Tuesday, January 01, 2013

Pivot: The Road to Ruin for Many Startups

The word "pivot" has become part of the entrepreneurial lexicon over the past few years.   Eric Ries developed the "Lean Startup" methodology for building and launching new products.  Ries argues that entrepreneurs should work toward the development of an MVP - minimum viable product - and then listen carefully to customer feedback so that the next iteration of improvements can be put in place.  Entrepreneurs should use the minimum viable product as part of a process of disciplined experimentation, whereby they test core hypotheses about their business model.    As entrepreneurs gather feedback, they should pivot based on what they are learning.  According to Ries, a pivot is a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth."

In a blog post for the Wall Street Journal, serial entrepreneur and Stanford Professor Steve Blank offers some cautionary words about the "pivot" concept though.  Blank gives an example of a founder who would rush back to his startup's offices after every customer visit and initiate a fire drill of sorts. The founder would constantly be advocating changes based on his most recent interaction with a customer.  Blank explains the problem:

Pivot as an Excuse
I wasn’t surprised when he pushed back: “I’m just getting out of the building and listening to customers. All I’m doing is pivoting based on their feedback.” By now I’ve heard this more times than I liked. “Yuri, one of the things that make you a great founder is that you have insight others don’t. But like all great founders, some of these insights are simply hallucinations. The problem is you and other founders want immediate action every time you have a new idea. That’s a mistake.
“A pivot is a substantive change to one or more of components to your business model.” You’re using “Pivot” as an excuse to skip the hard stuff – keeping focused on your initial vision and business model and integrating what you’ve heard if and only if you think it’s a substantive improvement to your current business model. There is no possible way you can garner enough information to pivot based on one customer’s feedback or even 20. You need to make sure it’s a better direction than the one you are already heading in.”

1 comment:

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