Business

Smart scaling: 3 signs you need to pivot and how to pull it off

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TriNetThis post is part of a series brought to you by TriNet. VentureBeat is collaborating with TriNet to discuss smart scaling for growing businesses and best practices for managing growth. As always, VentureBeat is adamant about maintaining editorial credibility.


It’s a Silicon Valley legend that YouTube started off as a video dating site inauspiciously named “Tune In Hook Up.” Heavily influenced by the success of the site HOTorNOT.com, its three cofounders, Steven Chen, Chad Hurley and Jawed Karim, planned to have people upload videos of themselves to meet others. Of course, within weeks, the idea was deemed too limiting and scrapped for the more open-ended approach that ultimately made them millions.

This is one of the most famous pivots in tech history — but it’s one of many. A “pivot” is a company’s decision to shift its core purpose or business model to optimize for success. In fact, technophile and blogger Eric Ries, author of The Lean Startup, suggests that all companies have pivoted in one way or another, some at earlier stages than others. Some have blazed bold new trails while others have stuck with nuanced course corrections.

But how do you know when this is necessary? And once you have a concrete project or strategy, how can you make change without alienating your users? Below is a guide for knowing when it’s time to pivot, and how to get good results.

1) People don’t get what you do. This is something that can happen to even mature, midstage, or small businesses. It’s possible to get to a certain level in a market with a core following that understands your value. But to really grow like you need to, you have to ensure that your product or service can be easily grasped by a popular audience, too. This is hard, especially if you’re a software-as-a-service (SaaS) company or if you’re trying to expand from enterprise into consumer markets. The concepts involved may be deeply technical, difficult to explain, and too complex to market.

At these moments, it’s important to reflect on what your company actually does and why it’s important for the people it serves. Even if you offer elaborate functionality with multiple feature sets, you have to be able to boil it down to one thing. Then you can layer everything else you offer on this bedrock. If you can’t do this, it might be time to consider pivoting your business so that it focuses on less or only on the services that make sense to the market you’re going after.

2) Your team’s deflated. In a sense, your employees are kind of like canaries in a coal mine. If they’re bored and disengaged with your business and what it does, your customers probably aren’t too far behind. This is why there’s such a media frenzy around startups these days: They have the energy, moxy and commitment to innovation that commands attention. When you grow out of this phase, none of this is guaranteed. If your team loses interest and doesn’t believe anything new is on the horizon, the media is probably also less likely to cover your efforts, and it’s a matter of time before your users migrate to the next best shiny brand in your space.

Key indicators of this include high attrition rates, employees frequently working from home (just look at how that took the wind out of the sails of a languishing Yahoo), and even your vendors becoming less interested in working with you. When people leave, more people get nervous, morale dips, and more people leave. It’s a vicious cycle that can take your once exuberant company down fast. One solution: Give your team and everyone else you work with something to believe in — the idea that you are interested in fresh, creative ideas, that you are open to rebranding, and that everyone has a stake in building this future with you.

3) There’s a competitor you just can’t beat. Much like Yahoo, Instagram started out with a completely different idea. Its founders had built a location-based social network called Burbn, and early on it did gain some traction. But at the time, there was already an elephant in the room — named Foursquare. It quickly became apparent that they were going to have to do something to differentiate themselves. By injecting photography (and gorgeous filters, at that) into their plan, they were able to carve out an entirely new market and, of course, ascend to one of the highest-profile acquisitions in recent years.

It’s not uncommon for a competitor to already exist out there in the market, or even come along behind you. Then, all of a sudden, they start to dominate. Maybe Justin Bieber tweeted about them. Maybe they landed a Fortune 500 client that turbocharged their revenue. If you find yourself doing battle with a giant, it might be time to cleverly steer in a new direction. And this isn’t only relevant to startups. Even behemoths like AOL have found themselves in the position of competing with newcomers. In that case, the company rebranded as a premium content platform — it’s success is yet to be seen. It’s always good to have an idea of where your company should go next. That way, when you really have to, you already have a map.

So, now that you know you need to pivot, how can you actually do it without losing everything? This is tricky. No matter how many customers you have begging you to do something different, there will always be that core group of power users, so easily alienated by every little change. There’s also your team. People get very attached to roles and routine. Shakeups can disrupt a delicate balance. And then there’s revenue. If you gamble on something new, there’s always the chance you could lose. With all this in mind, here are three pieces of practical advice for pulling off a major pivot:

1) Keep user experience central. When you run a mature company or small business, it’s easy to focus solely on the products and services you offer. It’s increasingly difficult to pay attention and listen closely to your customers’ experiences. How do they really feel about your product? What do they want to get out of it? Mostly, do they actually have meaningful interactions with your business on a regular basis? If not, this needs to change. Figure out the best channels to listen to your customers, whether its social media, feedback forms, forums, or all of the above. Then make it clear in writing that you plan to take their advice as action items. It’s commonly stated that people who provide feedback “just want to be heard.” But this isn’t enough if you’re planning on making serious changes to improve your company. You want your users along for the ride, invested in your success, and feeling like they are partners in your reinvention.

2) Make it a collaborative project. Engage your colleagues in your business model’s shift. Make sure they are informed and that those who want to be very active in the change have the opportunity to be. One suggestion is to create pivot task forces within your staff. Find out who is either most frustrated by the direction of the company, most excited by the concept of change, or most motivated to take action and stand out. Ask them to come up with ideas for how the pivot can be executed. How should changes be implemented? How can they rally their other co-workers and stakeholders around their ideas and a cohesive plan to make things better?

Most importantly, make sure that everyone can opt in to be involved, and that everyone overall remains in the know. Provide employees with channels to proffer confidential feedback, and be responsive to their concerns and needs when they do. When you make your pivot a grassroots concern, your employees are less likely to feel betrayed and more likely to be energized by the atmosphere and people around them.

3) Find another big problem to solve. The major criticism of the startup world today is that there are so many companies tackling unimportant problems. You hear a lot of people marveling that they never knew that finding a cab was so difficult until there were five different apps trying to make it easier. When you’re out of the startup stage, this is less of a problem. You’ve made a compelling argument for yourself, and customers have bought into your value. But if you find yourself needing to pivot, you have to be prepared to do this all over again.

People aren’t interested in companies that solve insignificant problems. They want a product or service that can fill a tangible gap in their own abilities or day-to-day experiences. So when you start sussing out a new business direction, it’s important to keep this tenet as a beacon for success. What are the other pain points — still related to what you are doing now — that plague enough people to make a meaningful impact? There’s no dearth of opportunity here. The key is to be creative in how you link what you currently do to what you want to do going forward.


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