Pivoting for Success - Knowing When a Business Pivot is Necessary

In this episode, Brian Montes discusses the importance of knowing when to pivot your business. He emphasizes that pivoting is not a sign of failure but rather a strategic decision to shift courses and capitalize on new opportunities. 

Brian provides examples of successful business pivots, such as Netflix, Instagram, and Slack. He also shares his personal experience with pivoting his own company. Brian highlights the factors to consider when deciding to pivot and the importance of conducting market research. He explains the challenges of implementing a pivot and the need for effective communication. Brian concludes by emphasizing the need for adaptability and continuous innovation in business.

Takeaways

• Pivoting your business is not a sign of failure but a strategic decision to capitalize on new opportunities.
• Successful business pivots include companies like Netflix, Instagram, and Slack.
• Factors to consider when deciding to pivot include market shifts, internal factors, and plummeting performance metrics.
• Implementing a pivot requires effective communication and resolve in the face of resistance.
• Pivoting does not guarantee success, but failure can be a valuable learning experience.
• Adaptability and continuous innovation are essential for long-term business success.

Email me at brianm@scaleocityworks.com

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Transcript

Speaker 1: 0:07

Welcome to the Entrepreneur to Employer Podcast. I am your host, brian Montez, founder of Scalosity Works, and the Entrepreneur to Employer Coaching and Membership Community. So congratulations is in order. If you've built a successful freelance business that has grown to the point where you need to hire, you have achieved a huge milestone. If you're already past the point of making your first hire and your team is now growing well, congratulations is in order to you as well. So, regardless of where you are with scaling your team and your business, whether you're at employee number one or employee number 100, this podcast focuses on everything related to people operations. We'll cover best practices, strategies and solutions to help you build a sustainable and scalable business that is fueled by great people and a great culture. So if you're enjoying listening to this Entrepreneur to Employer Podcast, please subscribe, give us a like and give us a review. Your feedback will help us grow this podcast and we'll be able to positively impact more employers to help them build better work environments.

Speaker 1: 1:10

Welcome back to another episode of the Entrepreneur to Employer Podcast. I am your host, brian Montez, founder of Scalacity Works. So today we're going to talk about the importance of learning when to pivot your business, because if you don't know when to pivot your business, you very well could watch all your hard work go down the drain. So pivoting your business, it's not a sign of failure. It's a sign that what you started out doing isn't working. There either isn't a market for it or something's not working, and that in order for you to grow a successful enterprise, you need to make a pivot. So in today's podcast, we're going to talk about knowing when it's time to make a change, what happens at decision time and how you go about executing, and what does a successful implementation of a pivot look like. And also we're going to talk about the fact that, even if you do pivot, there are no guarantees. So, without any further ado, let's start talking about pivoting your business, knowing when to pivot and how you go about doing it. Now, changing your business strategy to meet shifting market demands, it's not a bad thing, and when it's done carefully and strategically, it can transform your company into something extraordinary. So let's talk first about a few companies that everybody is going to know by name, their household names and how their business started as one down one path and, over time, shifted or pivoted to a different business, and the three businesses that come to mind are Netflix, instagram and Slack. And these three companies have one thing in common their initial business plan was not sustainable and they became formal companies over time because they knew when to pivot into a new direction.

Speaker 1: 2:52

Now, pivoting in a startup culture is a strategic business decision to shift courses so that you can capitalize on either a new need, a new market that's opening up. It's a change that you've identified is necessary to make. Now, making a successful pivot does require high organizational adaptability. Right, you got to be flexible, you got to be willing to adapt, and you have to be willing to do that if you want to achieve long term success. So, in a business world that is constantly fluctuating, pulling the plugs when things don't go as planned is an easy out right. So quitting all together and saying I'm out, I'm not going to be a business owner anymore, that's one path you can take. However, successful entrepreneurs and investors who truly understand their markets can see innovative ways to meet new opportunities by just tweaking their current business models.

Speaker 1: 3:38

So the question that you need to ask yourself is it time to pivot your business? And the reason I wanted to talk about this today is because I am in the process of pivoting scalosity works. So when I founded the company, we were an HR advisory firm and then we offered payroll and we offered HRI you know, cloud-based HRIS systems. But over time I've grown to enjoy that business less and less and have made the decision that Pivot Scalosity Works is going to pivot. I'm going to pivot for a couple of reasons. Number one I no longer feel like I want to compete against ADP and Paychecks and all the big payroll players out there. I just don't want to anymore. And we're going to pivot into something that I really enjoy and I do see a true market need for, and that is business coaching and fractional executive services. So we're in the process. I am in the process of making a business pivot, coming out of building an HR advisory firm to building more of a coaching business with some fractional executive services that'll be offered down the road. So, answering that question of is it time to pivot in your business, so let's see when it makes sense, let's talk about how to do it well and let's talk about what it looks like in both success and failure. So the first thing is knowing when it's time to make a change.

Speaker 1: 4:55

Right Now, I personally have lost track of how many businesses I've seen, with everything set up for success, only to have the market pull the rug out from under them. Even the most business savvy and meticulously prepared ventures can be surprised by economic changes. Right, none of us saw COVID coming the way it did. That was a black swan event that shut down a lot of businesses. So sometimes there are things that happen that are out of our control that force us to have to make a pivot. And then, of course, there's things that are within our control that still requires to make a pivot. Now we can see market shifts that create new technological advancements that will create economic hits to certain businesses. Right, we don't know how AI is going to impact certain businesses. We are speculating right now that AI is going to impact certain businesses, but we don't know for sure until we get a little bit further down the road. But I think it's fair to say that AI is a new technological advancement that very well could create economic hits to certain industries and certain businesses.

Speaker 1: 5:52

And those businesses are going to have to look at those external factors and decide is it time to pivot their business if they want to survive? And then, of course, there's always internal factors that will cause you to take a step back and decide if you need to make a pivot or not. Right, you could see plummeting performance metrics. You could see a drop in sales. You could see a shift in consumer behaviors. Excuse me, there are a lot of reasons internally where you may say it's time to pivot the business, and the truth is that few successful businesses got to where they are today following the same strategic plan they started with.

Speaker 1: 6:26

While you always need to maintain your core values, you know the things that make your company and you unique keeping your organization agile is essential. You should always be prepared to make a necessary shift to keep your company relevant and keep you financially stable. So once you have started to identify that it's time to make a change, your next step is to actually make that decision right. Recognizing the need to pivot and deciding to actually execute are two different things. There are so many factors that you as a business owner need to consider and several stakeholders may need to sign off right. If you have a board of directors, if you have investors, if you have a business partner, you're going to have to have those stakeholders potentially sign off on any pivot that you decide you need to make. And that's why, before you decide to make that pivot and execute on it, you need to conduct some extensive market research, you need to have your data, you need to have your analysis and you need to justify and be able to articulate why a pivot is necessary before taking the actual steps of making the pivot. Now some businesses might be experiencing a rough patch that will even out after a few tweaks and a few adjustments and some perseverance. Others may need a drastic overhaul of their business model in order to survive. Now there's no instant solution and there is no easy answer. A decision of this magnitude requires due diligence and a belief in your team and a belief in your product or your solution.

Speaker 1: 7:48

A great example of a pivoting business based on informed decision making is Netflix. Now, initially, if you remember, netflix was a mail order service for DVDs started in the early 2000s. They were competing against Blockbuster, whereas Blockbuster you didn't have to. They didn't have mail order. You had to go actually into the store to find what you wanted. So they were first a competitor to Blockbuster and, of course, all the small mom and pop video rental stores. But it quickly gained a corner in the at-home entertainment market. But it could feel the strain of growing competition. And while the executives at Netflix had their eyes on the current industry trends, they also saw an entirely new, untapped market that they could conquer. So in 2007, netflix launched its streaming platform, where many of the same movies and shows they sent in the mail were now ready to enjoy on demand. They pioneered the streaming revolution and continued to adapt as they began developing new and original content. Yes, over time, we saw many others follow suit, right, look at how many streaming services there are nowadays. But the point is that the Netflix executives understood the market and their company so intimately that they knew when it was time to pivot, and they executed on it in such a way that it actually disrupted the industry and kept their company's profits rising.

Speaker 1: 9:05

Now don't think that because you're going to make a pivot, you have to disrupt an industry. That's not necessarily the case, right? Not everybody, not all of our businesses are going to be disruptive. But sometimes it requires us to make a pivot to serve a new market, to serve a new customer, to hit a different niche, and it's okay if it's not disruptive. It just has to serve a purpose and solve a problem.

Speaker 1: 9:27

Now the third thing we're going to talk about is what does successful implementation look like? Well, the next phase of the pivot is setting everything in motion. Implementation can be one of the most challenging aspects, because your business is likely going to face scrutiny and backlash from a lot of different angles, including the inside, including from within your employees, and this is the phase where clear, effective communication becomes critical. You're going to feel resistance from your employees, who are uncomfortable to change because nobody likes change. You're going to feel resistance from stakeholders who weren't involved in a decision, and you also may face some criticism from the outside. Right Industry pundits may think it's the change is outlandish, not necessary. So your company's messaging must be on point and your resolve must be unwavering, regardless of who says what. In other words, you've got to have a thick skin to navigate the pivot Now. If you've done the proper research and you consider all the options and the scenarios and you have buy-in from the appropriate parties the parties that matter to you, nothing else should force you to change your stance unless there's a legitimate threat to your business's future. So communicating this shift from the point of empathy and care, while respectfully sharing the need for a pivot and how it's going to work is essential to keeping your process steady and to keeping your process moving forward.

Speaker 1: 10:43

Pivoting a business it's never easy, but planning and strong implementation in a defined process will help you be successful. Lastly, let's talk about the fact there's still no guarantees. Just because you make a pivot doesn't mean your business is going to succeed. So notice how, I've said all along, it can be successful. Like your initial business, it could still fall flat, even if laid out and executed perfectly. The unfortunate part of business is that there's always risk involved. Our job as business owners is to mitigate risk. There's always going to be risk in every decision we make. Our job is to make that risk as small as possible, because nothing is ever promised.

Speaker 1: 11:23

Yes, pivoting could save your business from failing, or it could lead you down a path that seems promising but is yet another dead end. And if that's the case, just learn from it. Failure is not the end, all be all. Failure is just opportunity. It could mean the end of the line from from this perspective and require you to make another detour to find your company's true potential Now. So, regardless, don't let a single failure go by without gaining insights for improvement or wisdom for what does and, more importantly, what doesn't work, and let's face it, failure does feel miserable. We've all failed, but it's an incredible teacher.

Speaker 1: 12:00

Even if your pivot is successful, that doesn't mean you won't have to stand in your toes, doesn't mean you won't have to be ready to adapt as the market changes, because no business is ever 100% safe. Industry shift, government issues shift, competition shifts everything in life is always shifting under our feet. So you have to be on your toes and you have to be ready to adapt. Never stop innovating. Don't get comfortable. Keep your eyes on the path forward and watch for what obstacle is coming next to you, because change, at the end of the day, is not a bad thing. Pivoting isn't a sign of weakness or failure. The business leaders who are open to change of direction tend to be the most successful. They're the ones who are vigilant and ready to pounce on the next opportunity before anyone else knows it's even there. So I encourage you to stay flexible, be ready to adapt and be ready to pivot when the time is right.

Speaker 1: 12:49

So I hope you've enjoyed this episode of the Entrepreneur to Employer Podcast, where we've talked about pivoting and knowing when in your business it's time to make a pivot and what a successful pivot looks like. So if you've enjoyed this episode, do me a favor, subscribe. I do record a podcast episode a week. I would love if you'd leave me five stars and a review. I do take every review seriously and use it to improve the quality of the podcast each and every week. And, last but not least, if you feel that there is somebody out there that would benefit from this episode, grab a copy or grab a link to the show, text it over to them and say hey, I just listened to this episode on pivoting your business, so don't be to think about. I think you'd enjoy this episode. The more you share this podcast, the more business and founder businesses, business owners and founders we can positively impact. All right, that being said, have a great week and we will see you next week on the Entrepreneur to Employer Podcast.