Pivot in business - Insights while changing the business model.
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The document discusses the concept of 'pivot' in business, clarifying that it is a strategic decision rather than an admission of failure. It explains the prerequisites and conditions necessary for a successful pivot, emphasizing the importance of aligning changes with long-term trends and ensuring management's commitment. The text also warns that once a pivot is made, it is difficult to revert back due to resource allocation.
Pivot in business - Insights while changing the business model.
- 1. Is it a embarrassment or strategic decision? PIVOT IN BUSINESS IS IT A EMBARRASSMENT OR A STRATEGIC DECISION?
- 2. Pivot is a complex word as it sounds yet it is very simple to understand. However, at times it is mistaken as simply a change in the method of doing business which is not the case. PIVOT IN BUSINESS – IS IT AN EMBARRASSMENT OR A WISE STRATEGIC DECISION Pivot can happen at any point in time in the life cycle of a business. It is completely circumstantial. At the outset, we must understand that making a pivot does not mean that the business has failed or it is a defeat of the leadership. On the contrary, it should be looked at as a daring step towards the business and leadership is willing to do pivot for better profitability, better market, and new geographies. It is also done to save the business as such and do a complete course correction.
- 3. PIVOT IN BUSINESS – PRECONDITIONS WHILE DOING LATERAL PIVOT A pivot must align the firm with one or more of the long-term trends created or intensified by the pandemic, including remote work, shorter supply chains, social distancing, consumer introspection, and enhanced use of technology. Pivots must offer a sustainable path to profitability, one that preserves and enhances brand value in the minds of consumers. A pivot must be a lateral extension of the firm’s existing capabilities, cementing — not undermining — its strategic intent.
- 4. PIVOT IN BUSINESS – RATIONAL BEHIND THE SAME If the existing business is bleeding and to what extent it can sustain itself. There is no exact time or triggering event that has to occur to do a pivot. It is completely situational and opportunistic. What is the right time to do pivot? There could be few reasons when you must think of Pivot If the existing product is becoming obsolete due to new technology. The market situation has changed dramatically. A new product has emerged on the market which completely substitutes your product and plus offer more features. Crises like Covid19 have gripped the country or world and it is impossible to do the business in a regular way.
- 5. PIVOT IN BUSINESS – BROAD DEFINITION OF PIVOT Radical change in business model. Pivot is a complex word as it sounds yet it is very simple to understand. However at times it is mistaken as simply change in method of doing business. It is not the case. Pivot really means you are changing the course of the business in terms of all or one of the following Expanding a new business vertical which is quite different than the existing one. Shutting down a division or business line and shifting the focus. Due to technological advancement shifting the complete face of the existing product resulting in to change in the target consumers. You may notice that only one of the feature of your product is doing exceptionally well. In those cases you can concentrate on that feature and develop further.
- 6. PIVOT IN BUSINESS – PREREQUISITES OF MANAGEMENT WHILE TARGETTING PIVOT It takes enormous courage to do the pivot and management has to ensure following prerequisites before embarking on pivot They have enough management bandwidth to handle the pivot. Since the pivot has to happen simultaneously with existing business, they have to ensure that the transition happens smoothly. Management has to ensure that pivot is well planned and lot of R & D has been done about the potential success possibility. This is especially true when the pivot is being done due to existing business suffering large cash losses. Management needs to be fully committed towards the pivot since they have to also transition people from one business to other business or even get the new team on board or in to new geography.
- 7. PIVOT IN BUSINESS – JUST A COURSE CORRECTION TOWARDS SUCCESS Pivot is actually very wise and strategic act of leadership wherein the management has not only recognized the existing problems but also found out another business model in order to take the ship to its final destination. Pivot has been around for very long time and some of the large companies have done the successful Pivot. Last word of caution on pivot is that it is extremely difficult to turn back once the pivot is done since large amount of resources would have been already diverted and turning back would amount of waste of time and money. Examples are...Twitter, Starbucks, Youtube, Groupon.