Time to Pivot Your Business: Where Do You Begin?
When Eric Ries first coined the term “pivot” in his book The Lean Startup, his intent was to encourage entrepreneurs to get to market more quickly and to let the market tell them what their final product or service should look like. But what about now, when you may already have a successful business and the world around you suddenly changes, invalidating most (if not all) of the assumptions that got you there?
Start With a Situation Analysis
A situation analysis is an exercise that most companies should conduct annually at the very least, if not quarterly. This can be a challenge for smaller companies that have limited strategic staff and senior leaders/owners that have to focus the majority of their energy on “keeping the boat sailing.” However, if you don’t take a minute to figure out where you are now and again, you will surely end up “lost at sea” at some point.
A solid situation analysis first looks inward at your company. Ask yourself who you are and how you got here. This assessment includes documenting the key factors that have determined the success of the business to date, including:
- Vision. What was the problem that the company’s founders were so passionate about solving that they opened the doors? How has that changed or evolved over time?
- Strategic Competitive Advantage. What did the company do differently and better than anyone else that enabled them to establish a foothold in the market? How has that changed or evolved over time?
- Customer Profile. How would you describe your company’s prototypical customer past and present? Why do they buy from you as opposed to your competitors?
- Product/Service Portfolio. How has the company’s product/service portfolio evolved over the years?
The next step in the process is to examine the outside world, as it impacts the company from several different perspectives:
- Economy. Has the current state of the economy affected your customers’ need or willingness to purchase your products/services? Has it added or reduced the number of customers in your available market? If it hasn’t yet, be sure to look ahead. What’s the forecast and how might it affect you?
- Society. Have current events created a temporary or permanent change in the way your customers behave relative to the products or services that your company offers? Will that behavior continue to change and evolve? For example, will people return to in-person meetings as a way of conducting business or will video conferences become the new norm?
- Technology. Has technology changed the way customers derive value from your products or services? Has it changed how you deliver that value? Has it enhanced the value you provide to your customers or has it given a foothold to new competitors?
- Regulation. Have new laws or regulations enhanced or limited the value you provide to your customers and/or your ability to deliver products and services to them?
- Competition. Have you gained or lost ground against your competition? Have new competitors entered the market? What are your competitors doing differently now than they were doing in previous quarters?
This inward and outward view of your business is paramount to determining options to either continue to push forward on the current course or to pivot towards new opportunities.
Examine Your Marketing Mix
One of the most difficult things to ask of any owner of a product or service, whether they be the owner of the company or a product manager, is to make an OBJECTIVE assessment, particularly in the context of an ever-changing environment. True market leaders understand that the “4 Ps” of marketing are NEVER static and should never be examined out of the context of the current market environment. You should always be asking yourself the following questions:
- Product. Is our product or service still relevant and providing real value for our customers? Do we provide that value at a level that is higher or lower than our competition? Do the changes in the environment make it harder or easier for us to deliver that value? Are sales increasing or decreasing (has that rate accelerated or decelerated)?
- Price. Price is not only the amount of money a customer exchanges with you for your product or service. It is also the total cost of delivery and the impact on cash-flow. Price should always be considered the complete cost of executing the transaction. You should also consider how difficult you make it for your customers to participate in that transaction. Is the process easier if they go to your competition?
- Place. While historically described as “place,” this 3rd P has come to encompass all aspects of a company’s channel strategy. Key questions here relate to methods of delivery and customers’ access to your product or service. In recent times, most consumer products companies have used Amazon.com to win customers over to their brand in the hopes of eventually bringing them in as direct customers, or switching them over to more profitable channels. The ultimate question here is, are your products and services available in EVERY place (physical or virtual) that your customers visit?
- Promotion. How products and services are advertised and promoted to customers has evolved more in the past 5-10 years than perhaps any time in the history of marketing. Much of this has been technology-enabled, as target customer behavior has taken over as the dominant driver of “connections” versus decades of demographic targeting. Even with these modern tools, however, companies are still missing massive opportunities to connect with target customers by not having the right messaging in the right place at the right time. A good question to ask yourself is: Do my marketing activities “look good” OR are they generating REAL traffic that converts into REAL leads that convert into REAL customers?
Complete Your SWOT Analysis
Without a thorough and objective situation analysis, it is virtually impossible to complete an objective and relevant SWOT Analysis: Strengths, Weaknesses, Opportunities, Threats. This should encompass the TOP 3-4 succinct and easy-to-recognize points for each of the following:
- Strengths. What are the 3-4 things that you do differently and better than your competition?
- Weaknesses. What are your real key areas of weakness versus your competition? Particularly, which weaknesses can be overcome or should be avoided in competitive strategy?
- Opportunities. Which changes in any of the “environmental forces” above have created TRUE opportunities for growth?
- Threats. Which changes in the environment around you will prevent you from accomplishing your objectives?
Finally: Is it Time to Pivot? How?
A decision to pivot is a crucial one because it often involves abandoning one opportunity in pursuit of another. This is a big decision even if the former is proving to be less than viable. Armed with the insights generated by the processes outlined above, however, it should be easier. Key questions to ask:
- Of the opportunities identified, which have the greatest potential?
- Of the companies competing for that opportunity, who do we possess the greatest competitive advantage against?
- What do we have to gain (or lose) by pivoting?
- What resources will it take to pivot?
- How long will it take to see the impact of the pivot?
Depending on the magnitude of the pivot, you may need an entire business plan or simply a new product or marketing plan. At the very least, it is imperative to clarify the key components of your new marketing mix:
- Product. What is the new value proposition that you are planning to offer and how will it benefit your target customers in this new world you’re operating in?
- Price. Is the price you are going to charge conducive to accelerating the purchase of your product or service? How does it compare to your “new world” competition?
- Place. Does your channel strategy provide easy access and delivery of your product or service?
- Promotion. Do you have a plan to communicate the right value points to your target customer throughout their buyer’s journey, and to move them through your funnel?
Pulling it All Together
During challenging times, it’s common to develop “analysis paralysis” and to stop in your tracks. While avoiding that trap can be easier said than done, a thoughtful process will uncover the best options in your course forward and perhaps highlight even more lucrative opportunities to pivot!
Are you ready to make a big change? It starts with strategy. Get your free strategic planning kit: it includes everything you need to create a solid marketing strategy that will support your business as you pivot.