Let's face it -- situations change. When you started your company, you knew the market, had a plan and probably executed it with precision and focus. Even if you did everything right and had a good, solid run, you may find yourself facing a changing business environment. So, before you hunker down and try to power through the change, here is a simple five-step test to see if you need to be thinking about a pivot.
1. The Competitive Environment Changed.
We're living in a time where technology is fueling changes across many industries. Amazon is driving retail to speed up delivery, Uber is inviting consumers to expect car services to provide efficient and seamless service. No matter how forward-thinking you were when you began your enterprise, chances are technology is changing consumer expectations in your thriving enterprise. New technology is inevitably changing the competitive environment you're operating in. There may be downward pressure on pricing or a need to improve terms. For example, shipping is now something consumers expect to be free. The biggest mistake you can make is ignoring changes in your environment. If consumers expect free shipping and free returns, it's time to adjust your model.
2. The Customer Needs Have Changed.
Venture investor Chris Sacca tells a great story about getting an early look at Airbnb and telling the founder that there was no way it was going to work. Too much risk, not any customer demand. A terrible idea. He was right of course, looking in the rear-view mirror. But only the founder could know that there was an unmet need for low cost, human-scale, room sharing. Airbnb turned couch surfing into a business, and a very big business indeed. Brian Chesky saw the future, and he built it. With $2.3 billion in funding, Airbnb now has has over 1,500,000 listings in 34,000 cities and 190 countries since its founding in 2008. So, how does the growth of Airbnb change the hospitality market? Does it impact your business? Does it open new opportunities? Customer needs are changing in many sectors -- staying in touch with those changes is critical to saying ahead.
3. The Barriers To Entry Have Dissolved.
Many years ago I owned a television production company. We owned expensive video cameras, costly editing gear, and the edit rooms and support services that our clients - mostly TV networks - expected when they came to edit a program or a series of promo spots. I remember the day I saw Apple's first edition of Final Cut Pro. It was an entire edit room on a laptop. I saw it in an instant. The barriers to entry in post production would vanish. Talented editors would no longer need my overhead. Networks would bring post in house. The hourly rate we charged would plummet and eventually vanish. It didn't happen overnight, but slowly we transitioned from expensive gear to low-cost software, and we lowered our hourly rates to meet the market. Today post production has declined for all but high-end effects. The business vanished as quality, low-cost production arrived and empowered new competitors.
4. Your Drive And Passion Has Changed.
We're all driven by different things. Some of us are driven by innovation. Some of us want to build big things. Some of us want to change the world. But as part of the magical entrepreneurial elixir, there's always an element of passion. Passion is what drives innovation, and gives entrepreneurs the confidence to take on big things and have the confidence, and some would say hubris, to believe that they can see the future and build that vision. As important as it is to have drive and passion, it's also important to know when you've run out. For some entrepreneurs, success can lead to boredom - and that means it's time to pivot. Either taking on new challenges or step aside. But understanding what drives you is critical to remain charged and striving for continued success.
5. New Opportunities Have Emerged.
One day - you may wake up and see that the path ahead of you has taken a turn. It may be an evolution - or it may be a revolution. If it's an organic and natural step in your path, then an adjustment or a pivot may be all it takes to stay focused on what lies ahead. Chances are, if you've already been bitten by the entrepreneurial bug and built a business - it's going to happen again. Maybe you'll be lucky, and the new opportunities will be on the path ahead. But chances are you'll find your passion driven by something really new - brand new - and divergent. So, don't be afraid to make the pivot a big one, even a life-changing one. There's little to be gained by staying at any party too long.