by Michelle McDonald Pride
Before a strategic rebrand, our business was called Trading Hope. We were growing, but well aware of looming trends in the marketplace and patterns in our business that indicated a future decline in revenue. A mentor to me half joked and half warned that if we did not change something, we would soon be called Fading Hope. Our rebrand was an outward representation of a major strategic pivot.
Some of the most well known brands have successfully pivoted. Wrigley Gum used to give away pieces of gum on the soap they sold. Facebook and YouTube began as dating sites. Even Avon began as a book business that gave away free perfume with a purchase. While these examples are drastic, they are all incredible pivots that recognized the advantage of changing strategy.
Being able to pivot as a social enterprise is one of the most important, yet difficult concepts to approach. How do you pivot your social enterprise without sacrificing your impact? Most social entrepreneurs do not begin their business based on a market need and opportunity; they begin based on targeting a social problem or a particular community group in need. The entire business model is often upside down. For this reason alone, pivots are of critical importance for social enterprises.
What is a pivot
A pivot is a strategic and substantive change in one or more components of your business strategy or model. Most startups will experience pivots of some sort; it is part of the process to identify your target (and correct) customer, value proposition and market position. This is why many will encourage young startups to pivot often and early.
There is a vast difference between a pivot and a tactical adjustment. A new marketing campaign is not a pivot. Changing or adding staff members are not pivots. Adding additional color varieties to a product offering is not a pivot. These types of changes are not likely to jumpstart a stalled venture or alter the trajectory of a business.
As entrepreneurs who pour countless hours into our babies (er…I mean businesses), it is also worthwhile to note that a pivot does not admit defeat. It does not mean you are closing up shop and starting over. It simply recognizes that your initial idea needs some tweaking. It means that you are keeping one foot firmly planted in your business, but shifting the direction of your stance with the other foot to more effectively pursue your vision.
When to consider a pivot
Since a pivot is a major change to your business, it cannot be taken lightly or flippantly approached. A pivot is not a band-aid to a broken system nor is it a magic pill to fix an ill planned market approach. Although there are many indicators and unique situations where business may decide to pivot, there are also some general landscapes where a pivot might be a wise option to consider:
Is your business experiencing a plateau in revenue, engagement or growth? After dissecting possible reasons for the plateau and exhaustively fixing what might be broken, begin to consider ways to jumpstart your progress. The saying is “pivot or persevere,” but that does not mean you need to persevere in mediocrity.
Maybe you were an early entrant into an emerging marketplace and since then, many new businesses have entered your space. A lot of social enterprises hang their hat on the fact that their product creates social value. Is your business’s only distinguishing factor that it is a social enterprise? Conscious commerce is growing, but the marketplace is also growing extremely crowded. A pivot might be necessary to better position the business as an industry leader that also has a social mission.
Are you consistently hearing the same negative feedback from customers? Is customer engagement and retention consistently diminishing? If large groups of customers (or a small group with large buying power) are providing the same feedback, consider making a pivot to offer a solution.
You might not be in the technology sector, but there are always technological developments that would benefit your business. Perhaps you developed, or an outside source, has created a new technology that will enable you to reach an entirely new demographic or change how you bring products to market. An example of this would be changing from B2C to B2B. New technology can revolutionize a business and mandate a pivot; by being an early adopter of new technology, you can jump ahead of competition.
Is there one element of your strategy that is gaining traction leaps and bounds ahead of others? Perhaps there is one customer segment or a product that is contributing more than its predicted share to your revenue. By recognizing this traction, your business can naturally pivot to its most successful (and perhaps inadvertent) market position.
How to successfully pivot
Pivoting successfully is as much of an art as it is a science. Many companies pivot multiple times, but with proper preparation and strategy, each pivot has a much higher success probability.
Crunch the Data
On what information are you basing your potential pivot? Gather and analyze as much data as possible. Look at qualitative and quantitative information. Dig deep into your business, your industry and customer segments. Ask questions that might not have answers right away. Actively engage with those in your commerce cycle to gain their insight and look for trends.
Test Your Model
In today’s connected world, it is easier than ever to test a new model. Before you pivot entirely or go beyond the point of no return, test your hypothesis. You can do this through social media, small-scale product launches, VIP customer experiences and so much more. Gone are the days of waiting months to see results; you can now test your pivot and receive instant feedback.
As an entrepreneur, you are constantly selling your idea and business to those around you. Don’t alienate your staff, customers or advocates (not to mention investors), by making a pivot without getting the buy-in of those around you. Communicating your plans and reasoning for a pivot is almost as important as the execution of the pivot.
Plan for Future Growth
Is this pivot simply navigating a roadblock? Or does it clearly open the highway for growth and opportunity? Having long-term vision for your pivot strategy is critical so as to not have to pivot again before necessary.
Often times, pivots come when we as entrepreneurs are tired, frustrated or confused about why things did not happen exactly as we wrote in our business plans…because they should have…right? Finding your why as an entrepreneur is critical for perseverance on the brutal road of building a business. As social entrepreneurs, we intrinsically have a mission and vision that motivates us when the days are long…but beware not to let your mission constrain you and stall necessary pivots for success. By being agile and adaptive, you can pivot without sacrificing your impact and therefore, even more effectively pursue your vision and social mission. And always remember, “the temptation to quit will be greatest just before you are about to succeed.”
Michelle McDonald Pride is the Founder of Trading Hope and The Foundry Marketplace. After leaving a career in private wealth management, she began working with impact driven businesses around the world. She is on a mission to show the world that business can be profitable and transformational at the same time.