The Predicament of the 2 Ps: Pivot or Persevere?
A solid vision, unrelenting determination in the face of obstacles, and a sense of steadfastness are almost always synonymous with successful entrepreneurs. However, stubbornness sometimes translates into obsessively staying the course and proves to be a company’s undoing. What this means is that, whether you are an entrepreneur working on your own bootstrapped idea or a product manager in a multi-national firm, a question that stumps many is what to do when a product or idea does not get the traction you expected. And it’s not just businesses — many of us face the same predicament when we’re at a crossroads. Money is just one aspect; the amount of time invested is equally important. So, how long is long enough before you need to change your course or shift gears? What factors tip the equation in favor of motoring on, and when and how do you cut your losses? There is no one correct answer — steering a company through these obstacles comes down to judgement, which is more art than science.
Persevere. The meaning is quite clear — stick to the chosen plan of execution and continue to invest until you find the perfect product-market fit. Its counterpart — pivot — is a buzzword that originated in the world of Lean Startups. It means shifting energies away from the original idea or strategy (or both) and iterate once more through the product cycle. Just like in Latin dance forms, to pivot means to keep one foot firmly in place while you shift the other in a new direction. In the words of Eric Ries, the creator of the ‘Lean Startup’ methodology, it means that new ventures process what they have already learned from past successes and failures and apply these insights to new areas — also called ‘failing fast’. Pivoting in the business world could employ one of many strategies: changing the segment you are focusing on, zooming in or out on specific features, changing the platform type, adopting different technology, new channels, or a totally different value proposition entirely. Irrespective of the type of pivot, the essence is that it is done to accelerate business growth.
But there are successful stories on either side of the argument. There are those who trucked on with their idea despite initial losses — like Pinterest — and improved incrementally on their idea based on feedback, making billions in the process. And then there’s Groupon — a fine example of a successful pivot. Their original aim was to organize social advocacy campaigns, but they are now a billion-dollar daily deal site. Another popular example of a pivot done well is Instagram. They quickly realized that photo sharing was where the company could gain more traction compared to their first attempt — a mobile app named Burbn, used for social check-ins. However, not all pivots spell success and are definitely not the only way to overcome hurdles. To help you create a method out of your madness, here are some pointers that might guide you in the best direction.
To make it easier, let’s look at the Lean Startup methodology for inspiration. It is based on a build-measure-learn model, and is the birthplace of the word ‘pivot’ as we use it here. The Lean model suggests building small increments of the product, each of which delivers value to the customer, and then measuring customer feedback to decide whether to carry on or change tracks. The model recommends monthly Pivot-or-Persevere meetings, where founders take stock, evaluate their business model, and assess their progress against the product/market fit, sifting through customer feedback for signs of failure. The outcome of these meetings should be one of the two Ps — a basic way to validate whether you are climbing the right mountain. Amazon’s Jeff Bezos calls this process the “regret-minimization framework” — it involves deep introspection after due diligence, the collection of all relevant data, and customer or market feedback. He encourages his teams to go the extra mile before dumping an idea, urging them to reflect, make up their minds and then get going — something we can all learn from!
So, before you make your decision, here are some important factors that need to be considered. The answers to these questions will help you make an informed decision:
- What is your burnrate, or the rate at which your company is losing money? It is typically expressed in monthly terms and measures how fast one is using capital to sustain the business. Do you have the requisite cashflow to stay afloat?
- Is there any data to indicate that the market or customers are liking some or all features of your product? Have you put out any feelers to see whether the idea is beyond its time, too early, or is subject to any other barriers?
- How competent is your team? Will they be able to execute your vision and face challenges posed by the market? Do you have the technical expertise and domain knowledge to change your idea halfway through, or the resources to clear hurdles if you plan to persist?
- Are you able to refine your product and offerings based on customer feedback?
- In case of a radically different idea, are your investors onboard with the idea? What is the exit plan for shareholders and what is the ROI they can expect if they stay invested?
- Finally, would you have the same fire in your belly if you had to pivot and start all over? If not, it might be time to look at a third option — call it quits.
All said and done, many times the choice to persist in the face of setbacks or pivot towards a different goal relies on common sense. Realistically speaking, pivoting is not a magic wand that will change the fortunes of your business overnight. It’s about finding a trajectory that will take your solution closest to your customers’ needs; one that will solve a real problem. Whether it means many pivots or just sticking your idea through, a profitable enterprise happens when you find customers who resonate with your North Star — and you, as an entrepreneur, stay true to it as well!