. After discovering their customers were primarily using email, they dropped support for PDA payments to focus on their primary customer value.

Example: Market Pivot and Zoom-In Pivot

Flikr was originally a multi-player on-line game which included a photo sharing functionality. They recognized that the photo sharing aspect could be retargeted to a broader market and abandoned the game.

Additional readings:

Pivot, don’t jump to a new vision

The Taxonomy of the Lean Startup Pivot

What’s the best pivot in business you’ve ever heard?

Individual Exercises:

  • Based on your current business model, list at least one possible pivot for every pivot type.
    • If the customers do not like the solution, can you solve their problems in a different way?
    • If the customers do not have the problem, is there another customer who may?
    • Etc.
  • Create a strategy tree of possible pivots based on your next planned experiments.
    • Example:
      • IF the customers do not have [old problem], test [new problem].
      • IF the customers do not have [new problem], test [new market] with [old problem].
  • Imagine possible pivots for:
    • Yelp
      • Could Yelp’s technology be used for another purpose?
    • IBM
      • IBM has made several pivots. What are some future possibilities?
    • Lady Gaga
      • Is it possible to have a personal career pivot?
    • A sushi restaurant in Mexico City

Group Exercises:

  • Describe one member’s product / market fit hypotheses.
    • Based on feedback from Customer Discovery, what are the possible pivots?
    • Does the customer feedback warrant a pivot? If not, what circumstances would indicate it’s time to pivot?
    • Which pivots should be tested first?

Thought / Discussion Exercises:

  1. What are the possible barriers to implementing a pivot for a company that is funded? What about a company that is not funded?
  2. How can you tell if your company needs to pivot?
  3. Which types of pivots are easiest to implement?
  4. Which successful companies have never pivoted? Why not?