As politicians enjoy saying, “the time to repair the roof is when the sun is shining”. This is also true of businesses. Pivoting a firm in a crisis might be necessary, but doing so when things are going well can often be more conducive to long-term success.
One of the clear traits of most successful entrepreneurs is that they are prepared to take risks. But striking the right balance is vital. It is important to maintain focus on the core profitable business and ensure that the creative team does not simply apply a scatter gun approach to new ideas which may divert management time and money. Some business owners spend years and burn through a lot of cash on an idea that was destined to fail. A lean startup approach to test a proof of concept is as useful for discovering bad ideas as it is for confirming good ones.
When successful entrepreneurs opt to pivot, they quickly assess the new business model to try to determine whether it has a clear path to profit. They take soundings from valued clients and partners to avoid running down blind alleys. They ensure that key stakeholders – particularly investors and senior employees – share the vision and agree that the pivot makes sense. Senior personnel may be resistant to change, as they may be unsure about how it will impact their standing and future in the company. Keeping all stakeholders on side is therefore crucial. It is also important to remember that existing external investors will have invested on the basis of an agreed business plan, so any material change in direction or new business model will need to be discussed and agreed in advance.
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