I’ve been thinking lately about the implications of the business “pivot.” There are conclusions to be drawn from this dramatic business development, which has been so significant in my life. I’d like to provide a bit of context around my experiences with the pivot, and some lessons learned.
I first heard the word "pivot" and first heard of the concept when I got into tech in 1998. Pivot had a negative connotation then. It meant that you couldn’t find your way, couldn’t figure out the right marketplace, that you had to hustle to make your business viable. Little did I know what was in store. The reality for me is that all three of the startups I was involved with over the last dozen years or so pivoted pretty substantially.
What exactly is a business pivot? Simply put, it’s a shift in course for your company. The pivot is quick, dramatic, a step change. It’s about adaptation and how you stay nimble and keep your business focused on the customer.
Sometimes it’s easier to say what something isn’t than what it is. For instance, a pivot isn’t necessarily a change in business model. Facebook pivoted pretty dramatically when it changed its focus from the desktop to mobile devices. However, Facebook still makes its money by selling ads. So Facebook’s business model didn’t change, but how it approached the market substantially changed.
Pivot isn’t the same thing as innovation. Innovation is something all companies must do. But pivot? Not all companies have to go through that, though most probably will….
Or maybe not. By one estimate, as many as three-quarters of VC-based startups fail to return the investment made in them. And that reminds me of another interesting factoid. According to the authors of the book Built to Change: How to Achieve Sustained Organizational Effectiveness, a comparison of the Fortune 1000 between 1993 and 2003 shows that 60 percent of the top companies were new to the list.
Those facts tell me that most companies—and not just startups—probably don’t pivot when they need to.
My pivot experiences have all revolved around technology. The first was when I started working for WebMD. The plan was for the company to go public, use the proceeds to buy thin-client PCs, and give them to doctors so they could check information from patients in the comfort of their homes. In one of my earliest meetings, we weighed the fact that hardware rapidly becomes obsolete and decided to pivot. We focused instead on the scale of the internet by offering an online service in a subscription model. Now WebMD is one of the most-visited sites on the internet.
The second pivot was with a startup I joined called N2 Broadband, which began as a provider of interactive television services. As we got deeper into the television services market, though, we realized that what consumers really wanted was a way to watch their favorite shows when they wanted to watch them. So we pivoted the company and began offering a software platform for video-on-demand services, which proved very successful—sort of a precursor to Netflix. We sold N2 Broadband to Tandberg Television in 2005.
The third pivot was with my startup Vitrue. The company originally offered a technology platform for brand marketers to provide video on their websites. Then I had a startling revelation about the incredible power of social media to influence buying habits. So I pivoted the company to offer publishing, content management, and analytics of social media sites in a cloud-based model. Oracle acquired Vitrue in 2012, which has contributed to Oracle’s continued pivot to the cloud.
That’s the context, so here are the lessons learned.
First up is always the bottom line: Doesn’t a business pivot cost a lot of money? It can be expensive, no doubt. But look at it in terms of ROI. For most companies that do it, the cost to not pivot (perhaps obsolescence or lower value creation) likely was greater than the cost to pivot.
Second, my experiences taught me that technology is at the center of the pivot, in several ways. The digital transformation of business and the change in consumer behavior around social and mobile—these secular trends are forcing companies to pivot. Also, the way that you use technology—look at it, leverage it—is an absolutely essential part of a pivot. That was the lesson of WedMD’s move from thin clients to an open internet approach, and of Vitrue’s move from its narrow video orientation to its embrace of the entire social movement.
Perhaps most importantly, technology allows you to pivot and enables the agility and responsiveness necessary for a successful shift in business. It’s relevant to point out that Oracle’s Social Cloud is a platform, not an end in itself. With it, companies can be anywhere their customers are—listening to that audience, connecting with it, comprehending it, then informing customer care and sales with intelligence from that interaction. That’s not a way to do business, but it’s a way to understand what business your customers want you to be in.
The simplest lessons of the pivot: Don’t rest on your laurels, always add value, never get complacent. Also, any size company should operate like a startup, embracing a balls-of-your-feet mentality that acts on the fact that the bigger you are, the harder it is to be nimble.
One more lesson: Don't fear failure. The closer you are to the edge of the cliff, the more risk there is—but that’s where you see the biggest breakthroughs.
Reggie Bradford is Senior Vice President, Product Development, Oracle.
