How to Tell When It’s Time to Pivot
Did you know Post-It notes were the result of a failure? It’s true. In the 1960s, a scientist at 3M tried to create a super-strong adhesive, but what he came up wasn’t as sticky as it was supposed to be. The product sat for five years, until a colleague came up with the idea of using the “failure” as a small, reusable bookmark. It took five more years of testing and changes before the product took off.
This is a classic example of a company pivoting away from the intended path to find a better one. Tom Sponsel, the managing partner of Sponsel CPA Group who has been advising entrepreneurs for 40 years, tells clients they should always be innovating. And that often means pivoting away from your business model.
Sponsel offers this advice for entrepreneurs who want to know when it’s time to pivot.
Because Market Acceptance Is Low
When you’re bringing a new product or service to market, you should set goals for how well it will sell over a given period of time. If you find that your market acceptance is not coming close to matching your forecasts, that’s a good indicator it’s time for big changes.
Instagram began as a check-in app that included elements from the gaming field, but it was so cluttered that it didn’t gain traction. So the makers stripped out everything but photos and rebranded it; as a result it became one of the fastest-rising social media platforms.
Because One Idea Leads to a Better One
Many legendary business success stories began as something very different from what was started. Henry Ford is hailed for inventing the automobile assembly line, but he got the idea from visiting a slaughterhouse. “In searching for answers, you may discover a map that is better than the one you had,” Sponsel says.
This is often seen in the pharmaceutical industry, where side effects of a medicine turn out to be more marketable than its ability to actually cure what was intended. Hair-growing drugs were originally developed to treat ulcers and high blood pressure. Medicine for diabetes helped with weight loss.
Never be afraid to pivot away from the original concept if you stumble upon a better one, Sponsel says.
Because Your Competition Is Pivoting
IBM famously did not think personal computers would become ubiquitous, preferring to put its energy into big mainframes. Competitors like Hewlett-Packard and Dell saw the opportunity that IBM did not, and became giants of the PC industry.
Often the best reason to pivot is when you see your competition is doing so.
Because Extinction Always Looms on the Horizon
Remember when handheld GPS devices were a big thing? Now it’s just one feature on your smartphone. Similarly, the neighborhood camera shop has largely become a relic, except for professional photographers and hardcore hobbyists.
By constantly innovating and reinventing your company, you’re better equipped to see looming extinction while there’s still time to pivot to a better business model, Sponsel says.
“If you’re not innovating, not looking at new markets, not looking at new ways of doing things, your epitaph is already being written,” he says.