For several years now, the business community has been using the term “pivot.” It is certainly not the first, nor do I believe it will be the last term that the business community appropriates from other disciplines.
For me, the word pivot conjures up mental images of levers and gears moving around a pin or bearing. Secondary images are of human dancers or athletes spinning on an imaginary vertical axis.
The business pivot is a change in direction for the organization.
Lately, companies are using the term to describe the need for an immediate change in the product or service they are delivering. Startup companies seem to be the quickest at recognizing that their business model and market surveys were no longer applicable since the pandemic lockdown has dramatically changed the need for their offering.
Established businesses break into two groups—those whose services and products are more important than ever, and those who have seen a precipitous drop in top-line revenue.
The companies I know who are in the first group are spending time and investing capital to scale up their operations while at the same time, protecting their employees as best they can. They tend to be in the healthcare business or providing products such as sanitizer. The home delivery business has picked up tremendously, and of course, online retail is seeing a boom in transactions.
For these companies, a continuing challenge is finding qualified workers. Despite a large number of unemployed workers, there is the frustrating issue of a mismatch in skills available versus skills required. That challenge existed long before the pandemic. However, employers find it is exacerbated by the pressure to scale up their business quickly.
Fighting For Survival
The second group of companies is fighting for survival. The question for them is, will the top-line revenue pick up before they run out of cash? And, also, will their market exist once the economy recovers? These companies are coming up to a moment of reckoning as borrowed funding runs out, and payroll protection ends. They must cut expenses to match diminished revenue.
They must decide whether or not to close the business, downsize to survival levels, close altogether, or try to build a new product or service. For many, it will be a combination of those options.
The early-stage startup companies, pre-funding, are scrambling to pivot—that is, they are going back through the market survey phase to find what businesses and consumers need. For some, their product or service will change drastically. For others, they may find they need to focus on a different part of the marketplace with the same product or service.
Startups that have secured a first or second round of funding are more invested in their business model and the product or service they are offering. It is challenging for them to pivot at this point since they generally do not have much of a cash runway. Yet survival may well depend on them not doubling-down on their original business model. It is a trying time, for sure.
Leadership in Pivotville
Regardless of the phase a business is in—startup or well-established—leadership in this time of economic change is critical. For some leaders, learning how to guide their businesses through a significant pivot to a new market or product will require different skills.
Established concerns usually implement incremental change programs. Rarely do they “bet the farm” on making significant disruptive changes in the business. A leader in this organization will not only have to have the vision and foresight to guide the operations through quickly developing a new product, but they will also have to lead their employees through a critical change management initiative.
In either case, this pandemic is providing fertile ground for leadership development. I believe that statement holds for large, small, for-profit, and not-for-profit organizational leaders. It’s a time for growth. It is also a time of reckoning—is our organization’s culture what it needs to be in the new economy, or do we have to make changes there as well?