Smart Pivoting for Innovators and Entrepreneurs
Stefan Lindegaard has coined the term smartfailing to refer to the discipline of understanding and learning from failures that can occur in business and innovation pursuits. This thinking can be extended further to the reconsideration of strategy stemming from this
analysis and then acting on it. This is referred to as the pivot.
Last week, I sat in on a talk about Entrepreurship given at The Ohio State University. The speaker was Fred Brothers, a successful entrepreneur and Ohio State grad. Fred covered his entrepreneurial journey with the class, and during his talk remarked that (paraphrasing) many successful businesses pivoted from their initial direction.
I was struck by Fred's use of the term "pivot" in a business context. I had been familiar with its use in sports and politics, but I hadn't heard it used in discussing businesses. Doing a bit of research, I searched out some descriptions that I thought would be relevant. While some people apparently dismiss it as an overused buzz phrase that can refer to any type of change in strategy or business direction, I found a definition that I like, from someone on Quora who identifies himself as Ho-Sheng Hsiao:
"Using the language of chess (from Bob Rice's "Three Moves Ahead"), a pivot is an exchange sacrifice. You are exchanging the current advantages you hold for a different set of advantages...In a startup, you don't necessarily know all the advantages you hold and you are still searching for a business model. However, I don't think it is enough to think in terms of "changing direction" or "changing your business model". It does not make sense to sacrifice your current advantages for nothing."
Applying this thinking, I recall a Cincinnati based business that started up in the mid-1980's: Elegant Fare. It was originally conceived to offer customers for restaurant-quality gourmet meals that they could enjoy at home. These were high quality meals flash frozen and packaged for delivery or customer pickup. In hindsight, they were 20 years ahead of their time! However, at that time, they were trying to make a go of it and were struggling to establish their niche. For a while it appeared that they were wedding their business to their novel flash freezing technology. However, they pivoted, and shifted to a more conventional food catering business. This redirection proved very successful for them. While their pivot involved a repositioning of their offering, it also leveraged their core equity of gourmet restaurant quality foods available away from a restaurant.
Net, it is wise to learn from mistakes, but it can be even better if one can apply these learnings to help create and execute a superior business approach. Has your company pivoted during its evolution?