Pivot

Definition

A pivot is a strategic change or shift in direction that an entrepreneur or business makes in response to new information, changing market conditions, or the discovery of a better opportunity. It involves pivoting away from the original business model or plan to pursue a more promising path forward.

5 Must Know Facts For Your Next Test

1. Pivoting allows entrepreneurs to adapt their business model or product to better meet customer needs and market demands.
2. Successful pivots often involve incorporating customer feedback and data gathered from the initial product or service offering.
3. Pivoting is a key component of the Lean Startup methodology, which encourages rapid experimentation and iteration to validate assumptions.
4. Entrepreneurs may pivot their target market, revenue model, technology, or other key aspects of their business in response to new information.
5. Effective pivots require a willingness to let go of the original plan and embrace a new direction that aligns better with customer needs and market opportunities.

Review Questions

• Explain how the concept of pivoting is related to the Lean Startup methodology and the development of a Minimum Viable Product (MVP).
  • The Lean Startup methodology emphasizes the importance of pivoting, which involves making strategic shifts in a startup's business model or product in response to customer feedback and market data. The development of a Minimum Viable Product (MVP) is a key component of this approach, as it allows entrepreneurs to quickly gather validated learning about their product and customers. Pivoting then enables startups to adapt their MVP or business model to better meet customer needs, ultimately increasing their chances of success.
• Describe the different types of pivots an entrepreneur might make and the potential benefits of each.
  • Entrepreneurs may pivot their business in various ways, such as changing their target market, revenue model, technology, or product features. For example, a pivot in target market might involve shifting from serving one customer segment to another that is more receptive to the product. A revenue model pivot could involve transitioning from a free-to-use model to a subscription-based one. Technology pivots might involve switching to a different underlying platform or infrastructure. Each type of pivot allows the entrepreneur to better align their business with customer needs and market opportunities, potentially leading to increased traction, revenue, and overall success.
• Analyze the role of customer feedback and data in the pivoting process, and explain how entrepreneurs can use this information to guide their strategic shifts.
  • Gathering and analyzing customer feedback and data is crucial to the pivoting process. Entrepreneurs should closely monitor customer behavior, usage patterns, and feedback to identify areas for improvement or new opportunities. This information can then inform strategic pivots, such as adjusting product features, pricing, or the target market. By basing pivots on empirical data and validated learning, entrepreneurs can increase the likelihood of making successful shifts that better meet customer needs and market demands. The willingness to let go of the original plan and embrace a new direction based on customer insights is a hallmark of effective pivoting.

Related terms

Lean Startup: A methodology for developing businesses and products, which emphasizes experimentation, iterative product releases, and continuous customer feedback to guide pivots and business model changes.

Minimum Viable Product (MVP): A basic version of a product with just enough features to gather validated learning about the product and its continued development.

Entrepreneurial Pivoting: The process of making a strategic shift in a startup's business model, product, or target market in response to new information or changing circumstances.