Another Blog About Pivoting
Countless buzzwords have crept into the vernacular during the COVID-19 pandemic: herd immunity, social distancing, flattening the curve, the 'rona, PPE, and, of course, super-spreader.
In the business world, “pivot” might just top the list. In a quick Google search, “business pivot” got 93,500,000 results while “herd immunity” came in at a relatively unimpressive 55,800,000. So at the risk of being #93,500,001 in the Google search results, here’s the scoop on pivot’s meaning in business.
While the concept is getting more press, it is not new. A business pivot refers to a shift in strategy, often in response to unforeseen or rapidly changing circumstances – but not always. It may be in response to long existing conditions that have finally reached a point where they cannot be ignored.
Even without the pandemic, the pace of change has been accelerating for decades thanks to changes in technology and other factors. A business pivot might involve a change in products or services, sourcing, processing, delivery, technology, facilities, branding, or anything else involved in getting a product or service to the user in a profitable and sustainable manner. It covers a lot of territory so there is no one stock approach, but there are a few common factors.
Identify the opportunity: This may not be as simple as it sounds. A classic example is the Eastman Kodak company, which invented the digital camera in 1975 and patented several related technologies yet refused to go to market with a digital camera until it was essentially forced to by market pressures – at which time it was too late. Why the delay? The company feared cannibalizing their profitable film business, so they let everyone else do it.
Food and agriculture, like many industries, are seeing dramatic shifts in consumer preferences (e.g., organic, plant-based meat substitutes), but also in how and where people buy their food. For example, while many think of home milk delivery as a thing of the past, it is coming back in some markets thanks to growing preferences for locally produced and “farm-to-fork” foods. After implementing market research and a business plan we assisted with, our client Top O’ The Morn Farms now delivers milk and other products directly to doorsteps from Fresno to Bakersfield, and has added grocery distribution and two dairy drive-throughs.
Look before you leap: Research and planning can be overdone, but more commonly we see it short-changed. Market research is critical: no market, no point. Beyond that, look at the specific needs, costs, and risks. Perform financial projections under likely scenarios. Don’t underplay planning on the grounds that you can’t anticipate everything; you can’t, but you can anticipate some things and take advantage of foreseeable opportunities and avoid predictable pitfalls. Come up with a workable pivot business model; not doing so is asking for trouble.
Define the risks: Those reluctant to buy in to new ventures are often painted as risk averse, and that may be the case. However, make sure everyone is defining risk the same way.
Don’t automatically chalk up differences to risk tolerance. If a business is doing reasonably well, one decision maker may view substantial changes as messing with success, or “If it isn’t broke, don’t fix it.” Accordingly, making significant changes to a successful strategy is viewed as risky in itself. Another person may view success as a temporary condition and believe the current situation is not an indication of future success. This view might be summarized as “Standing still is waiting to get run over.” The two may score the same if “risk tolerance” could be measured on an objective scale, but have very different views of what constitutes risk in the first place.
Get commitment: I intentionally avoided the word “consensus.” Consensus is great if you can get it, but if it is seen as mandatory it can become more of a “yeah, whatever” buy-in. Google “disagree and commit,” or give us a call. It is a much more realistic principle that allows all to freely discuss their opinions and concerns, but expects that once a decision is reached all must commit to its success. No one should feel pressured to feign consensus, but they do have to work toward the common goals.
Morrison has helped many in food, agribusiness, and other industries with market research and analysis, business plans and strategies, forecasting, and gaining commitment among key personnel with different views. Feel free to contact us with any questions.