Failure to Pivot Can Lead Your Startup to Death

November 27, 2020 4 min read

Opinions expressed by Entrepreneur contributors are their own.

• Pivoting in the context of a startup happens when a company decides to change its business strategy to adapt to changes in its industry.
• A CB Insights study points out that not pivoting is one of the 20 reasons startups fail, even leading to death.

Undertaking is not an easy task, it involves a great effort in every way to bring a product or service to market. Typically, a plan is drawn up that describes the business goals, strategies, or projections that will need to be taken to be successful. However, in reality, the roadmap that is proposed is not a path that draws a straight line; On the contrary, it is a road of obstacles and changes of direction that leads startups to make important decisions for the company, one of them is to pivot and not doing so can lead companies, even to death.

A CB Insights study points out that not pivoting is one of the 20 reasons startups fail, even leading to death. We believe that the concept should not only be present in the mind of the entrepreneur to avoid failing a business, but also to remind us that at no time should you stop learning or taking advantage of any resource.

Pivoting in the context of a startup happens when a company decides to change its business strategy to adapt to changes in its industry, customer preferences, take advantage of opportunities that were not taken into account when the project started, or any other factor that affect your bottom line results.

There are many cases that have achieved success thanks to pivoting their businesses, such is the case of Netflix, for example, which has stood out for being a very innovative company, which was clear that it wanted to revolutionize the entertainment industry.

In 1997 Netflix intended to become the largest DVD distributor in the world; Although it initially competed directly with Blockbuster , ironically and for financial reasons, they sought to offer it the company (another case that has ceased to exist by remaining static and not reacting in time to market needs). After a difficult road (mainly financial) for the company, they changed their DVD rental business model to a subscription model.

^{Image: Alto Nivel / Depositphotos.com}

Later, with the arrival of streaming, they decided to refocus their efforts and develop the brand as we know it now, the rest is history that they will continue to write, since one of the main recommendations is to be attentive to changes in the environment and Netflix must be one step ahead of its competitors to continue competing in the market with the greats such as Amazon, and if necessary to pivot again.

Pivoting requires a great analysis of your company and your environment in the industry (and in the world, just look at the changes that the pandemic brought with it). Always seek to adapt to them, the preferences of the clients, take advantage of the opportunities that were not taken into account when the project began or any other factor that affects its final results.

One of the toughest questions startups ask themselves is when is the right time to pivot? So G2 Consultores shares with you these moments that will help you to have greater clarity to rethink if it is time to turn your business around:

1. When one element of the product or service stands out above the others.
2. When the business is financially unviable.
3. When the market has not responded as you expected.
4. When the competition constantly beats you.
5. When you have to take advantage of an opportunity that did not exist when you started.

Accompany these key circumstances with some important recommendations such as: do it as soon as you can, do not act reactively to the circumstances, listen to your clients, but the best recommendation we can make is that you always go accompanied by an expert to ensure success of your company.