How to pivot properly

The most pop­u­lar busi­ness growth strat­e­gy of 2020 is the pan­dem­ic piv­ot. Accord­ing to a sur­vey by soft­ware rec­om­men­da­tion plat­form GetApp, 92 per cent of small busi­ness­es in the Unit­ed States have decid­ed to piv­ot busi­ness mod­els since March, either set­ting up vir­tu­al ser­vices, launch­ing new prod­uct lines or tar­get­ing a dif­fer­ent cus­tomer base. When asked how their bal­ance sheets were look­ing four months on, those that had piv­ot­ed were three times more like­ly to have boost­ed their incomes com­pared to those that didn’t.

The world has fun­da­men­tal­ly changed since coro­n­avirus sent shock­waves through the glob­al econ­o­my in mid-March. As con­sumers’ pri­or­i­ties have adapt­ed, busi­ness­es have had to keep up. But in such uncer­tain times, how can lead­ers know they’re mak­ing the right moves?

“It’s hard to know what the front foot looks like when you’re nav­i­gat­ing so much uncer­tain­ty and no one knows how things are going to pan out in three, six, nine or twelve months,” says Kathryn Tin­gle, start­up strat­e­gy lead and founder of Trail­blaz­er Cir­cles. “You need to be strate­gic and proac­tive as well as reac­tive; that’s a very fine bal­ance to strike.”

The art of the successful pivot

It can be dif­fi­cult to find a start­ing point when ques­tion­ing the fun­da­men­tal exis­tence of your busi­ness mod­el, but Tin­gle says it’s cru­cial to frame this as an oppor­tu­ni­ty to make pos­i­tive changes and not see it as a set­back. “I’m a firm believ­er that in dark times there’s usu­al­ly a sil­ver lin­ing and in busi­ness that sil­ver lin­ing can be new oppor­tu­ni­ties,” she says. “All lead­ers knew the oppor­tu­ni­ties that dig­i­tal trans­for­ma­tion posed and dur­ing the pan­dem­ic there’s been a nat­ur­al accel­er­a­tion of these plans.”

You need to be strate­gic and proac­tive as well as reac­tive; that’s a very fine bal­ance to strike

Tin­gle points to super­mar­ket brand Sainsbury’s which, by piv­ot­ing to cloud tech­nol­o­gy, was able quick­ly to scale up its over­loaded deliv­ery ser­vice, a change that will pay div­i­dends beyond the pan­dem­ic.

Emma Mills-Sheffield, who runs busi­ness con­sul­tan­cy Mind­set­up, agrees changes to the busi­ness mod­el should be made with longevi­ty in mind where pos­si­ble. “If it’s oppor­tunis­tic, then you have to be real­ly crit­i­cal about whether you can plug that back into your core busi­ness growth strat­e­gy,” she says, cit­ing exam­ples of com­pa­nies piv­ot­ing to pro­duce per­son­al pro­tec­tive equip­ment ear­ly on in the pandemic’s tra­jec­to­ry.

“Go back to your core pur­pose. Are these things fun­da­men­tal to the busi­ness or bolt-ons to fill the gap for three months? You need to reflect and ask, ‘what do we stand for as a busi­ness and what do our cus­tomers need?’”

That’s not to say oppor­tunis­tic piv­ots can’t be sol­id moves, par­tic­u­lar­ly when rel­e­vant to the ecosys­tem a busi­ness sits with­in. When Bris­tol microdis­tillery Psy­chopomp decid­ed to start pro­duc­ing hand sani­tis­er in March, it said it planned to sell the prod­uct at cost to restau­rants and pubs.

It’s an atti­tude that Lee Powney, senior part­ner at inno­va­tion agency Vival­di, says lead­ers should embrace when mak­ing fun­da­men­tal strate­gic changes. “If you invert your strate­gic think­ing to ask, ‘how can I cre­ate shared val­ue?’, what you’re doing is refram­ing your busi­ness in a wider field, rather than just think­ing of it in terms of cre­at­ing prod­ucts and ser­vices,” he explains.

If the business model ain’t broke

Not all busi­ness-mod­el piv­ots need to be head­line grab­bing. Dr Vaughn Tan, lec­tur­er at Uni­ver­si­ty Col­lege London’s School of Man­age­ment and author of The Uncer­tain­ty Mind­set, says sim­ply acknowl­edg­ing uncer­tain­ty can help lead­ers iden­ti­fy more sub­tle strate­gic shifts.

“That very basic assump­tion changes what you pay atten­tion to strate­gi­cal­ly and it changes what you do inter­nal­ly: how you hire, how you moti­vate peo­ple and how you set goals,” he says. “With the uncer­tain­ty mind­set, the idea is not that you con­duct big tests with big con­se­quences, but micro-tests that result in small course cor­rec­tions along the way.”

How­ev­er small or large the busi­ness mod­el switch is, deci­sions should be ground­ed in data and sol­id insights, not just gut feel­ing. “The only way you can know if a piv­ot is like­ly to work is if you put down on paper all the assump­tions you are mak­ing,” says Tan, empha­sis­ing the impor­tance of crunch­ing the num­bers and com­par­ing the cost of launch­ing a new prod­uct or ser­vice with a real­is­tic idea of how much rev­enue it will gen­er­ate. Inter­nal data can also pro­vide hints on where changes need to be made.

“If you need to rein­vest, be real­ly clear about the out­comes you want to see,” Mills-Sheffield adds, not­ing that set­ting clear key per­for­mance indi­ca­tors from the out­set can pre­vent a sit­u­a­tion where piles of cash con­tin­ue to be invest­ed, despite a piv­ot not bring­ing expect­ed returns. “Go back to lean start­up prin­ci­ples; what’s the min­i­mum viable prod­uct?”

Final­ly, busi­ness own­ers should remem­ber they’re not doing this alone and plen­ty of sup­port can be lever­aged by get­ting cus­tomers and employ­ees on board with any strate­gic shifts being made.

“What­ev­er you decide to do, make sure you’re super clear on how you’ll com­mu­ni­cate that with your staff, because they’re the ones on the jour­ney with you,” Mills-Sheffield con­cludes. “It’s not just about piv­ot­ing from the top; it’s about mak­ing sure everybody’s on board.”

Shaking it up

Call the beau­ti­cian

May­fair salon Nails & Brows is renowned for cre­at­ing neat, tidy, nat­ur­al-look­ing brows and for telling clients not to mess about with them at home. Dur­ing lock­down, founder Sher­rille Riley decid­ed to shift away from that advice and piv­ot the busi­ness mod­el to teach­ing clients how to do their own touch-ups at home. The online con­sul­ta­tion ser­vice lets clients book 15-minute video appoint­ments when Riley talks them through the process of shap­ing, main­tain­ing and apply­ing make­up to their brows. The piv­ot has enabled Riley to expand her client base from London’s West End world­wide so now 50 per cent of her clients are in the Unit­ed States.

Work­ing from home is win-win

On Fri­day March 13, the Aus­tralian gov­ern­ment announced a ban on gath­er­ings of more than 500 peo­ple, exact­ly the sort Syd­ney-based Stagek­ings was in the busi­ness of build­ing sets for. “That was 100 per cent of our upcom­ing work,” says founder Jere­my Flem­ing. With the right skills in-house to make any­thing out of tim­ber, with­in a week Stagek­ings had gone from cre­at­ing event stages to sell­ing stand-up and reg­u­lar desks to con­sumers under the name IsoK­ing. Demand for desks has been so strong that Flem­ing has been able to hire 17 addi­tion­al mem­bers of staff and is now look­ing into licens­ing the brand in Europe.

Switch­ing sup­ply chain

Sales of children’s toy com­pa­ny PomPom’s indoor climb­ing frame peaked as the UK went into lock­down, but sup­ply chain dis­rup­tion in Europe made keep­ing up with demand dif­fi­cult. In May, founder Kather­ine Rhodes set about design­ing an improved ver­sion of the prod­uct and sourc­ing a UK sup­pli­er to make it for her. It was a leap of faith as this was the first time Pom­Pom had designed its own prod­uct and all deal­ings with the man­u­fac­tur­er have been done over the phone or Skype. But it has paid off. When the new mod­el launched in Sep­tem­ber, it sold out with­in a fort­night.

Child’s play online

In 2018, Del­vene Pitt launched Lit­tle­crowns Sto­ry­house, a sen­so­ry play­group for tod­dlers. In March, Pitt not only shift­ed her ses­sions online, but decid­ed to add a new dimen­sion to the busi­ness: “I thought, why don’t I use my pro­duc­tion degree and start putting on a kids show?” Invest­ing £3,000 in new equip­ment, such as edit­ing soft­ware and light­ing, Pitt began upload­ing a week­ly children’s pup­pet show to YouTube along­side her pri­vate Zoom ses­sions. The busi­ness-mod­el piv­ot has enabled her to reach new cus­tomers, includ­ing schools, and expand her audi­ence. In 2021, Pitt plans to launch a mem­ber­ship mod­el giv­ing par­ents access to addi­tion­al edu­ca­tion­al con­tent.

DIY din­ners

With their restau­rant shut­tered, chefs Zijun Meng and Ana Gonçalves, founders of Tōu, decid­ed to turn their cus­tomers into cooks. In August, they launched a meal kit con­tain­ing every­thing to make Tōu’s icon­ic Iberi­co pork kat­su san­do at home for £10.50. “When we were open as a restau­rant, we were doing 500 of those sand­wich­es per week, now we’re doing about 50 or 60,” says Gonçalves. “It’s enough for us to keep the brand sur­viv­ing.” The restau­rant remains closed and the plan is to keep build­ing out the at-home offer­ing, with deliv­ery planned to go nation­wide at the start of 2021.

Cash-flow conun­drum

India’s nation­wide lock­down meant US direct-to-con­sumer spice brand Dias­po­ra Co had no idea when it would be able to get hold of its raw ingre­di­ents. With sup­plies dwin­dling and a need to pay its farm part­ners to keep them in busi­ness, founder Sana Javeri Kadri decid­ed to over­haul the company’s cash-flow strat­e­gy, switch­ing to a pre-sale mod­el. “Pre-orders were such a suc­cess that we end­ed up buy­ing 35 per cent more than we had fore­cast for the year, just to keep up with demand,” she says. Since mak­ing the switch, Dias­po­ra Co has raised more than $750,000 from 13,500 pre-sale orders, far in excess of the 4,000 orders it expect­ed.

Work out wher­ev­er

So cus­tomers could work out from the com­fort of their own homes, Urban Sports Club, which sells mul­ti-access pass­es to fit­ness venues across Europe, teamed up with Cologne-based soft­ware com­pa­ny Fitogram to enable its gym part­ners to run ses­sions online. Stu­dios have uploaded more than 160,000 class­es to the plat­form since mid-March. “Our stu­dios are now in hybrid mode,” says Fran­ka Schus­ter, Urban Sports Club’s pub­lic rela­tions lead. “Our French col­leagues are switch­ing back to online because of the new lock­down, but in Berlin we are still train­ing out­side, inside and with the livestreams.”

From rentals to restau­rants

In March, US uni­ver­si­ties shift­ed their teach­ing online, leav­ing LoftS­mart, a plat­form that helped col­lege stu­dents find accom­mo­da­tion, with­out a mar­ket. Founder Sam Bern­stein decid­ed to over­haul the oper­a­tion, build­ing an entire­ly new plat­form that let restau­rants deliv­er cook­ing class­es and sub­scrip­tion offer­ings online. Table22 has so far onboard­ed restau­rants in 13 US cities, which have gen­er­at­ed more than $500,000 in rev­enues between them; Table22 takes a cut of each sub­scrip­tion sold. “I don’t see us going back,” Bern­stein reflects. “I’m much more pas­sion­ate about the mar­ket we’re solv­ing prob­lems for now and I want to keep work­ing on that.”

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