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Pivoting in a Start-up

The business plan in a start-up evolves very frequently. Mostly the market, customers, product requirements would move in an ever changing world during execution of your business plan. Good entrepreneurs must have a good view at the ground level reality, as well as a high level view into how the marketplace is emerging so they could adapt their business plan accordingly. Visionary leaders are mostly able to foresee the opportunities and threats around the corner and react accordingly. Several investors even look at pivoting opportunities in a start-up before investing. Not just start-ups, even large well established corporations need to evolve with time as well. Some chose to pivot when they visualize certain interesting newer opportunities.

Pivoting can be defined as a dramatic change in course of a business to pursue somewhat related but tangential business opportunities. Good entrepreneurs and business leaders can foresee and pursue good opportunities by pivoting and adapting quickly. Pivot is a term also used in a basketball game when a player runs with the ball and then stops to throw the ball to another player in any direction. The eventual target is to put the ball in the basket, but the path chosen can vary dramatically depending upon the changing positions of the players.

Let us look at a couple of examples of successful business plan changes that may be called as pivots:

Apple used to make computers in 90s, and then suddenly in the last decade they got into music business (iPods and iTunes) , then into mobiles (iPhones), then created a new market of tablets (iPads) and the next products we hear might be printers, televisions etc. Ever thought when Steve Jobs was leading Apple, how easy it would have been to convince the Board of the company to adapting the business plan into these new products and business lines, which were not the core of what Apple used to do?

Amazon moved from online retail to the Cloud hosting business very successfully and is leading and dominating the market. Let’s look at the relatively more obvious opportunities larger companies missed early on,

Microsoft missed the mobile operating systems opportunity that’s now dominated by Google’s Android and Apple’s iOs. If you think about it, Microsoft’s core business is operating systems for decades, but they missed the growth in use of mobile devices and the related operating systems requirement.

Google did not get into social media for years. Their CEO at the time Eric Schmidt publically apologized for missing that opportunity. There would be a lot more examples in this category as well. In a similar way there are many failed pivots as well in various large businesses. Key point is that in a start-up, you will need to look carefully at how your business plan is evolving. You must find time and update your business plan every quarter so you get a chance to step back and review your progress and plan for the future. You may have to make a tough decision when you need to pivot, or when you need to continue with the existing opportunity you are chasing. You will have a limited number of resources that you need to carefully deploy across the products / services / customers you are after. Success of a start-up is very dependent upon the entrepreneur’s ability to adapt its business plan over a period of time.

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