Quick Summary
A pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, or engine of growth when the current model is not working.
A pivot is a change in business strategy when the current approach is not working. Popularized by Eric Ries in "The Lean Startup," it involves testing a new fundamental hypothesis while keeping one foot grounded in what has been learned so far.
Types of Pivots
| Pivot Type | Description | Example |
|---|---|---|
| Zoom-in | Single feature becomes whole product | Instagram started as Burbn (check-in app) |
| Zoom-out | Product becomes feature of larger product | Adding adjacent features |
| Customer Segment | Same product, different target audience | Slack pivoted from gaming to business |
| Customer Need | Solve different problem for same customers | YouTube started as video dating |
| Platform | Change from app to platform or vice versa | Opening API for developers |
| Business Architecture | B2B to B2C or vice versa | Switching target market type |
| Value Capture | Change revenue model | Free to freemium to subscription |
| Technology | Same solution, different technology | Netflix DVD to streaming |
When to Pivot
- Product is not achieving traction despite iterations
- Customer feedback consistently points to different need
- Market size for current approach is too small
- Competitive dynamics make current approach unviable
- Technology shift makes current approach obsolete
- Business model is not economically viable
When NOT to Pivot
- Early stages without sufficient customer feedback
- Execution problems (fix operations first)
- Temporary market downturns
- Lack of resources (pivot requires investment)
- Shiny object syndrome (chasing trends)
Famous Pivot Examples
- YouTube: From video dating site to video sharing platform
- Slack: From gaming company (Glitch) to team communication
- Instagram: From check-in app (Burbn) to photo sharing
- Twitter: From podcast platform (Odeo) to microblogging
- PayPal: From PalmPilot payments to email payments
- Netflix: From DVD rentals to streaming to content production
How to Execute a Pivot
- Acknowledge the need based on data
- Identify what you have learned (assets, insights)
- Formulate new hypothesis
- Develop minimum viable product for new direction
- Test quickly with target customers
- Iterate rapidly based on feedback
Key Points
- Strategic change when current model fails
- Keep learnings, change direction
- Types: zoom-in, customer segment, technology
- Should be based on customer feedback data
- Requires courage but can save the company
- Famous examples: YouTube, Slack, Instagram