The 4 Secrets to a Successful Pivot
A pivot is a powerful tool. A company that stays the course without looking for new opportunities risks failure. Eric Ries, author of The Lean Startup, said in an interview: “Kodak or Blackberry -- pick your favorite company in the last few years that’s gone from a 100 million market cap to 5 billion. And ask yourself, ‘was playing it safe actually that safe?’ I don’t see evidence of that.” Even billion-dollar companies need to pivot in today’s world.
A smart pivot can save struggling companies, create growth opportunities in a related yet new direction or be the breakthrough that allows for the domination of an industry. In the dizzyingly fast pace of modern business, learning to quickly adapt through a well-thought-out pivot is essential. Responding intelligently to changing demands allows the more adaptive businesses to flourish. Pivoting could mean a business changing its focus to something completely new, using research to help identify a fresh target audience or test a new product line.
What is most important is that the change is efficient and wise. Joe Liebke, founder and CEO of LUXPADS, a leading international vacation rental company, describes it as “a directional change that is based on experience and knowledge gained from a previous position.” A successful pivot lies in a leader’s ability to execute his or her new plan with as much insight and passion as he or she had for the original business. This is exactly the approach that Liebke is taking by pivoting with his new venture Villaway.
Using the knowledge gained from his previous venture, Luxpads, Liebke focused on emerging trends in the way people want to experience upscale travel, essentially creating an AirBnB for the jetset. Rather than letting the opportune moment pass by, Liebke decided that Villaway has to be the leader in the field and dominate the luxury vacation rental marketplace. So, what are the four secrets to a successful pivot?
1. Timing You have to listen to what the market is telling you to decide when a pivot is the right move. This is something the self-aware entrepreneur needs to keep in mind. Half the battle with a successful pivot is picking when the time is right. Liebke says “too many people fall victim to over analysis and they miss market opportunity.” Reacting quickly is key. All business must change and owners must react if they want to stay current with their audiences and be competitive within their industry. The worst thing for a business is to become stagnant and irrelevant. In the case of Villaway, the team behind it assessed the situation within the travel industry and felt the agency model wasn’t adequately serving the needs of property owners, managers or the guests. So they created a unique platform that connects the property managers directly to guests. This new approach to more efficiently manage luxury property might be the disruptive model that changes the way things are done. History abounds with pivots that have changed whole industries. Remember when HBO used to play movies made by others? The traditional model of cable television was dying, so it made a pivot by producing its own content and now it is a juggernaut in the media world. A well-timed pivot can be worth billions.
2. Learn The ability to learn, or "validated learning," is one of the key strategies that must be adopted by business owners when pivoting. One of the foundations of this strategy is the need to understand new problems at their core. This helps to guide the business venture. Luxpads’ experience as an agency taught its leadership the challenges and shortcomings of the current agency model. They knew they could create a viable solution by climbing vertically to a managed distribution business model by controlling the quality of product and partner members via the Villaway platform. Learning from relevant business experience helped inform the decision-making process. You need to assess what is acceptable risk to make a change, your capacity to make that change, measure the cost and then weigh these against the potential rewards. Relevant experience should also be used to guide future learning. Knowledge is key. There is no excuse for ignorance if you are considering a pivot to a new market. Related: 5 Reasons Why Pivots Are Crucial to Today's Businesses
3. Adapt A strong business leader is always assessing, measuring and adapting to the marketplace. This is the best way to create sustainable growth when making a pivot. By adapting to the market you place yourself in the best position to take on the new regulatory and financial risk-management challenges that come from rapid growth. The window of opportunity opens only briefly, so the confidence in your team, resources and ability to execute are key measurements in evaluating a decision to pivot. Adapting to new market developments is the only way to ensure success, especially when timing is a consideration. The success of a new business model depends on the ability to adapt to fast-changing marketplace conditions. In the case of Villaway, Liebke says, “Our business puts us in the balance of technology, travel and real estate. These are all very dynamic and change frequently, so we have to pay close attention to all the market movers.” This dynamism also permeates the tech world, where product cycle development gets faster every day. Instagram used to be a virtual check-in service, but it quickly adapted. Had its leadership stopped assessing their business, they never would have made the change they needed to grow.
4. Ride the wave Pivoting was originally a sporting term, and many analogies have been made about pivoting in business and sports. “I would draw the analogy of riding a wave. You have to sense and feel your position in relation to the wave as it is always changing," says Liebke, a former nationally ranked surfer and surfboard shaper. "If the waves slows, speeds or changes shape, you can pivot off your back foot to reposition yourself depending on your strategy for the ride.” This analogy suggests the importance of responding to market developments, the feel of the wave, as a catalyst for your decision to pivot. Assessing the right time to make a pivot and how you respond to the wave of the marketplace is then dependent upon having the passion and the knowledge gained from previous rides. A successful pivot is a dynamic maneuver, leveraged from a previous position that optimizes your momentum and direction for the most positive outcome, whatever the objective might be. This applies to both surfing and pivoting. With a keen sense of timing, learning and adapting you might just make the right pivot and ride a wave to a whole new level of success.