SUCCESSFUL BUSINESSES KNOW HOW AND WHEN TO PIVOT: DO YOU?

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As we settle into 2020, it’s fair to say that responsiveness will be the thing that makes or breaks your business.

We’ve seen several years of predominantly good news and buoyant growth for businesses; however, as we’ve seen in the early months of this year, the unexpected can happen – and it doesn’t take very long for the bottom to fall out of the market in a crisis.

There’s not a business in New Zealand that hasn’t been affected by the novel coronavirus (COVID-19) and subsequent lockdown. We moved quickly past ‘wait and see’ and most businesses didn’t have much time to prepare before they were facing a completely new operational reality. From revenue disruptions and liquidity crises to the significant impact on people and culture, businesses have had to act quickly and be bold to have a hope of survival.

Despite the growth goals many had in 2020, when faced with the option of growth or survival, we pursue the latter every time. Things were already changing – and the rate just accelerated. We’ve been forced to take a huge leap. Now it’s up to businesses to decide if that is to be a leap forward. The world cannot go through something of this magnitude and come out the other side unchanged. And while this may seem scary, it also points to an incredible amount of possibility.

This year we’ve all had a crash course in how important it is to be able to make strategic decisions in real time. We’ve been forced to confront new constraints, new perspectives, and new realities. The world will not be the same after this – and neither will our businesses. We’re being given the opportunity to imagine how we want to make them better. We’re being given the opportunity to pivot.

“It’s not the strongest who survive, nor the most intelligent, but the ones most responsive to change.” – Charles Darwin

Planning to pivot

Long gone are the days where you could set your strategic plan and tick it off the list for the year. Planning was always iterative, but it’s now become even more so. No businesses will end this year with the same plan that they had at the beginning – events have proven our plans cannot be static.

The ability to pivot depends on contingencies; it’s about having a plan b (and sometimes c or d) –iterations to the plan that can be deployed if things change. While none of us could entirely predict or adequately prepare for this crisis, some businesses were in a better position than others. They were normalised into a modality of looking out, making decisions, and executing on the most important stuff regularly. They were agile. They had built the discipline required to plan iteratively and they’d created a structure that allowed them to quickly seize opportunities. Businesses that can do this will most successfully rise to the current challenges.

Planning is about direction, obviously – you need to know where you’re going to be able to get there – however, it’s also about alignment. One of the most powerful deliverables of well-done strategic and contingency planning is that everyone is in agreement, knows what part of the plan they own, and is clear on what they need to do next to execute on it.

None of us have a crystal ball – although it certainly would have been helpful this year so far. Regularly and frequently looking at what is happening around us is our best attempt at building one. Resilient and agile businesses closely monitor trends and events, and look for ways to leverage them for their strategic advantage. They make assumptions about what might happen based on what they can see is happening already – and in doing so, they predict what they might need to react to.

A culture of continuously doing this is important but – even when not in crisis mode – it’s vital to go through a rigorous process regularly and look over the horizon line to see what’s coming. Structured and scheduled discussions – every 90 days – are key. The questions may remain the same, but the answers are always changing because the landscape is. So, examine your previous assumptions and make new ones. It has been proven already this year that businesses need to have two or three possible contingencies that they can deploy quickly as market conditions change, or significant events occur. This allows them to move and pivot, preferably before they are hurting.

A number of our clients doubled their market share during the GFC because they were proactive, as opposed to reactive. Another saw the first winds of what was coming with COVID-19 and took the chance to establish her business online – a move she had been thinking about for a few years. The subsequent timing was perfect and the market, right then, was ready. These businesses proved that it’s possible to come through uncertain times even stronger if you make the right moves. They were able to change quickly and execute confidently, seizing market share while their competitors were still wondering what was going on.

“A well-researched external perspective – bringing a healthy dose of accountability and challenge – is hugely valuable for this process.”

Refusing to rise to the challenge

A well-researched external perspective – bringing a healthy dose of accountability and challenge – is hugely valuable for this process. Our own view tends to be internally-focused and not challenging this, on a quarterly basis, is dangerous in a changing marketplace. We become blinded by our own perspectives – and we don’t need to look far to see the perils of this approach.

Consider the torturous tale of Blockbuster when they severely underestimated Netflix as a threat. In 2000, Netflix offered itself to Blockbuster for acquisition for $50 million; Blockbuster declined. In the interceding years, Netflix continued to build its subscriber list (they were a mailbox delivery DVD company at the time). Capitalising on the advance of streaming technology – a disruptive technological change – in 2007, Netflix introduced video on demand via the internet. Just three years later, Blockbuster filed for bankruptcy, costing 60,000 people their jobs.

Too often we see businesses left scratching their heads and wondering what on earth just happened, as no doubt the Blockbuster execs did. Their focus was so insular – and possibly their arrogance too complete – that they missed what was happening around them. There will be more examples of this as we emerge from the COVID-19 crisis. Those who revert to the old ways of working risk looking out-dated as the world has moved on. We need to be seizing this opportunity for progress.

Of course, a pivot can be required to avoid disaster – as in the case of Blockbuster, and a number of others we’ve seen already this year. However, pivoting can also help us to seize opportunities, and there are plenty of those now. Even from negative events, we can identify and predict positive ones, if we’re willing to change course.

 

My personal experience of pivoting

My own journey has contained plenty of pivots. After I bought into The Results Group in 2003 the company’s revenue was just north of $1M and the business was operating with a franchise structure and 25 licensees. I had little respect for licensee models in our market, so our first pivot was to un-franchise the business. Following that, we grew to nine offices around New Zealand, which saw us essentially outgrowing the New Zealand market. We needed to pivot again.

We chose not to do the obvious route of launching into Australia and instead, having already successfully scaled my previous business in the US, we headed there – to North America. We opened three offices in Canada that were successful, but when we opened our California office, we realised that we would struggle to achieve the scale needed to make an impact on that market; there was no way for us to deploy 400 offices across the US right then, so we pivoted again.

We set out to create a tool – an execution platform that enabled us to consult better virtually than we could have using other tools available at the time. However, a software business, as we had now become, is cash hungry and has the opposite resource needs to a consulting business. We successfully raised capital, but it took our focus and energy away from other things.

So then came another major pivot – the decision to split the two companies out. The software arm was branded as Results.com and separated for IPO.  My focus was then on rebuilding our consulting business that was less fixated on scale, and more about quality clients and their needs and outcomes. Where we previously had a Product Leadership strategy, our consulting business (now re-branded as Advisory.Works) required a Customer Intimacy play. This fuelled our focus on finding only the best and most successful entrepreneurs to deliver their expertise to a select group of clients.

Those pivots took place over a number of years, but they would not have been possible if we weren’t walking our own talk and keeping our eyes above the horizon line. There’s a danger in making decisions based solely on where you want to go. Simply, sometimes the world has other plans. We need to – all the time – be looking at the playing field, assessing the reality of where we are as well as where we are wanting to go. Those who will survive and thrive are not simply those with the best plan (although a great plan does help!) – but those who are not so wedded to their plan that they can’t adapt when the playing field changes.

Not all businesses need to pivot, but we should be looking now at the possibility of doing so. The new perspectives we’ve been able to acquire, amidst all that is happening around us, are brimming with possibility. It’s our chance to move forward towards better – making successful strategic decisions around an agreed and aligned plan of action that we can start executing immediately.  For a sounding board with true, trusted advisors who also believe in better, get in touch.

This blog was written by Simon Mundell, Founder and Strategic Advisor at Advisory Works.

Published in NZ Business: https://nzbusiness.co.nz/article/successful-businesses-know-how-and-when-pivot-do-you

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Topics: Blog, Business Strategy, Leadership