The “business pivot” is all the rage in technology startup circles. The phrase coined by The Lean Startup author Eric Ries refers to the process a company goes through when it fails to achieve its vision and, in order to redeem itself, tries an often radically different approach.There are many famous examples of pivots in the technology world:
- Twitter began as Odeo, a podcast subscription service which failed after the launch of iTunes.
- Groupon began as The Point, an online service to help people organize protests.
- Flickr began as an online multi-player game.
As Ries’ research indicates, most successful startups that achieve spectacular growth went through several pivots, experimenting with new ideas until they hit an approach that worked.
Business pivots aren’t limited to just startups or social media companies. Any business that’s in trouble can undertake a successful pivot. Even small businesses that haven’t had meaningful change in years, or decades, can muster the resolve to pivot toward great opportunity and success. If you’re considering a pivot, take a closer look at the example below to see how it actually works.
A Case Study
CAB launched in 2009 with a vision to revolutionize access to financing for small businesses. The company had a seasoned managed team and a visionary founder. It also had identified a clear opportunity, due to changes in government regulation, that would allow the company to tap into large funding sources for the benefit of small-business owners. As a small business itself, the company needed to prove its model quickly to build traction and convince regulators that it had the ability to accomplish its goals.
As the company executed on its original business plan, it ran into several roadblocks. First, obtaining regulatory approval to proceed with its funding model required that it first secure millions of dollars in capital, while the investors wanted to ensure approval was in place before funding. This created a chicken and an egg problem.
