What is "Pivot"?

If you are involved in startups, you may have heard about Eric Ries' "Lean Startup" at least once. Our company, Waveon, also applies Lean Startup thinking by helping teams test value propositions and customer demand before building too much. The term "lean" means "without fat", which implies no waste. In this context, a lean startup is a methodology for startups that recommends eliminating unnecessary elements, quickly testing products, and moving agilely.

Eric Ries not only applied the lean management concept to startups in his book "The Lean Startup" but also introduced the sports term "pivot" to business for the first time. Originally used mainly in basketball, the pivot, which has the literal definition of "the center of rotation," refers to a play where a player who has seized the ball continually moves one foot while keeping the other foot planted to avoid being stripped by another player. Eric Ries redefined the pivot, noting that this play is similar to the process of changing the business model while maintaining the original vision of the startup.

"Pivot" is a change in strategy without a change in vision.

According to Eric Ries, a pivot is a process that changes the business strategy while keeping the vision and goals unchanged, resulting in new customer responses. In the end, a pivot can be considered an attempt to change some of the following three items:

• Core target market
• Core technology
• Business model

Changing all three items is not a pivot. If you change the market, technology, and business model, it would mean folding the original business and starting a new one. The pivot is a process of identifying and making appropriate business transitions without unnecessary efforts by exploring items that need to change depending on the situation.

Why is pivot necessary?

There is no "correct answer" in business. In other words, there is no absolute criterion for determining the success or failure of a business. However, there is "superiority" in business. Think about writing. There is no "correct answer" in writing, but there is "superiority." Which is the "better" writing, a draft written in 10 minutes or the draft revised over three days? Most likely, it is the latter. The same goes for business. As you proceed according to the initially planned plan, your business can become "better" through refining your thoughts on the direction of the business and receiving various external feedback. The pivot is a good option for startups to get closer to the "superiority" of the business.

Pivot Case 1: YouTube
The video-sharing platform YouTube, which is now an information hub and source of relaxation for everyone, was initially a video-based dating service. In 2005, YouTube allowed users to upload videos of themselves and select dating partners. However, due to the lack of customer response, YouTube pivoted to a service that highlighted the video sharing feature that was initially part of the product, alongside its acquisition by Google in 2006.

Pivot Case 2: Slack
Slack, the collaboration tool used by many companies, also went through a pivot to become what it is today. Slack started as an internal messenger for a gaming company. Slack's parent company was preparing an online role-playing game called Glitch. The messenger was an internal feature to help communication among game developers who were scattered in different locations. However, when the game's market response was weak after its launch, the company focused on the internal communication messenger feature, giving birth to today's Slack.

Hearing the stories of successful companies that pivoted makes us wonder if we should seriously consider pivoting, doesn't it?

Is pivot an essential requirement for dramatic success?

When a startup introduces the concept of a lean startup, it faces various changes in the process of operating the business. If the conclusion from the market validation stage using an MVP (Minimum Viable Product) indicates that the hypothesis was wrong, the startup must attempt to change. A focused landing page can make this decision easier by comparing messages, target segments, pricing assumptions, and sign-up intent before the team commits to a larger product change. Discussions on the direction of improvement should be held, followed by another round of market validation tests.

However, American software developer Marc Andreessen pointed out that startups should be cautious not to apply the 'lean startup' concept indiscriminately. If the lean startup strategy is misused, startups might consider failure as something natural, neglecting to analyze the reasons for their failure in the market and consequently losing the possibility of success. If pivots are executed recklessly without thoroughly analyzing the reasons for change, good results are naturally hard to come by. In other words, meaningless repetitive pivots can increase team members' fatigue and, ironically, waste resources and energy.

Shall we revisit the concept of a pivot? A pivot is not a process of changing every aspect of the business. It involves keeping one foot in place and moving the other foot, that is, maintaining the core competencies while identifying and appropriately transitioning the areas that require change. Therefore, startups should make decisions after fully understanding the core strengths of their team and product. Additionally, efforts should be made to find the basis for judgment from the perspective of the customers, rather than that of the company.

I hope you become adept at responding quickly to market trends and boldly identifying the real demand that the market desires.

Need evidence before deciding whether to pivot? Create a validation landing page and compare real visitor behavior before changing your product direction.