Perseverance and resiliency are some of the essential, and most admirable, qualities in an entrepreneur. The ability to stay executing on an idea and leading a team while battling hostile market conditions, competition and unexpected events is, by most psychologists, considered almost irrational but is also the source of success of many companies. Sometimes, despite great efforts, products fail to get traction. At that point, entrepreneurs will face one of the most difficult decisions in the startup life: persevere on a specific idea or implement a change of direction which the industry knows as “pivot”.
Pivoting is one of the most over-marketed and misunderstood concepts in the modern startup world. Mistakenly, entrepreneurs tend to associate pivot with ANY change in the direction of the business which is far from true. Understanding what a pivot really is might help us deal with the process in a more efficient way. From all the definitions of pivot I’ve encountered, I tend to familiarized myself with Eric Ries of the “Lean Startup” fame. By Ries’ definition a pivot is a change in strategy without a change in vision.
Let me try to explain….
Vision is one of the key elements in the DNA of a company. A vision clearly details how a specific aspect of the world should be improved or changed. In order to execute to a specific vision companies use different strategies and products. Oversimplifying things, we can think of a little formula to express the dependencies between vision, strategy and product.
Vision= Strategy + Product
In some contexts a product can be seen as a specific part of the strategy. I prefer to establish a small distinction between product and strategy. From my standpoint, I think about products as the physical materialization of a commercial entity that reflects a portion of the company vision while I typically associate strategies with softer elements such as engines of growth, sales, marketing, etc. I am aware this definition is not 100% accurate but I find it very helpful to strategize and implement changes on different instances of a company.
Understanding the dependencies between product, strategies and vision can help entrepreneurs to embrace change at different levels. Successful startups very frequently adopt drastic changes in products and strategies in order to better execute on their vision. This is the classic example of pivot. In that sense a company can pivot by embracing a different engine of growth, focusing on a specific feature of a product, go after a specific segment of the market, etc.
Contrary to pivoting, sometimes companies completely change their vision to focus on different areas. A change on the vision of the company should not be considered a pivot and, instead, should be seen as almost a new business. A classic example of a change in vision, and one that people often associate with a pivot, was the transitional process that the podcasting company Odeo established to create a real time information platform that ultimately evolved onto Twitter.
Embracing the distinction between pivot and a change in the vision of the company might help entrepreneurs understand that, although painful, pivots are a necessary element to correctly execute to the bigger vision of their companies.