Pivoting

Being ahead of time

Grip on changing client needs

Turbulent market conditions sometimes force you to make a sharp turn and completely overhaul your business model in order to survive. But this pivoting can also be about opportunity: if your company adapts well to the changing needs of your clients, it will gain access to tangible benefits such as sales growth, higher profitability and a larger market share.

Technological innovation and external factors

During the corona pandemic, pivoting was an emergency solution for many companies. Many food manufacturers saw their usual markets closed. They had to quickly explore alternative business models or forge partnerships with delivery services to gain access to the takeaway market. Bending was necessary to survive.

Pivoting can also be about opportunity: about creating an efficient, sustainable business that meets both the current and future demands of your customers. Under normal circumstances, adapting your business model to create value requires foresight: understanding how and why things are likely to change, and how that will affect your business. Technological innovation and external factors have led many industries to rethink their business models in recent years.

Successful pivoting: four characteristics

There is a difference between real change and a series of incremental changes, such as introducing technology into your company. The first - if done properly - increases the value creation potential of your company. The second will not.

A true pivot is one that truly changes your business model, allowing your company to improve customer service, increase market share, and/or expand into new markets. It creates efficiencies in workflow, processes and organisation - such as a supply chain restructuring - and above all, there is a distinctive result in the form of revenue growth, increased profitability, increased market share and an increase in the share price.

Some of the most successful turnarounds in recent years are companies moving from a direct sales model to offering their goods or services as a subscription model. If you do this right, they are excellent examples of value creation because it's about revenue growth. If your customers use your product to the fullest and get the most out of it, they are more likely to remain loyal to you. Successful pivots have a number of common features:

Without an overarching strategic vision, your company will simply make a series of incremental changes. Your story matters – for your company and for your stakeholders.

More often than not, long-term gains will require short-term pain. You will need a huge amount of investment to keep your business running, and there may be situations where returns are somewhat disappointing or may decline for a while. If your business is operating under the pressure of a public market, you will need to articulate your plan clearly.

Your business needs clarity about the decisions you need to make at every stage of the process to identify and mitigate risk while maximising return on investment. Think about understanding how cybersecurity can have a significant impact on your business value throughout the lifecycle of a new technology investment.

You can’t change your business model on your own. You can’t create value without flexibility, leadership role modeling for the desired future behaviour, adapting processes and attracting and retaining the right talent. A technology-driven company will behave differently and have very different operational and skill requirements than the 'established company it used to be'. For example, it needs a chief information officer and a well-developed product management function.

Successfully pivoting your company depends on strategy and execution, but also on the story you tell. It requires a certain amount of confidence from your investors and other stakeholders that your vision is the right one and that the change will generate sustainable value and resilience.