Pivoting is a hot topic right now, but what does it actually mean?
The term “pivot” comes from the French word “pivoter,” which means ‘to turn, rotate, or switch around.’ In sports like basketball, a pivot step involves keeping one foot firmly planted while moving the other to explore new positions. This is a great metaphor for pivoting in business: maintaining a stable foundation while exploring new opportunities.
Eric Ries first introduced the concept of a pivot in his 2011 book, “The Lean Startup.” He described it as a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.”
More recently, Flechas Chaparro and de Vasconcelos Gomes (2021) defined a pivot as strategic decisions made after a failure (or potential failure) of the current business model. These decisions lead to changes in the company’s direction, resource allocation, and possibly even the business model itself. Sadeghiani and Anderson (2023) suggest that a pivot is more than just a strategic change. They see it as a “substitution,” focusing on significant shifts in one or more areas: 1) a replacement in value proposition and/or target customers, 2) a replacement in value production, distribution, and/or consumption, and/or 3) a replacement in value promotion and/or value capture.
Pivoting is not about minor tweaks; it’s about making substantial changes to the business model. The process of exploring and executing these changes is what we refer to as “pivoting”.
For Pivotal, therefore, a pivot involves two main criteria:
- Strategic decisions made after (or in view of a potential) failure of the current business model.
- One or several fundamental changes to a core element either of the value proposition, the frontstage, backstage, or profit formula area of the company.