How to Pivot Your Business Planning Strategies
The term pivot, introduced by Eric Ries, made its way into the business planning vocabulary in 2011 as a way to describe fundamental changes young businesses often need to make in order to achieve their missions and visions. Put differently, sometimes businesses need to undergo major strategic changes in order to survive and succeed.
Frequently cited examples include Twitter, which pivoted from a podcasting platform to a microblogging behemoth and Groupon, which started as an online fundraising site called The Point before transforming into the daily deals giant you know today.
In each case, an aha moment prompted a complete course correction that recharted the path to success.
Watch for these signs to indicate that a major redirection or even a total reinvention of your product, market, business model, processes, or operations is in the cards:
When the market you serve diminishes greatly
When demand for the products you sell collapses
When the way you do business is eclipsed by new innovations
When costs require that you rethink how you staff, equip, and organize your business
When the market presents opportunities that you can seize only by dramatically altering the way you do business
If you determine changes in your business aren’t temporary but likely to affect your business well into the future, don’t wait until your business is upended by change before you refocus your strategies. Stay proactive by annually assessing how well your product, location, distribution, staffing, and operations suit the situation your business faces.
Make product changes
To assess whether your product is in need of a minor-to-major overhaul, refer to Form 6-1, this time completing it with change in mind and keep these steps in mind:
Summarize your product and its features.
This time frankly assessing whether the features of your offering are still competitive in your marketplace and, if not, what new features you could add to address changing customer wants and needs.
Summarize your target customers.
Assess whether your current products might appeal to different groups, within your current market area or in new market areas or distribution channels, in order to provide the sales volume you seek.
Summarize the benefits your product provides.
Ask whether customers still value those benefits and, if not, how you can revise your offering to create a different value proposition.
Consider whether your company can adapt to its changed market environment by creating and offering an altogether new product, so long as that product fits with the capabilities of your business and your company’s brand image.
Move your business
Whether your location is online or in a bricks-and-mortar building, sometimes a move is necessary to address the wants and needs of your customers and to kick-start lagging sales.
Consider where your business could be located — physically and online. Can you achieve greater success in a different location or market area? Can you realize higher profit margins if you shift the nature of your location, reducing or eliminating physical inventory in favor of virtual inventory, for example?
Outline what would be involved to physically revamp or relocate your business, or to establish an additional location.
Outline how you could achieve a stronger Internet footprint — by improving your own site, expanding your online social networks, establishing online marketplace affiliations, or establishing new ways customers could access your products online.
Revamp your operations and processes
Some business reinventions involve changes to the very way companies operate. For example, a manufacturer that can’t achieve competitive pricing due to high costs might orchestrate a major business redesign by licensing proprietary designs for manufacture by third parties.
A business that can’t keep full-time staff productive might revise operations from an employee-based business to a virtual workplace staffed by freelance contractors. A business that requires large volumes of supplies or services may decide to create new business divisions in order to provide such components internally.
Use an Operations Planning Survey (Equipment), to consider whether your business would benefit from a major change in how it’s equipped. Would adding equipment allow your business new production options? Would selling equipment and subcontracting through third-party suppliers provide your business with higher profit margins?
* Use an Operations Planning Survey (Labor), to assess whether your business might benefit from a redesign of the way it’s staffed and organized.
Use an Operations Planning Survey (Process), to reconsider how you produce your product, how you handle inventory and delivery of your product, and how you maintain and guarantee product quality.
Alter distribution channels
If your business planning is motivated by the need to turn your business around, seriously consider how you might overhaul how you distribute your offering.
Outline new ways your product might reach your marketplace. If you’re currently a bricks-and-mortar operation, consider what an all-online distribution model might look like.
If you currently sell through an internal sales force, consider how you could benefit from shifting to sales through wholesalers, distributors, sales representatives, auctions, or other altogether new sales approaches. If you currently sell directly to consumers, assess whether your business might benefit from strategic alliances with intermediaries that might purchase in bulk for resale to consumers.
Consider whether the market area you serve is sufficiently large to sustain your business, or whether you should expand or shift emphasis to distribute your offerings into new markets.
Especially if your business is undergoing major changes, in your written business plan define how you plan to revise your business strategies by altering your product, location, distribution, staffing, operations, and marketing. When describing your strategic adjustments, explain what business or marketplace condition makes the strategic change necessary and how the strategic change will result in positive outcomes that outweigh anticipated disruptions.