“Pivot” ranks right up there on the Mt. Rushmore of startup jargon – right alongside “bootstrap,” “scale,” and “agile.”
With AI becoming mainstream over the last year, discussions of pivots have been sent into overdrive. We’ve seen one tech company after another pivot toward AI. Some are genuinely integrating AI into their products; others are using marketing plays to AI-wash their brands.
To be clear, AI is the real deal; it’s why I wrote my thesis on it in business school. It’s not just a wave of enthusiasm – AI is finally delivering on the promise that’s been decades in the making. Everyone wants in, builders and investors alike.
But a pivot, whether it’s toward AI or something else entirely, is never easy. You can’t just will it to success. And while there’s a lot to be excited about, many organizations are sprinting too drunkenly toward AI. Worse, many companies that are doing just fine without AI are making drastic, irreversible changes that could cost them dearly – for the sake of AI.
A good pivot demands a clear strategy and a perfect product market fit. Founders must make decisions based on a deep understanding of market dynamics, not a fear of missing out on the next hot thing.
Trust me, I have been there.
See also: 7 Things Sailing Taught Me on Leadership
An aircraft carrier-style turn
My company, Sure, began as a direct-to-consumer (D2C) mobile insurance app before becoming a digital insurance infrastructure company, using our existing core technology. In hindsight, the shift was absolutely the right move, but success wasn’t guaranteed, and it wasn’t always clear if it would work.
They key lesson I learned: Never pull the plug on something that is working to do something new until proving that you can successfully do the new thing.
Our transformation didn’t happen abruptly, or as a result of one meeting or feedback from our board. It wasn’t a situation where we got up one morning and decided to do something totally new. It was an evolution based on skeptical thinking.
We didn’t even utter the word “pivot” – we thought of it as an aircraft carrier-style turn. We kept our heads down on the existing business while we started to identify the first customers for our SaaS solution – and it worked. The first partnership that we ever secured as a SaaS infrastructure provider is still going strong to this day. In fact, it’s never been stronger.
Unfortunately, many startups make the fatal mistake of impulsively abandoning what they are currently doing successfully to prematurely pivot toward something new – and, well, they end up failing, oftentimes slowly and painfully.
What not to do
Don’t get me wrong. A pivot can succeed. It just requires careful execution and avoiding certain pitfalls. Here are some pits of sorrow and misery that will make your pivot fail and lead your company toward oblivion:
- Act impulsively: Jump on any trend, regardless of its long-term viability or relevance to your core strengths.
- Ignore customer feedback: Avoid engaging with customers or conducting thorough market research. Ignore data, trust feedback from one VC.
- Rush the pivot, at all costs: Make abrupt changes without considering the impact on your existing customer base, team, and business partners that joined with the prior strategy.
- Abandon your strengths: Disregard what your company is currently successful at. Instead, pivot toward unfamiliar areas that you’ve spent a weekend thinking about.
- Stick to a rigid plan: Refuse to adapt your strategy as challenges arise. Remain stubbornly committed to an initial plan, no matter its flaws and lack of traction.
- Reinvent the wheel: Forego seeking advice from experienced peers or industry experts. Ignore what you are uniquely good at.
- Chase short-term gains: Focus solely on immediate results rather than long-term sustainability and growth. Try to hit that next milestone for a capital raise instead of focusing on building for the long-term.
- Avoid feedback: Neglect to refine your pivot strategy based on customer or market feedback. Don’t be skeptical. Your first idea wasn’t right, so the second one must be right!?
- Expect smooth sailing: Fail to anticipate and prepare for the inevitable difficulties and setbacks that come with major change or a whole new set of competitors.
See also: Leadership Lessons From Sports
What to do
Pivoting is nothing new in the startup world, especially in recent years. Startups have navigated through periods of rapid growth, abundant capital, and challenging economic climates. Seasoned founders understand that simply having a great product doesn’t guarantee success, and shifting focus can either make or break even the most innovative companies.
While Sure may have had a short lifespan as a D2C mobile app, the strategic hypotheses that we committed to early on helped us to grow into the complete digital insurance technology solution that we are today. That core technology, application programming interfaces (APIs), embedded insurance, and fundamental hypothesis about the market has never been more true than it is today. We chose to stay focused on our core strengths while we explored new markets, and the results speak for themselves.
Pulling off the pivot isn’t easy, but if done well it can unlock bigger opportunities you never dreamt about at the beginning of your entrepreneurial journey – all while positioning your company for long-term success.
