What is Pivoting in Business Explained

For many who are new entrepreneurialism and even for some seasoned entrepreneurs, understanding what pivoting really means can be confusing. The first thing to clarify is that pivoting your business does NOT mean your business has failed.

With that said lets discuss the issues and provide some light on it in this article on what is pivoting in business explained.

So pivoting is the act of applying a pivot, which is a tweak or a structured change, in the product, service, or strategy of a business. In 2011, Eric Reis introduced the business term “pivot” in his bestselling book “The Lean Startup.” Pivoting is a fundamental necessity for startups and a prime requisite of growth for established companies.

A company starts with a business model and in order to be profitable, the model needs to be sustainable and have continuity. The business model also needs to be scalable for future growth.

Related: How To Develop An MVP (Minimum Viable Product) For Your Startup Business

Towards these ends of profitability and scalability, a forecast based on an imaginary but probable market scenario is made. When this forecast is tested in the real market, it is generally seen that some elements of the business model will work as expected and perform well; some will just work in an average way, while some do not work at all.

The elements that work averagely are optimized or altered so that they begin to work as per expectations. The elements, which do not work at all, are simply eliminated or substituted with elements that have already been proven to work.

These changes or tweaks in the components of the business model, make the business model acceptable and functional in the real market. So it’s this act of making these process changes in the business model that is known as pivoting.

Either way after you have pivoted it may result in a less, moderate or drastic change in the product, service or strategy of the business.

Some analysts consider very slight tweaking as pivoting, while other analysts consider pivoting as applying fundamental changes that affect the company in a significant way. Whether slight or significant, pivoting as a process, is iterative in nature, is constant and aligned with the existing market conditions.

Related: How To Analyse Markets For Your Business Plan

Examples of pivoting

The business world is full of examples where companies have undergone partial or major transformation by pivoting. Some notable examples are listed below.

1. Twitter


This social media giant started as a company known as Odeo, which was a network of podcasts. With the emergence of iTunes, the podcast market changed, as iTunes almost monopolized it. Odeo pivoted with the application of a significant change by becoming Twitter, a status-updating platform featuring micro-blogging. Due to successful pivoting, it ensured its survival and growth in changed market conditions.

2. PayPal


Starting originally in 1999 as Confinity, it allowed customers to send payments from PDAs. With the decline of PDAs, it pivoted by merging with X.com and changing its name to PayPal. Again, it pivoted by combining with eBay and becoming the favoured payment system for all the sellers on eBay. The pivoting continues, due to which it has expanded to several countries and can accept multiple world currencies.

3. Hewlett-Packard


HP started in 1947 as a company creating signal and audio generators. It also produced several testing products mainly for the electrical engineering industry. Thereafter, in 1968 it pivoted with the introduction of a personal computer. However, personal computers did not catch up with the public, primarily due to its price and size. With the advancement of technology, both price and size shrunk and during the 1990s, personal computers became acceptable by the public. Now, HP again pivoted and separated the electrical testing products into a new company. Thereafter, HP concentrated primarily on computers, and accessories like printers and scanners.

Other notable examples of companies applying successful pivots include Nintendo, Instagram, Wrigley, Avon, Pinterest, Fab.com, Suzuki, Flickr, Nokia, Starbucks and Groupon.

Related: Important Tips To Validate and Test Your Business Ideas

Telltale signs of the need for pivoting

Any entrepreneur, CEO or businessperson who takes direct responsibility for running their company is concerned with the changing conditions of the market, as it forces them to make critical structure decisions to their business model.

The decision is primarily to consider whether to keep the business on the same track or to change direction. To aid the decision making process, there are certain telltale signs that show that pivoting is required and a change in direction is needed.

Here are the most common signs that your business might be in trouble or in need of redirection.

  • The financial performance of the company has reached a plateau.
  • There is a perceptible slowdown in growth.
  • The growth of the company is behind the growth projections given by the industry.
  • The results of the company are behind the results of the competitors.
  • The overall market or the market segment in which the company operates, is not as profitable as it previously was.
  • Being a leader in the market has lost its charm and excitement.

The above is just a short list and there are many other warning signs, which are revealed by active participation in the market and continued communication with the consumers and client base.

The process of pivoting

Pivoting implies change and this necessarily challenges the status quo. People do not like changes and generally resist them. However, the constant progress in science, technology, economics and other branches of industry learning, alter the needs and demands of customers, which in turn, compels businesses to change accordingly and move with the times.

The process of pivoting can be simple or complex, depending upon the nature of the pivot, as well as the circumstances under which it is applied. Nonetheless, the process invariably includes the steps as outlined below.

1. Recognition that change is needed

The process of pivoting starts with the recognition that change is needed and it is usually needed urgently. An efficient management ensures that pivoting is structured by anticipating and analyzing market trends.

Whereas, an inefficient management is caught unaware and either the company goes out of business, or goes into a frantic survival mode, by adopting any and all pivots. Timely recognition of the need for pivoting is the first step in any process of pivoting. Yes I have been there!

2. Reinventing company vision for the required change

Pivoting involves acknowledging the market realities and adapting to it, by successfully reinventing the company vision. It may seem worthwhile to step up marketing efforts in order to once again capture the lost market share, but if the market itself has changed, then no amount of marketing can reclaim lost territories.

Therfore, a paradigm shift from focusing on marketing to focusing on the market, is required. The company vision has to be reinvented by taking in account the realities of the market.

3. Structuring the change by formalization

For a pivot to be effective, it has to be structured. This structuring is achieved by planning and implementing the change in phases, by formalizing the various business processes. Formalization can take place in terms of documentation and also by recognition of competent employees, who are given more freedom and authority. Formalization provides a structured change, which eliminates undesired surprises and prepares the company for further growth.

4. Maintaining constant connectivity

Once pivoting is achieved and the required change implemented, constant connectivity has to be maintained. Connectivity is undertaken by remaining in touch with the market realities, consumers, team members and the social media. Maintaining constant connectivity enables the recognition of market trends and its subsequent analyses. By this constant connectivity, the company can further plan for the next pivot and the process of pivoting continues iteratively, in a structured fashion.

Pivoting is both difficult and easy. It is difficult to accept that a pivot is required, to recognize the exact pivot to apply and to gather the necessary resources for its due application. Once this stage is crossed, then pivoting is easy, as a detailed road map is already made that simply needs to be followed. Pivoting is also an art. When preparation for pivoting is undertaken in advance, the application of a pivot is graceful and pivoting becomes an art. However, in the absence of any preparation, a company faces an emergency and the pivoting is haphazard, undertaken simply to survive anyhow.

Nowadays, with the global impact of the internet, both online and offline business models are in a state of constant flux. They are constantly applying pivots to keep pace with the changing needs, tastes and desires of the global consumer. Startups undergo more frequent pivoting than established companies do. Being rooted in the real market conditions, pivoting is a necessity for survival and growth and has become the prime consideration, of businesses all across the globe.

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