Startups Must be Prepared to ‘Pivot’ When Necessary

By August 05, 2013

In a highly competitive market, what options are available to startups in order to differentiate themselves? Perhaps they should just listen to the market and be prepared to switch direction accordingly.

However surprising it might seem, 93% of successful companies have at a given moment had to abandon their initial strategy, reveals Professor Amar Bhidé in his book Origin and Evolution of New Business, which he wrote while on the faculty at Harvard Business School. “This teaches us that when it comes to entrepreneurship, it’s not so much a matter of taking the right decision, but rather making all the wrong ones fast enough,” argues Oussama Ammar, co-founder and partner in early-stage startup accelerator TheFamily. If this is true then startups really need to master the art of the ‘pivot’, i.e. tweaking their business model while still keeping one foot in the original business, with all the accumulated know-how and the company reputation. This flexible approach to the company business model goes beyond how to monetise your services, covering a range of aspects including forecasting and type of customer service model, and touches on the entire value chain.

The vision behind the pivot

Like the basketball player who keeps one foot planted while changing direction with the other, “a startup needs to have a firm long term vision on the basis of which to make changes,” underlines Romain David, co-founder of Paris-based Wisembly, an interactive platform that facilitates communication exchanges between participants and the speaker during meetings. Having originally started out in the events organisation business, this startup had to switch to the seminar and training market, “because this is how we can achieve our basic aim of making people smarter when they get together,” explains the Wisembly co-founder. In addition, it is essential that entrepreneurs remain alert to any new trends gradually emerging in their ecosystem. “There again, the challenge is to distinguish between long-term trends and fleeting fads,” stresses Benjamin Hardy, co-founder of French mobile enterprise apps specialist Kawet. The Kawet founders switched from a product aimed at a wide audience to one that is 100% BtoB, “because we felt that the growing need to use apps right throughout companies was a market that we should grasp,” he explains. The financial results have proved Kawet’s hypothesis right, and Wisembly’s pivot enabled the startup to meet the challenges of scaling up its business.

Pre- and post-pivot

The pivoting process will also mean taking another look at the whole setup. ″The entire staff must understand the reasons why the company is changing course so that they all stay on the same track,” says Hardy. This is a tall order, especially with large teams, but Oussama Ammar says: “I would advise a company’s founders to talk to everyone, to discuss the changes with a few people, and then to make the decision on their own.” Once the decision has been taken, there will be a raft of changes to make involving products, sales strategies, team reorganisation, company name, and much more besides. In the case of Wisembly, the move into new markets led the company to change its business model. “Previously, we used to invoice each individual service, now we offer our services on a subscription basis,” reveals Romain David. The Kawet team re-thought their product’s functionality to make it fit the needs of client companies more closely. “Rather than add Facebook icons we placed the emphasis on security,” explains Hardy. Finally, both of these companies felt that a change of name was required, so as to ensure that customers have a clear idea of what the companies are now doing.


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