My friend Marty Zwilling has written an excellent blogpost for forbes.com, which we thought we’d repost here. We have done a bit of editing on the introduction, but the remainder is intact.
“Over time, this pivoiting may lead them away from their original vision, but not away from the common principles that link each step. The pivot has to leverage previous learning about customers, technology and the environment. The alternative is more risky, simply jumping compulsively from one vision to another, and is likely to lead to a death spiral.
The pivot can be applied to any element of the business model, without changing the underlying vision. Here are some of the most common pivot elements that Eric (Ries) and others have noted:
1. Customer Problem Pivot. In this scenario, you use essentially the same product to solve a different problem for the same customer segment. (Ries) says that Starbucks famously did this pivot when they went from selling coffee beans and espresso makers to brewing drinks in house.
2. Market segment pivot. This means you take your existing product and use it to solve a similar problem for a different set of customers. This may be necessary when you find the consumers aren’t buying your product, but enterprises have a similar problem, with money to spend. Sometimes, this is more a marketing change than a product change.
3. Technology pivot. Engineers always fight to take advantage of what they have built so far. So, the most obvious pivot for them is to repurpose the technology platform, to make it solve a more pressing, more marketable, or just a more solvable problem as you learn from customers.
4. Product feature pivot. Here especially, you need to pay close attention to what real customers are doing, rather than your projections of what they should do. It can mean to zoom-in and remove features for focus, or zoom-out to add features for a more holistic solution.
5. Revenue model pivot. One pivot is to change your focus from a premium price, customized solution, to a commoditized solution (or vice versa). Another common variation worth considering is the move from a one-time product sale to monthly subscription or license fees.
6. Sales channel pivot. Startups with complex new products always seem to start with direct sales, and building their own brand. When they find out how expensive and time consuming this is, they need to use what they have learned from customers to consider a distribution channel, ecommerce, white labelling the product and strategic partners.
7. Product versus services pivot. Sometimes products are to different or too complex to be sold effectively to the customer with the problem. Now is the time for bundling support services with the product, education offerings, or simply making your offering a service that happens to deliver a product at the core.
8. Major competitor pivot. What do you do when a major new player or competitor jumps into your space? You can charge ahead blindly, or focus on one of the above pivots to build your differentiation and stay alive.
In all cases, the change is not linearly adding one more new feature, in the vain hope that this one will cause tration to magically materialize. The key to pivoting is spotting trends from real data and real market experience, and optimizing the basic product/market fit, without leaving a hole or divot in your market or credibility.
Look for multiple data points before you pivot. You have to learn that no product will satisfy every customer, so don’t make random jumps based on a single customer, friend or negative blog article. A good internal data point or early-warning is a chronically frustrated solution team.
Get your investors and advisiors to do the pivot exercise right along with you, so there are no surprises. Adaptation and dealing with chaos is the key to survival for a startup, and your best competitive edge over large companies. The down side is that it may be bad for your golf swing.”