How to Pivot your business model
Never before has the knowledge on how to pivot your business model been more important. In this article, we will define what pivoting is, how to pivot, and provide a range of practical tips to help.
Your goal to become good at pivoting business models is not to produce a brilliant single business model but to create multiple business models, all with their own strengths and weaknesses. This will involve pushing yourself to experiment, work quickly and think differently.
What is pivoting?
It has become very popular to talk about pivoting and usually when this term is used in the media, it is about companies changing what they do to reach new markets. During the pandemic, pivoting has been all about creating new offers, markets, and delivery mechanisms but there is so much more to it than this.
A pivot is when you substantially change one element of the business model canvas and then ask the positive question about how this one change impacts on the other parts. I have seen pivots create mind blowing results where people have seen the benefits of adding new skills, or partners to a business, or changing how they ask the customer to pay. Pivoting is not something you do once and then forget about to focus on sales and delivery, it is about always trying new things and measuring what works.
How to pivot your business model
The first stage to pivoting your business model is to map your core business model (or someone else’s). Use the key questions section below to capture how you do business now. Often your first business model is a bit messy and full. You will need to refine your business models so that they are aimed at market niches and capture the different dynamics and costs of your different income streams.
Once you have your core business model it is time to pivot. You can pivot on any segment of your business model. Each pivot is a ‘what if’: what if we had a different key skill; what if we had a different partner; what if we used a different way of charging the customer; what if we targeted a completely different type of customer; what if someone else did all the delivery? For example, you can be an engineering firm with the key skill of quality assurance, and you can say what if we were great at public relations, i.e. getting stories into the media.
Only make one change at a time. For each section of the canvas ask the question “how does the pivot impact on each part of your business model?” So, in the scenario of the engineering firm pivoting around the public relations skill you would ask the following questions:
- Now that we are great at PR does our customer change?
- Now that we are great at PR how might the value we provide to customers change?
- Now that we are great at PR, does our relationship with the customer change?
- Now that we are great at PR what new channels to customers might we have/could we develop?
- Does being good at PR bring us any new income streams?
- Does being great at PR bring us any new partnerships?
As you roll through the canvas you are capturing the impact of the pivot. With each change and new possibility you create, you are looking for new ways of:
- Increasing value to the customer, employees and partners
- Improving income streams, ways customers want to pay, creating recurring revenues,
- Reducing costs incurred before goods and services sold
- Increasing the role of partners in delivery across the business model
- Scaling up the business
- Creating intellectual property and dynamics/relationships in the business model that can’t be copied to protect your market
Pivoting often makes things messy again. You can keep most of the original business model underneath as you put the new value created on the top. As with all business models, you can come back later to tidy up, clarify, and simplify the business model.
What is a good pivot?
A good pivot is one that challenges you to think differently and create higher value for the customer and better returns for the company.
The whole point of pivoting is to find new ways of doing things with the potential of disrupting and profiting from ‘how things are done now’. Doing something new and embracing change always includes a bit of mental pain. A pivot will make you scratch your heads, rethink, and make your brain hurt. We are creatures of habit and prefer to do it the way we first envisaged it, but this is the opportunity. Business model pivoting isn’t just embracing change, it’s transforming it into a fun activity.
A good pivot is one that makes you change your business model. Often a pivot will introduce something that you have no intention of doing, but the value of pivoting is that it makes you better at creating and evaluating clever business models. Choose pivots to challenge yourself, the assumptions you are making, and the way business is done normally. The more you pivot the more you will explore new ways of meeting customers’ needs and increase your potential to disrupt traditional business models.
Here are some tips to improve your pivoting:
- Invite: invite some different people from other sectors or ‘walks of life’ to join in with a pivoting session to bring new skills and knowledge into the room
- Challenge: choose challenging pivots such as a customer segment which is the opposite of your target market
- Sprint: give yourself the challenge, individually or in groups of creating 10 canvases in 10 minutes
- Combine: combine pivoting with other business sessions such as team meetings, visioning sessions or hackathons.
- Use real design thinking: Use the British Design Council ‘Double Diamond’ process
- Blind spot: acknowledge which part of the business is your biggest blind spot and pivot around that, for example: finance, operations, legal, marketing.
- Reversal: take away the bit of the business you are best at
Tobias Gould is a Business Innovation Fellow at the University of Leicester’s Innovation Hub and runs a social consultancy called Community Enterprise Engine. He has facilitated business model innovation sessions with over 100 companies helping them to do things differently.