Earlier this year, Kevin D. Klak (founder of Digitalrat and editor-in-chief of the magazine ‘Der Verwaltungsrat’) interviewed me on what real board involvement should look like during a pivot.
Here is the English translation (original in German can be found here)
KK: What led you to make pivoting your mission, and how did your own experience as a founder shape that?
SZ: Over the past 20 years, I’ve spun off three tech companies from ETH Zurich. All three grew rapidly in the first few years. However, after four or five years, growth began to plateau — for various reasons, including market shifts, bets that didn’t fully pay off, or external crises that affected the companies. Each time, we essentially had to reinvent the company — even though it was already in the market with customers and sometimes funded by investors.
In tech jargon, such strategic reorientation is called a “pivot.” And because I’ve gone through this three times and learned a lot through “hard learning,” I decided to make better, faster, more systematic pivoting my mission post-50.
KK: How do you define “pivoting” in an entrepreneurial context, and what distinguishes a pivot from a course correction?
SZ: The term “pivot” was first mentioned by Eric Ries in 2011 in a tech context. It originates from the French word pivoter, meaning “to turn around something.” In English, “pivotal” means central, life-changing, fundamental. So that already tells us that a pivot refers to significant changes in the business model.
A pivot is thus a strategic reorientation after (or in light of a potential) failure of the current business model, involving a fundamental replacement — either of the current value proposition (the “frontstage”), the “backstage,” or the profit formula of the business model — or even several of these areas at once.
KK: Statistically, many companies either fail at pivoting or never even initiate the process. What psychological or structural barriers most commonly block this?
SZ: That’s true: in tech, about two-thirds of companies eventually face a situation where total failure threatens. This often comes from the investment structure — with many tech ventures funded by venture capital, which thrives on risk-taking. The rule of thumb is: invest in ten companies, one needs to return the entire fund, and three will fail. That leaves six “stuck in the middle” — usually good companies, but with strategic or organizational challenges.
A major issue is that founders, management teams, and boards often cling too long to bad bets or get trapped in the “focus, focus, focus” mantra. This can prevent them from simultaneously testing alternative paths forward — which increases vulnerability to crises and leaves companies with little resilience against major shocks.
KK: What specific role does the board play in a pivot situation, and how can it ensure it’s not just advising, but actively adding value?
SZ: By law, the board has strategic oversight of the company — so it’s fully responsible for the success or failure of the strategy. It also acts as a counterbalance and control body to the management team, so it must reflect carefully on the direction taken.
In tech, many founders are first-time entrepreneurs, so the board’s collective business experience is even more critical. A good board must always look for risks and explore alternatives — even in good times. That way, when things go wrong, the company is more prepared, and the range of options is broader.
KK: A pivot often involves uncertainty and risk. How can a board provide stability while also encouraging bold decisions?
SZ: There are certainly different views here, but in my experience, a good board in a tech venture also acts as a sparring partner — even on a personal level. Let’s be honest: companies are where they are because of the people leading them — with all their strengths and weaknesses.
Ideally, a board (or individual members) can also take on a coaching role. At the very least, they should understand that the personality and mindset of the leaders are crucial. Especially in tech ventures, where it’s not easy to replace founders or entire teams, the personal development of those in charge becomes essential.
KK: You mention a data-driven and systematic approach to effective pivoting. Is there a best practice or framework you recommend for leadership teams to follow?
SZ: Yes. That was my insight after three pivots, which we did more or less through trial and error. I concluded that pivoting needs to be more effective and systematic. So I developed the “Pivotal Framework”: a structured process to follow when approaching or ideally before entering a pivot situation.
It’s inspired by the Business Model Canvas from Alex Osterwalder, which many founders and management teams are already familiar with — but I’ve tailored the process specifically for tech startups.
KK: What indicators or KPIs not only suggest a pivot is needed but also show if it’s working?
SZ: Around 50% of pivots are triggered by flattening growth numbers, and another 25% by direct customer feedback. These are KPIs every company should be tracking anyway — and they also indicate whether a pivot or experiments toward possible new paths are working.
Generally, it’s wise to run multiple experiments toward the “next new” — rather than going all-in on one idea right away. These experiments should be based on measurable hypotheses so you can assess success based on defined metrics.
KK: How does a pivot impact not only the business model but also the leadership structure?
SZ: Any change to a business model also brings changes to the organization and roles — and often to the leadership level. I always make this clear from the beginning with founders and boards — not as a threat, but as an opportunity.
In tech startups, you usually can’t just replace founders. That’s why you have to work with them personally. Many can tap into new energy for the next phase if the path is clear. Sometimes it’s even a relief for them to see a way into a different role — like joining the board, moving into a technical or specialist role, or becoming an evangelist or advisor.
KK: What traits are especially important in board members who help guide this kind of transformation?
SZ: The typical board member in a tech venture is either a founder, a co-founder, a representative of an investor (often lacking specific market or founder experience), or a business angel who knows the market well but comes from a big corporate background with little experience in radical tech transformations.
Board members who have founded companies themselves and been through tough situations are rare — but they’d be incredibly valuable as independent members in any tech venture.
KK: What would you advise a board facing a management team that resists reorientation — perhaps out of fear of losing control or admitting mistakes?
SZ: That’s a tough one — especially if board members have their own agendas, like representing a fund that just wants a sale at some price. From my own experience and the founder perspective, I’d say: peer-to-peer exchange helps the most.
That means connecting founders and management teams with others who’ve been in similar situations. Organizations like EO (Entrepreneurs’ Organization) or YPO (Young Presidents’ Organization) serve as “support groups.” I recommend every founder join one.
KK: Often, not all leaders or board members are equally convinced about a pivot. How do you handle internal conflicts during such a process?
SZ: Another tough question. If there’s already disagreement about whether the company is even in crisis, that’s the first thing to address. What helps is an external, independent perspective.
You can identify typical early warning signs — backed by research — and that’s part of the framework I’ve developed. Investors can use it to assess their startups or scale-ups annually with an outside view. That often helps to make the conversation more objective.
KK: In tech, pivots are almost normal. Are there non-tech industries that could benefit from tech’s systematic pivoting experience?
SZ: A pivot is, ultimately, a strategic reorientation. Every company eventually faces a moment when the current model is no longer enough and might need to be fundamentally flipped. The difference with tech is speed: what takes years in large corporations can play out in months in tech ventures.
But the process is the same: analyze, generate and test options, validate through experiments, then refocus.
KK: Was there a moment in your own projects when a pivot led to a breakthrough? What made it successful?
SZ: Yes — all three companies pivoted successfully. The first was absorbed into another firm, the second was sold after the pivot, and I’m still chairman of the third, which is now stable and newly aligned — although we may pivot again to prepare it for a specific exit.
What all three had in common: cut costs immediately to reach break-even. That buys you time to run experiments. Pivots need time — often two years or more. If you don’t have or make that time, you have to ask whether a reorientation is even possible.
KK: You emphasize data in pivoting. What data are you talking about? ?
SZ: It’s not about the classical performance data. It’s more about generating data on the market and your relative position — ideally gathered together with external experts — to create a basis for an objective discussion.
In my experience, many boards in tech ventures lack market-specific knowledge (e.g., because they’re VCs), while founders and management risk becoming blind to flaws or too attached to their original ideas. New data can break through that.
KK: In your document on pivot patterns for tech companies, you emphasize 49 different strategies. Are there patterns that are particularly suitable when companies are under intense time or cost pressure?
SZ: The paper 49 Pivot Patterns for Tech Ventures simply outlines 49 typical pivot paths that have been taken by other tech ventures. These paths are structured—drawing from Osterwalder—into the areas of Value Proposition, Frontstage (everything related to market and sales), Backstage (everything involving R&D and production), and Profit Formulas. Some paths are easier to implement—for example, the “Zoom-In Pivot” described by Eric Ries. This makes sense when you realize users are only engaging with a small part of your offering. Then it’s worth cutting the rest and focusing.
Other paths are more complex. But regardless of the path, reducing costs and eliminating burn rate should always be step one in any pivot process.
KK: How do you decide whether a pivot is even the right move—or whether it would be better to wind down or sell the company?
SZ: I don’t decide that—ultimately, the board and management team must make that decision. Generally speaking: if an asset is truly distressed—meaning it has less than six months of runway left, can’t reduce burn any further, and has no financing in sight—then a pivot is no longer an option. In that case, an emergency sale or an orderly wind-down should be planned.
KK: During a pivot, what should the board consider to avoid losing trust?
SZ: Communication is everything—but it must happen at the right time and in the right order: first, communicate with internal key players, then key customers and partners. Honesty wins—everyone knows business has ups and downs. Talking openly about specific challenges is often liberating—and it’s not uncommon for key customers to offer their support.
KK: Finally, what three core messages would you give to a board member who is dealing with the topic of pivoting for the first time—and why?
SZ:
- Pivoting is the core competency every tech venture needs—both at the board level and the management level. If it’s not there yet, it should be proactively developed.
- “Focus, focus, focus” is good—but not everything: 10–20% of a company’s energy should be devoted to exploring and experimenting with alternative approaches to build resilience.
- Company success is tied to the personality of founders and management teams. Instead of waiting for a crisis, flip the script—boards should actively support the personal development of founders and managers. Not just because it’s valuable in itself, but because it increases the odds of company success.
Interviewer:
Kevin D. Klak is the founder and managing director of Digitalrat GmbH—a network of digital experts who support companies in retail and industry in navigating digital transformation, from strategic planning to practical implementation.