The CEO’s guide to pivoting between business models — Platform Executive

Pivoting from one business model to another is an essential strategy for businesses facing market shifts, technological changes, or challenges that make their current models unsustainable.

This strategic shift can allow a company to leverage its core competencies in a new, more profitable direction.

Drawing upon my experience as a Chief Executive and SME Founder, I aim to guide you through the process of executing a pivot within your business.

UNDERSTANDING THE NEED FOR A PIVOT

First and foremost, it’s crucial to recognise when a pivot is necessary. This realisation often comes from consistent signals: (1) declining sales; (2) diminishing customer engagement; (3) disruptive technologies undermining your business model; or (4) shifts in consumer behaviour that render your value proposition obsolete.

Vigilant leaders stay attuned to these signals and are prepared to act decisively.

EVALUATING CORE STRENGTHS AND ASSETS

Before considering any pivot, take stock of your company’s core strengths, assets, and competencies. This involves a thorough analysis of what your company does best, what resources it has (including technology, intellectual property, and human talent), and how these can be reoriented towards a new market opportunity.

The goal is to identify areas where your current capabilities can solve different problems or meet new market needs.

IDENTIFYING OPPORTUNITIES

Pivoting successfully requires a deep understanding of the new market or domain you plan to enter. This means conducting comprehensive market research, understanding customer pain points, and identifying where your business can offer unique value. Look for opportunities that align with your company’s strengths and can be captured with reasonable adjustments to your operations.

VALIDATING THE NEW BUSINESS MODEL

Before committing to a pivot, it’s critical to validate the new business model. This can involve creating a minimum viable product to test market demand, engaging with potential customers for feedback, and conducting pilot projects. These validation steps are crucial to avoid the costly mistake of pivoting towards a model that lacks market fit.

CRAFTING A STRATEGIC PIVOT PLAN

With validation in hand, the next step is developing a comprehensive plan for the pivot.

This plan should detail the transition from your existing model to the new one, including changes to your product or service offerings, adjustments to your marketing strategy, shifts in your target customer segments, and any necessary operational changes.

Assign clear responsibilities, set milestones, and establish metrics for success to guide your pivot process.

COMMUNICATING THE PIVOT

Communicating the pivot effectively is critical to its success, both internally and externally.

Internally, it’s important to get buy-in from your team. This requires transparently sharing the rationale for the pivot, how it affects each part of the organisation, and what is expected from each team member during the transition.

Externally, you’ll need to reassure existing customers, attract new ones, and communicate the shift to investors. Tailor your messaging to each audience, highlighting how the pivot will generate value for them.

EXECUTION WITH AGILITY

Executing a pivot requires agility and the willingness to learn and adapt as you go.

This means being prepared to face unforeseen challenges, respond to new information, and make adjustments to your plan as necessary. Foster a culture that supports innovation, encourages constructive feedback, and is resilient in the face of setbacks.

MONITORING, LEARNING, AND ITERATING

A successful pivot is rarely a one-and-done process. It involves continuous monitoring of your progress against the strategic plan, learning from the outcomes, and iterating on your approach. Use the metrics for success you established in your pivot plan to evaluate performance, and be prepared to refine your strategy in response to what you learn.

Throughout my career in the United Kingdom, United States and Australia, I’ve witnessed and led several successful pivots. One notable example is a tech company that shifted from a consumer-focused model to a B2B offering.

Initially, the company struggled to gain traction in the crowded consumer market.
However, by leveraging their technology in a B2B context, they were able to meet a critical need for enterprise customers, resulting in a successful pivot that significantly increased their revenue and market presence.

Another example involves a retail company facing declining foot traffic and sales.

Recognising the shift in consumer behaviour towards online shopping, the company pivoted by enhancing their e-commerce platform and transitioning to an omnichannel retail approach. This pivot not only reversed the decline in sales but also opened up new markets and customer segments.

Pivoting from one business model to another is a complex, multi-faceted process that requires careful planning, clear communication, and the flexibility to adapt as new information and challenges arise.

It necessitates a deep understanding of your core competencies, a keen eye for new opportunities, and the courage to venture into uncharted territory. With the right approach and mindset, a pivot can transform a struggling business into a thriving one.

As leaders, our ability to navigate these transitions can define our legacy.

Remember, the goal of a pivot is not just to survive but to thrive by seizing new opportunities that align with our strengths and market demands. With strategic foresight, diligent execution, and an unwavering commitment to learning and iterating, businesses can successfully navigate the pivot process and emerge stronger on the other side.