To pivot or not to pivot

It’s really funny to read about how some actual big companies (Starbucks, Nintendo, Marriot, etc.) started years ago. For instance, Nintendo was founded in 1889 by Fusajirō Yamauchi in order to sell Hanafuda playing cards. After a successful start, Yamauchi used the companie’s revenues to test other business ideas such as love hotels for couples, or food stores. All that ventures failed but due to the know-how on playing cards, Nintendo was able to introduce the company into the video-gaming industry.

Starbucks started as a coffe bean roaster and retailer, and in 1984 Starbuck’s founders took the opportunity to purchase Peet’s Coffee & Tea, a coffee roaster and retailer, and after that sold Starbucks to Howard Schultz, who previously worked as Director of Marketing at Starbucks. When working at Starbucks and after visiting Italy and discovering the importance of coffee bars in Italian’s life, Schultz become obsessed about reinventing Starbucks as a coffee shop. As Starbuck’s founders didn’t like the idea, Schultz founded its own coffee shop, called Il Giornale, and when he was able to adquire Starbucks, renamed Il Giornale with Starbucks name and expanded the business across the United States.

Virgin Records was founded in 1972 as a record shop called Virgin Records and Tapes, specialized on selling records cheaper than other record shops as they sold records previously declared as export stock. Although the record shop was successful, Branson was questioned about the export stocks and had to repay any unpaid tax. After that, Branson decided to create its own record label, starting with Mike Oldfield’s Tubular Bells.

What does all these companies have in common?

Starbucks, Nintendo, Marriot, Virgin Records and a lot more of well known companies have pivoted at least one time in order to become the great companies they actually are. So pivot, as a concept, has existed for decades, before being popularized by Eric Ries (author of Lean Startup), and become hype among startups and VCs.

So, should I pivot?

Whatever made any company successful doesn’t have to help your company, and that can be applied to a lot different aspects of your company. And one of that aspects is pivoting. Pivot may be considered as a resource that helps you to reorientate your company when the hypothesis that supports your business plan has failed.

So, start testing your initial hypothesis. It doesn’t make sense that you pivot before launching your initial product (starting with the MVP, minimum viable product). As an entrepreneur, you should learn from your mistakes, so if you don’t even test if your initial hypothesis were wrong or right, you’re not learning anything.

Once you launch your MVP, test the market. Is your product enough good to accomplish the needs and expectations of your potential customers? Is your pricing model suitable for your potential customers? Does the costs adapt to what you had estimated?

Once you’ve tested your initial hypothesis, you are able to determine whether you may continue with your business plan or you need to pivot. Before pivoting, you may consider several questions related to what pivot means. First of all, you may need to focus on a different target, so you need to examine the new target, and analyze if you need to increase your current team with professionals with previous experience developing products for your new target. So, pivoting depends on your employees, not only due to the new target you need to address, but also due to the technology you need to develop. Maybe you have a team full of frontend engineers and now you need to develop a product with a heavy backend. If you have formed an excellent team for developing a given product, you can’t assume that the same team is the perfect one to develop a totally different product.

So, pivot is a “tool” you may need to use in given situations such as after testing the inviability of the hypothesis that sutained your business plan. But you have to be careful when thinking about pivoting as it may make you lose focus and throw away an interesting idea that could work fine in the market.

  • http://www.melaniegenereux.com Mélanie Généreux

    Great article. I absolutely agree that the perfect team for one project might not be the perfect team for the next project, unless you are building sequels (say in games, that would make to keep key team members as expertise builds up..)

    ps
    I found a tiny typo,
    So, should I pivot?
    2nd paragraph, 2nd sentence.
    reads “I doesn’t make sense that you pivot before launching your initial product [...]” instead of “It doesn’t make sense [...]“

  • JoSeK

    Mélanie, thanx for the corrections :)