Last Updated on
January 19, 2023
By
Excedr
While "pivot" has it's place as a trendy term in the startup realm, it's a well-documented strategy for turning failure into success. Companies like Netflix, Instagram, Slack, and Nintendo have all successfully pivoted. For example, Netflix transitioned from DVD rentals to a streaming service and production company. Instagram evolved from a location-based app to a leading video-sharing platform. Slack emerged from a failed game project to become a prominent messaging program. Nintendo shifted from selling playing cards to electronics and video games.
Despite their eventual success, each of these companies underwent significant pivots, altering their products or business strategies. Knowing when and how to pivot is a crucial skill for any founder or entrepreneur. This article will cover key aspects such as what a pivot entails, when to consider it, types of pivots, how to execute one, and exploring alternative strategies. You'll gain insights on differentiating between pivoting and iteration, identifying the need for a pivot, and executing it effectively in a competitive landscape.
In this article, we'll review what a business pivot is, when to pivot, and what types of pivots are executed. We'll also include examples relevant to the life sciences, recognizing the unique challenges faced by biotech companies compared to tech startups. This ensures you have a tailored comparison rather than having to adapt strategies from tech or social media companies to your own industry.
Simply put, a pivot in business is changing your business idea, strategy, or product, most likely because your original idea wasn’t executing the way you’d like or your product isn’t useful to your target market. This change is usually fundamental and can improve a company’s revenue or help them survive in the market.
In the same way a basketball player pivots their foot to change directions with the ball, a business pivots its strategy or product to breathe new life into the company.
That said, a more technical definition of pivot involves distinguishing between an iteration and an actual pivot. While you may consider pivoting research slightly to focus on a more promising molecule, it could be an iteration.
This distinction applies to early-stage startups that haven’t made much headway in drug discovery and development. Any pivot you make here could be considered more of an iteration than an actual pivot.
A proper pivot is generally when a company with a customer base and an established product decides to change the direction of its business. In the case of an emerging biotech, its customer base and the established product are its project portfolio or any commercialized drugs.
Because starting from scratch or making significant sweeping changes to strategy, product, or portfolio is a huge undertaking; it’s vital to pivot only when it’s clear that pivoting is necessary. However, identifying that situation can be difficult, especially for a first-time founder or co-founder.
Are you in a position that requires perseverance, or is it time to throw in the towel and redeploy the company or team to a new project? It might be time to make a pivot when:
Do any of these examples apply to you? If so, you’ll want to consider your options for iteration or to pivot rather than persevering in the hopes that something will change while wasting precious resources.
Many years ago, Eric Ries published “The Lean Startup,” which addressed the new approach startups were using to build. The approach considered that startups often need to make many course corrections, or “pivots,” to find a successful formula and product.
According to Ries, the approach dramatically improved the efficiency and speed of these corrections, allowing founders to continuously iterate, finding a formula that eventually would lead to a highly successful business.
While his approach is, in many ways, for technology companies, many aspects of the approach apply to other businesses, including the life sciences and biotechnology. In “The Lean Startup,” Ries discusses the various pivots companies make to test different theories about a business model or product, most of which we will review here. The types of pivots include:
Correctly identifying the business model or product changes you need to make will help you determine the right pivot for your business. You may need to perform a technology product to bring down development costs.
Identifying the changes you need to make is the first step in the pivoting process. And that takes knowing what types of pivots are available to you.
Pivoting takes thoughtful planning and execution. If you’re convinced that pivoting is the wisest business decision, you’ll wonder exactly how to spin. Consider these tactics, which help you solidify your pivot strategy and reduce the risks involved.
Recognizing that you need to pivot is tricky. Acting decisively can be even more difficult. As a young company, chances are you and your team are attached to the work you’ve been doing, and simply letting go of all the hours you’ve put in can feel like the wrong decision.
If you’re convinced it’s time to pivot, you’ll want to act quickly. It can help you avoid wasting more money, time, and effort.
It’s essential that you evaluate your business model to the best of your abilities and use that evaluation to hone in on what’s going well. If you focus on the project or projects that are the most promising, you’ll have a better chance of making those projects work.
Ask yourself whether or not you need to learn a new skill or hire a new team member to make the pivot successful. Sometimes, the pivot you decide on can take you into a new field or market. When that’s the case, you might lack the skills or expertise necessary to make serious progress.
Assess whether or not you can personally learn the skills needed or if hiring another scientist or building a new team will increase your chances of success.
It might be that you’ve identified your business model as the issue. In this case, pivoting to another model might be the most intelligent decision.
For example, if your business model is focused on strategic partnerships with pharmaceutical companies, but the genes you’ve discovered and identified are relevant to more than one therapeutic area, you will have difficulty remaining partners.
It would make sense to pivot into a new business model in this situation, which is what Millennium did.
Letting go of a failure will help you move forward, and being comfortable with significant changes can help you navigate the stress and anxiety that comes with pivoting. Rather than get hung up on something not working out, embrace the change and lean into the newness. Doing so can help you more easily adjust and develop your pivot strategy.
Before pivoting, startup founders and small business owners should consider whether or not they should try some iterations first. Iterating on your business plan, product, business strategy, marketing strategy, or model can help you work past the bumps you’re experiencing in your research or development processes. You can consider building out your project portfolio or drug pipeline as a form of iteration, allowing you to ultimately get more “shots on goal” or more chances at having a drug candidate succeed.
If it’s apparent that iterating won’t help your business—a drug that failed clinical trials, for example—then it’s time to pivot. Pivoting will let you start fresh, taking your team and company in a new direction.
No matter what, the most meaningful thing you can do to increase your chances of success is to back people, not projects! When you look at the bigger picture, strong teams of talented people are often behind the best ideas out there, not because they always succeed immediately, but most likely because they’re willing to pivot and do so thoughtfully and with intention.