Turning Setbacks Into Strategy: How To Lead A Successful Company Pivot

How to lead a successful company pivot? Planning and executing a pivot is an excellent strategy for overcoming setbacks and reinventing the business for relevance and stability. You can restructure various aspects of your company, such as the business model, product portfolio, pricing, and customer base.

However, it is essential to understand that the approach typically involves extensive planning and, at times, substantial costs. Before diving into the transition, you’ll create detailed frameworks and step-by-step strategies to ensure success and long-term profitability.

Several top companies have demonstrated that timely restructuring can help brands serve customers effectively while maintaining a viable business. Some great examples include Slack (formerly Glitch), YouTube (originally a dating site), Instagram (initially Burbn), and Twitter (once Odeo).

These success stories demonstrate how changing the company’s direction and/or rebranding can ensure its survival and consistent revenue growth. If you aren’t quite sure when pivoting the company is a necessary move, look for the various signals. Identify the signs indicating that the startup must pivot or go under.

Always remember that pivoting is not a decision to be taken lightly and needs to be an unavoidable recourse. However, having made the decision to transition the company, you’ll quickly start planning the execution and implementation. Be sensitive to the fast-evolving market conditions. Here’s how.

Research and Analysis

Restructuring a company typically begins with thorough research and analysis to gather detailed and verifiable data. Your decisions should center on the facts and figures your team compiles regarding the company’s internal capabilities. You’ll also gather market-centric data to identify future trends.

Analyzing the Company’s Internal Structure

Before planning how to lead a successful company pivot, you’ll start by verifying that a restructure is absolutely essential. You’ll also ensure that the company is stable and has the necessary resources to adapt to the changes. Expect to invest capital to execute the transition.

For instance, you may need to update your product portfolio with fresh research and development (R&D) and recruit new talent. If you opt to target a new customer base, that will involve advertising and marketing approaches. Improving manufacturing facilities with technology also needs money.

Compiling and Analyzing Data

• Evaluate the company’s financials by examining incoming cash flows, revenues, and profits. If the performance is falling short, that’s a good time to pivot. But ensure you have resources in reserve for the transition.
• Evaluate the sales figures to identify the products that consistently generate regular revenue. And those that are no longer in demand. That indicates customer preferences and trends.
• Work with the sales team to analyze customer feedback on social media channels and the company’s after-sales communications. Additionally, examine customer support complaints to understand where the products are falling short, particularly in comparison to competing brands. This is a good time to conduct surveys to identify your strengths and weaknesses.
• Analyzing feedback provides you with valuable data that informs patterns in users’ behavior. You’ll identify areas that need improvement, such as the product and its features, or customer support services. Data can also indicate if you need to deploy aggressive marketing strategies.
• Data on purchasing trends indicates whether customers are shifting toward innovative and more affordable alternatives. That could signal a diminishing brand value that you need to address as soon as possible.
• Analyzing sales data can reveal a great deal about whether your company has achieved an ideal product-market fit. You may be targeting the wrong audience and need to revamp your sales approaches.

Conducting a SWOT Analysis to Understand External Factors

S.W.O.T. is the acronym for Strengths, Weaknesses, Opportunities, and Threats. Every entrepreneur should conduct this analysis periodically when planning to lead a successful company pivot. Or, when evaluating the company’s performance. Here’s how it’s done in context with a restructuring strategy.

• Strengths: These are the areas that distinguish the brand from the competition. It could be a unique value proposition, such as distinctive product features and exceptional after-sales support. Timely upgrades, such as those for software, are a valuable perk that customers appreciate. A robust brand identity that customers emotionally relate to can also be a strength.
• Weaknesses: These are the areas where the company is falling behind. The fresh data you’ve compiled can help you identify where the brand is going wrong. For instance, product quality that doesn’t stand up against competing brands, ineffective product performance, or a lack of competitive pricing. Difficulty in accessing support can also be a significant downside.
• Opportunities: Now that you’ve identified the weaknesses and shortfalls, you’ll focus on the available opportunities to cover the gap. For instance, improving product quality and features by hiring new talent and/or purchasing technology, tools, and equipment.
• Threats: These are the external factors that can negatively impact the company’s long-term stability. For instance, emerging new technology in the market can render existing products obsolete. Or, startups breaking into the market with operational innovations that enable them to offer competitive prices. Changing regulations and geopolitical factors that impact the entire industry will also ultimately influence your brand’s potential for success.

When exploring external factors, you’ll pay close attention to what competitors are doing, their product features, pricing structure, and more. Determine how you can develop an edge over them. And whether your company can match them in terms of scale, resources, and market reach.

Defining the Pivot and Identifying Your Options

Gathering and analyzing data is crucial to determining whether a company restructuring is actually necessary. Or, if it only needs a drastic change in strategy. Here’s what you need to do:

Determining Your Goals from the Pivot

Before determining how to lead a successful company pivot, it is essential to be clear about your goals and objectives. What are the shortfalls the data revealed? Declining sales, falling revenues and profits, or difficulty in retaining customers? Or, negative customer feedback. You’ll align your pivoting strategies with the objectives you’re trying to achieve.

• If the sales are falling, but the product is top-notch, consider targeting a different customer demographic. Say, transitioning from B2C to B2B. Exploring a new geographical region is also a great approach. This move eliminates the need for a major redesign of the product. Simply adapt your marketing strategies to a new audience, and you’re set.
• If product demand is falling, explore options to build on the current portfolio instead of scrapping it entirely. You need not go back to the drawing board.
• While on the subject of advertising, ensure that your messaging effectively resonates with your target audience. Highlight product features that customers specifically care about. Tweaking some of the product features or rebranding can also achieve the desired results–higher sales and revenues. The goal here is to ensure buyers are aware of everything they can accomplish with the product.
• If your prices are high, adjusting the pricing framework to include additional perks or offering alternative payment plans can also work. For instance, you could provide customers with discounted deals and limited-time promotions to encourage sales. Rewarding long-term buyers with loyalty points that they can redeem is yet another effective strategy.
• If customers have complaints about the product, it’s time to examine the portfolio. Develop better and improved product ranges to retain customers and maintain sales.

Testing and Validating Pivot Strategies

Before implementing major shifts in the company, you’ll validate the strategies by testing them on actual users. Target a selected group of customers and conduct a brief survey to gain insight into their views. Present a menu of options to gauge their responses to the proposed changes.

If the responses are positive, you’ll move forward with the transition or explore alternative channels. Additionally, conduct one-on-one interviews with regular customers to gain nuanced insights. Request feedback on the current product portfolio and services your company offers.

Next, you’ll ask about the improvements they would like to see moving forward so the product best meets their requirements. This strategy not only educates you about customer needs but also makes them feel heard and valued. You’ll develop stronger relationships with them.

When strategizing how to lead a successful company pivot, always rely on testing and more testing. Develop a minimum viable product (MVP) to serve as a beta version that customers can try. Gather feedback in real-time and use the insights to make further improvements.

Alternatively, you can develop two or more versions of the product for your customers. A/B testing is a valuable strategy for testing performance before launching full-scale manufacturing. Maintain constant contact with customers to gather updates and ensure their satisfaction with the products.

Creating the Frameworks for Pivoting

Now that you have a clear direction for how to lead a successful company pivot, the execution stage can begin.

• Ensure that you set benchmarks to measure progress and identify the specific criteria that will indicate optimal results. For instance, increasing sales and revenues or market share.
• Ensure that you set achievable timelines for achieving the pivot goals. That’s how you’ll drive consistent progress, which in turn enables tracking.
• Determine the capital and resources you’ll need to implement the changes. Budget your expenses carefully, taking into account the costs of research and development, purchasing tools, technology, and equipment, as well as hiring talent. Factor in the costs of marketing and advertising, as well as the expenses of a trained customer service team. You’ll allocate resources to align with the strategies you’ve developed for the pivot.
• Assign responsibilities to trained team members to execute the changes. This move ensures accountability and action.
  Organize tasks according to priority. Time-sensitive tasks require immediate action and a higher priority when allocating resources.

Keep in mind that storytelling is everything in fundraising, particularly when convincing investors about the viability of your pivot. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.

Communicating with the Company’s Stakeholders

Considering that restructuring the company is a significant decision, it’s crucial to keep stakeholders in the loop. That’s how you’ll build trust and promote an environment of collaboration and shared goals. Here’s how:

• You’ll communicate with investors, informing them about the upcoming transitions. When raising funding for the company, you’ve likely discussed the product and product-market fit with them. The use of funds is another crucial slide that investors rely on. Now that you’re making major changes, you must update them about the change in strategy. Also, discuss the need for additional capital to execute the pivot successfully.
• In the contemporary business landscape, investors are more than capital providers. They are also strategic partners acting as mentors and advisors committed to the long-term success of the company. You may also have investor representatives on the board of directors. This is a good time to tap into their industry-specific expertise and knowledge to inform decisions.
• Send out newsletters to customers with details about the new product portfolio and the many changes in your offerings. Talk about the improved product features and how they enhance functionality and performance, while ensuring increased satisfaction. Welcome feedback with the promise of delivering to customer expectations.
• Discuss the move with your team and company employees. You’ll start by explaining the rationale behind the pivot and why it makes sense to adapt to changing conditions. Discuss the expected outcomes and how the pivot is likely to affect them directly. Encourage any suggestions for improving the company and its performance.

Executing the Pivot

The final step in how to lead a successful company pivot is execution. Now that you have the desired frameworks in place, tried-and-tested strategies, required funding, and stakeholder buy-in, it’s time to act. Deploy your plans quickly, but also be mindful of market conditions and feedback.

Remain agile and ready to adapt the initial hypothesis. Your execution should feature continuous adjustments based on customer iterations. Be prepared to refine your approach consistently and tweak it to align with the product’s performance in the real world.

Expect challenges and hurdles to arise, but treat them as opportunities for learning on your journey toward making the company resilient. You’ll also keep a close watch on the metrics that indicate the pivot is successful.

Restructuring and reinventing the company to adapt to market conditions and customer trends is essential for long-term success. Don’t be afraid to take the necessary steps to initiate and lead a successful company pivot.

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