Pivoting in business. How Strategic Shifts Can Save and Grow Your Business.

“The Lean Startup’s Guide to Pivoting in Business: When and How to Rethink Your Strategy”

Pivoting in business is all about making a strategic shift—changing direction to address challenges, adapt to market changes, or seize new opportunities. It’s not about abandoning your vision but evolving your approach to ensure your business stays relevant and competitive in an ever-changing environment. 

Whether it’s a subtle adjustment or a significant realignment, pivoting allows you to keep moving forward when the original path no longer serves your goals.

The ability to pivot is essential for survival and growth. Markets are dynamic, customer needs constantly evolve, and external events—like the pandemic—can disrupt even the most robust business models. Businesses that succeed are often those that can identify when change is necessary and take decisive action.

Think about companies that thrived during the pandemic by pivoting: restaurants that shifted to meal delivery, fitness studios that embraced virtual classes, or retailers that built e-commerce platforms seemingly overnight. These businesses didn’t just adapt; they innovated, using pivots as opportunities to grow.

In this blog, we’ll dive into the concept of pivoting, drawing on insights from Eric Ries’ The Lean Startup. You’ll learn about different types of pivots, from shifting customer segments to rethinking delivery methods, and when it’s time to consider a pivot for your own business. 

We’ll also explore real-world examples of successful pivots, including lessons from the pandemic, and provide actionable steps to help you pivot effectively.

If you’ve ever felt stuck in your current business model or wondered how to adapt to changing circumstances, this guide will help you understand how to pivot with purpose. By the end, you’ll have the tools and insights to make strategic shifts that position your business for long-term success.

What is Pivoting in Business?

Pivoting, as defined by Eric Ries in The Lean Startup, is a structured change in strategy designed to address challenges, adapt to new realities, or seize opportunities, all while staying true to your core vision. 

It’s not about scrapping everything you’ve built; it’s about finding a new path to achieve your business goals more effectively. In essence, pivoting allows you to recalibrate your approach without losing sight of your destination.

Pivoting vs. Overhauling

One of the most common misconceptions about pivoting is that it means starting over from scratch. However, pivoting is not a total overhaul of your business—it’s a targeted adjustment.

• Pivoting focuses on strategic shifts, such as changing your target customer, refining your value proposition, or adopting a new delivery model. For example, a company might move from selling physical products to offering a subscription service, all while keeping the same core mission of providing value to customers.
• Overhauling, on the other hand, involves completely abandoning the original vision and starting anew, which often means letting go of your existing audience, infrastructure, or goals. While overhauling may occasionally be necessary, pivoting is a more practical, efficient, and sustainable way to evolve.

Think of pivoting as a course correction: You’re still heading toward your ultimate goal, but you’re taking a different route to get there.

Why Pivoting is Essential in the Entrepreneurial Process

Entrepreneurship is inherently uncertain. Markets evolve, customer needs shift, and unexpected challenges—like global pandemics or economic downturns—can upend even the most well-thought-out plans. Pivoting is crucial because it allows you to adapt to these changes while preserving the essence of your business.

• Learning Through Feedback: The entrepreneurial journey involves testing assumptions, gathering feedback, and learning what works. Pivoting allows you to respond to feedback and adjust your strategy to better meet customer needs.
  • Example: Instagram started as a location-based app but pivoted to focus solely on photo sharing after realising users were primarily engaging with that feature.
• Navigating Market Shifts: External factors such as technological advancements, economic changes, or new competitors can disrupt your industry. Pivoting enables you to stay relevant by aligning your business with these new realities.
  • Example: Netflix pivoted from a DVD rental service to a streaming platform, anticipating the shift in how people consumed entertainment.
• Seizing New Opportunities: Sometimes, a pivot isn’t about solving a problem but about recognising a better opportunity. Entrepreneurs with a growth mindset can identify these openings and pivot to capitalise on them.
  • Example: Slack evolved from a failed gaming company into a leading communication tool by recognising the potential of its internal messaging system.

The Role of Pivoting in Growth and Resilience.

Pivoting isn’t just about survival—it’s about positioning your business for long-term success. By being flexible and willing to change, you can uncover new opportunities, improve efficiency, and strengthen your value proposition. 

Businesses that resist pivoting often find themselves stuck, unable to adapt to evolving markets. Conversely, those who embrace pivoting as part of the entrepreneurial process are better equipped to innovate, grow, and thrive in the face of uncertainty.

Ultimately, pivoting is a strategic tool that helps you navigate the unpredictable terrain of entrepreneurship. It ensures that your business remains agile, relevant, and aligned with the needs of your market—while staying firmly rooted in your core mission.

Types of Pivots in Business. 

In The Lean Startup, Eric Ries outlines several types of pivots, each designed to address specific challenges or opportunities within a business. Pivoting doesn’t mean abandoning your vision; it’s about strategically refining your approach to better align with market needs, customer feedback, or emerging trends. Understanding these types of pivots can help you determine the best way to shift your strategy while staying true to your mission.

1. Zoom-In Pivot

A zoom-in pivot occurs when a single feature of your product or service becomes the primary focus, transforming it into the core offering. This type of pivot often happens when customer feedback reveals that a particular feature is driving the most value.

• Example: Instagram started as a location-based social networking app called Burbn. After observing that users were primarily engaging with the photo-sharing feature, the founders decided to pivot and focus solely on this aspect, leading to Instagram’s success as a photo-sharing platform and ultimately its purchase by Facebook for $1 Billion!

2. Zoom-Out Pivot.

The opposite of a zoom-in pivot, a zoom-out pivot involves expanding the scope of your product or service to include additional features or capabilities. This approach is often necessary when the original offering isn’t substantial enough to meet market demand or compete effectively.

• Example: Slack began as an internal communication tool for a gaming company. Realising its potential as a broader team collaboration platform, the founders expanded its scope and repositioned it for business teams, leading to its widespread adoption.

3. Customer Segment Pivot

A customer segment pivot occurs when you discover that your product or service resonates more strongly with a different audience than originally intended. By shifting focus to this new customer group, you can unlock greater growth opportunities.

• Example: Airbnb initially targeted business professionals looking for short-term accommodations. However, they quickly realised that budget-conscious travellers and people seeking unique experiences were a more lucrative audience. This pivot became the foundation of their global success.

4. Customer Needs Pivot.

Sometimes, businesses realise that the original problem they set out to solve isn’t the most pressing need for their customers. A customer needs pivot involves addressing a different pain point or demand that’s more aligned with customers’ requirements.

• Example: PayPal originally developed encryption software for handheld devices. After noticing the increasing popularity of their email payment system, they pivoted to focus exclusively on digital payments.

5. Platform Pivot.

A platform pivot involves changing how a product or service is delivered, often transitioning from a product to a platform or vice versa. This pivot is common when businesses identify more scalable or efficient ways to meet customer needs.

• Example: Netflix started as a DVD rental-by-mail service. Recognising the growing demand for digital streaming, they pivoted to a streaming platform, which ultimately became their primary business model and revolutionised the entertainment industry.

6. Revenue Model Pivot.

This type of pivot involves changing how your business makes money. It could mean switching from one-time purchases to a subscription model, adopting freemium pricing, or introducing new revenue streams.

• Example: Adobe transitioned from selling one-time software licenses to offering subscription-based services through Adobe Creative Cloud. This pivot significantly increased their recurring revenue and customer retention.

7. Channel Pivot.

A channel pivot occurs when you change the way your product or service reaches customers. This might involve shifting from brick-and-mortar sales to e-commerce or focusing on direct-to-consumer channels.

• Example: During the pandemic, many retailers pivoted from in-store sales to robust online platforms to maintain customer engagement and revenue.

8. Technology Pivot.

This pivot involves using new technology to deliver your product or service more effectively. It’s often driven by advancements in technology or shifts in consumer expectations.

• Example: Spotify leveraged cloud-based streaming technology to offer an on-demand music service, pivoting away from traditional methods of music consumption like downloads and physical media.

Why Understanding Pivot Types Matters.

Recognising the various types of pivots allows you to choose a strategic approach that aligns with your business’s specific challenges and opportunities. Each pivot type is a tool that can help you adapt, innovate, and ultimately succeed in an ever-changing market.

By identifying the right pivot at the right time, you can turn obstacles into opportunities and ensure your business remains agile and competitive.

Signs That It’s Time to Pivot.

Pivoting is a powerful strategy, but it’s not something you should do on a whim. Recognising when it’s time to pivot requires careful observation, honest assessment, and a willingness to confront challenges head-on. 

Here are the key signs that indicate your business might benefit from a strategic shift.

1. Stagnating Growth.

When your business stops gaining traction, it’s a clear signal that something isn’t working. This could manifest as stagnant sales, a plateau in customer acquisition, or declining engagement with your products or services.

• Example: A tech startup offering a niche software product might notice that sales have levelled off after initially attracting early adopters. Despite marketing efforts, they’re struggling to grow beyond their initial customer base. A pivot might involve refining the product to appeal to a broader audience or shifting focus to a different customer segment.

2. Market Feedback Suggests a Disconnect.

Consistently receiving feedback that your product or service doesn’t fully meet customer needs is another red flag. This disconnect often highlights opportunities for improvement or shifts in direction that could better align your offerings with market demands.

• Example: When YouTube launched, it was intended as a dating platform where users could upload videos introducing themselves. Early feedback showed that users were more interested in sharing a variety of videos, not just personal introductions. This insight prompted YouTube to pivot into a general video-sharing platform, which became its defining feature.

3. Shifting Market Conditions.

External factors such as technological advancements, economic downturns, or unexpected global events (e.g., the pandemic) can create new challenges or opportunities that require a pivot to stay competitive.

• Pandemic Example: During COVID-19, restaurants pivoted to focus on delivery, meal kits, and online ordering to offset the loss of in-person dining. Those who embraced this shift were able to sustain operations and, in many cases, discover new revenue streams.

4. Reaching Capacity Limits.

When your business is operating at full capacity and struggling to meet demand, it might be time to pivot toward scalability. This could involve streamlining operations, adopting new technologies, or expanding your team or resources.

• Example: A small e-commerce store may experience a surge in orders that overwhelms its current infrastructure. A pivot could involve investing in a more robust e-commerce platform, outsourcing logistics, or shifting to a subscription model to manage inventory more predictably.

5. Internal Inefficiencies and Operational Strain.

If your business model is becoming unsustainable—whether due to high costs, resource inefficiencies, or operational challenges—it’s time to consider a pivot. A more efficient approach can help you save money and better allocate resources.

• Example: A clothing retailer struggling with excess inventory might pivot to an on-demand production model, reducing waste and aligning inventory with actual demand.

6. Increased Competition.

A crowded market or the entrance of a disruptive competitor can make it difficult to maintain your position. Pivoting can help you differentiate your offerings, carve out a unique niche, or address underserved customer needs.

• Example: When traditional taxi companies faced competition from ridesharing apps like Uber and Lyft, some pivoted to offer premium services, eco-friendly vehicles, or app-based booking systems to stay competitive.

7. Your Passion or Vision Has Evolved.

Sometimes, the need to pivot comes from within. If you find that your passion or vision for the business has shifted, it might be time to realign your strategy to reflect your new goals.

• Example: A graphic design agency might evolve into a full-service marketing firm after realising they’re more passionate about creating comprehensive branding strategies than focusing solely on design.

How to Recognise the Right Time.

• Use Metrics: Regularly review key performance indicators (KPIs) to identify trends that suggest it’s time for a change.
• Listen to Customers: Pay attention to feedback, complaints, and suggestions—they often highlight gaps or opportunities.
• Conduct Market Research: Stay informed about industry trends, competitor movements, and emerging technologies.
• Evaluate Your Gut Feeling: If you feel like your current path isn’t sustainable or fulfilling, trust that instinct and start exploring alternatives.

Recognising the signs that it’s time to pivot is crucial for maintaining your business’s relevance and growth. By staying attuned to these indicators and being willing to make strategic shifts, you can adapt to challenges, capitalise on new opportunities, and position your business for long-term success.

The Pivot Process: How to Pivot Effectively

Pivoting isn’t just about making a quick change; it’s a thoughtful, strategic process that requires careful planning and execution. To pivot effectively, you need to evaluate your current situation, identify the best course of action, and implement changes in a way that minimises risk and maximises opportunities. 

Below are the key steps to guide you through the pivot process.

Step 1: Identify the Problem.

Before making any changes, you need to pinpoint what isn’t working or what opportunities you’re missing. This involves collecting data, analysing performance metrics, and listening to customer feedback. Look for patterns or recurring issues that indicate where your current approach is falling short.

• Questions to Ask:
  • Are sales stagnating or declining?
  • Are customers expressing dissatisfaction or requesting features you don’t offer?
  • Are operational costs too high to sustain profitability?
• Example: A meal kit delivery service may notice that customers are cancelling subscriptions due to the cost. By identifying affordability as a barrier, they can pivot to offer a budget-friendly product line.

Step 2: Define Your Pivot Type.

Once you’ve identified the problem, determine which type of pivot is most appropriate for your situation. Refer to the pivot types from Eric Ries’ The Lean Startup—such as a customer segment pivot, revenue model pivot, or platform pivot—and choose the one that aligns with your goals.

• Example: A software company facing low adoption rates among its target audience may consider a customer segment pivot to appeal to a different demographic with similar needs.

Step 3: Validate the Pivot.

Before fully committing to a new strategy, test your ideas on a small scale. Use lean principles to create a minimum viable product (MVP) or pilot program, allowing you to gather feedback and assess the viability of your pivot without a significant investment.

• Tips for Validation:
  • Conduct surveys or focus groups with your target audience.
  • Launch a beta version of your product or service.
  • Analyze customer behaviour and engagement with the new offering.
• Example: A gym considering a pivot to virtual fitness classes during the pandemic could have started by offering a limited number of online sessions and gauging interest before scaling up.

Step 4: Communicate the Pivot.

Transparency is key when implementing a pivot. Inform your stakeholders—employees, customers, investors, and partners—about the changes and why they’re happening. Clear communication helps build trust, reduces resistance, and ensures alignment across your organisation.

• How to Communicate Effectively:
  • Share the rationale for the pivot, emphasising the benefits for stakeholders.
  • Use multiple communication channels, such as email updates, press releases, and team meetings.
  • Address potential concerns and provide a roadmap for the transition.
• Example: When Slack pivoted from a gaming company to a communication platform, the founders explained the shift to their team and investors, focusing on the growing demand for collaborative tools.

Step 5: Monitor and Adjust.

Pivoting doesn’t end once the changes are implemented. You need to continuously monitor performance, track key metrics, and gather feedback to ensure your new approach is working. Be prepared to make further adjustments as needed.

• Metrics to Monitor:
  • Customer acquisition and retention rates.
  • Revenue growth and profit margins.
  • Customer satisfaction and engagement.
• Example: A retailer that pivots to e-commerce should monitor website traffic, conversion rates, and customer reviews to fine-tune their online shopping experience.

Best Practices for Successful Pivots.

1. Be Proactive, Not Reactive: Don’t wait until your business is in crisis to consider a pivot. Regularly assess market trends, customer needs, and internal performance to stay ahead of the curve.
2. Involve Your Team: Engage your employees in the pivot process to leverage their insights and gain their buy-in.
3. Stay True to Your Vision: While your strategy may change, your core mission and values should remain intact.

Example of an Effective Pivot.

Netflix’s transition from DVD rentals to streaming is a textbook example of a successful pivot. By identifying shifting consumer preferences and leveraging emerging technology, Netflix transformed its business model to dominate the entertainment industry. Their ability to validate the pivot, communicate the changes effectively, and monitor results ensured long-term success.

Why the Pivot Process Matters.

A well-executed pivot can mean the difference between survival and failure in today’s competitive business landscape. 

By following a structured process—identifying the problem, defining your pivot type, validating the idea, communicating the changes, and monitoring progress—you can navigate uncertainty with confidence and position your business for sustainable growth.

The Risks and Challenges of Pivoting in Business.

While pivoting can unlock new opportunities and drive growth, it’s not without its risks and challenges. Poorly executed pivots can result in wasted resources, alienated customers, or even the downfall of a business. To pivot effectively, it’s crucial to understand the potential pitfalls and how to mitigate them.

1. Losing Focus.

One of the most common risks of pivoting is losing sight of your business’s core mission and values. When you pivot too often or without a clear strategy, you risk spreading your resources too thin and confusing your audience.

• Example: A tech startup that continuously pivots its product focus may struggle to establish a clear identity in the market, making it difficult to attract and retain customers.
• How to Mitigate: Stay true to your vision while being flexible with your strategy. Clearly define the purpose of your pivot and ensure it aligns with your long-term goals.

2. Alienating Existing Customers.

A pivot can lead to changes in your product, pricing, or delivery model, which might alienate your current customer base. While it’s important to attract new markets, losing your loyal customers can harm your reputation and revenue.

• Example: A subscription box service that pivots to a premium pricing model may lose budget-conscious customers who feel excluded.
• How to Mitigate: Communicate the reasons for your pivot transparently and offer solutions for existing customers, such as grandfathered pricing or alternative options.

3. Resistance from Stakeholders.

Pivoting often requires buy-in from stakeholders, including employees, investors, and partners. Resistance to change can slow down the process or create internal friction.

• Example: An employee team accustomed to a specific workflow may resist adopting a new process or technology introduced during a pivot.
• How to Mitigate: Involve stakeholders early in the pivot process. Share your rationale, highlight the benefits, and provide training or resources to support the transition.

4. Resource Constraints.

Pivoting requires investment—whether it’s time, money, or manpower. For small businesses or startups with limited resources, the cost of pivoting can be a significant barrier.

• Example: A restaurant pivoting to online delivery during the pandemic faced high upfront costs for developing an app and training staff on new processes.
• How to Mitigate: Start small with a minimum viable product (MVP) to test your pivot before scaling up. Seek additional funding or reallocate resources to support the shift.

5. Overestimating Market Potential.

A pivot is only as successful as the market it targets. Overestimating demand for your new product or service can result in wasted resources and unmet expectations.

• Example: A clothing retailer that pivots to eco-friendly products without validating demand may end up with unsold inventory and financial losses.
• How to Mitigate: Conduct thorough market research and validate your pivot with customer feedback and pilot programs before committing fully.

6. Operational Strain.

Pivots can place additional stress on your operations, especially if they involve scaling up quickly or introducing new systems. Without proper preparation, operational inefficiencies can derail your pivot.

• Example: A fitness studio pivoting to virtual classes might struggle to manage scheduling, technology, and customer support simultaneously.
• How to Mitigate: Prepare your team and systems for the pivot by streamlining operations, investing in technology, and planning for scalability.

7. Complacency After the Pivot.

Pivoting successfully is only the beginning. Businesses that fail to continuously innovate and adapt risk falling into complacency, leaving them vulnerable to new challenges.

• Example: A software company that pivots to a new platform but neglects to update features regularly may lose its competitive edge.
• How to Mitigate: Build a culture of continuous improvement. Regularly review performance metrics and market trends to stay ahead.

Why Understanding the Risks Matters.

Pivoting is a powerful tool, but it’s not a guaranteed solution. By understanding the risks and challenges involved, you can approach pivots strategically and minimise potential downsides. Every pivot should be guided by a clear purpose, backed by data, and aligned with your long-term goals.

The Rewards of a Well-Executed Pivot.

While the risks of pivoting are real, the rewards can be transformative. A successful pivot can open up new revenue streams, attract a larger customer base, and position your business as an industry leader.

By navigating the challenges with care and confidence, you’ll be better equipped to turn setbacks into opportunities and build a more resilient, adaptable business.

Final Word.

Pivoting is one of the most powerful tools in a business owner’s arsenal, enabling you to adapt, innovate, and thrive in an ever-changing marketplace. As Eric Ries highlights in The Lean Startup, pivoting isn’t about abandoning your vision—it’s about finding a better path to achieve it. By understanding what pivoting truly means and recognising the right time to make a strategic shift, you can position your business for sustainable growth and long-term success.

The importance of pivoting cannot be overstated in today’s fast-paced and unpredictable environment. Whether it’s responding to shifting customer needs, navigating competitive pressures, or seizing new opportunities, pivoting allows you to stay agile and resilient. 

Successful pivots, such as Netflix’s move to streaming or Zoom’s rise during the pandemic, demonstrate how the right strategy can turn challenges into game-changing opportunities.

As you consider whether a pivot is the right move for your business, remember the steps to pivot effectively: identify the problem, choose the appropriate pivot type, validate your approach, communicate transparently with stakeholders, and monitor progress. While pivoting carries risks, these can be mitigated by thorough planning, clear communication, and a commitment to staying true to your vision.

The entrepreneurial journey is filled with unknowns, but the willingness to adapt and innovate is what separates thriving businesses from those that falter. If you’re at a crossroads or facing challenges that require a new approach, now is the time to take action. Evaluate your current strategy, gather data, and be open to change—it could be the key to unlocking your business’s full potential.