06
Jan
11

Pivoting

Pivoting means changing your business model when the older one isn’t working out. There are lots of successful examples of such.
Companies sometimes have to make a tough call to change their entire business instead of continuing with something that doesn’t work till they fade away.

This is a must read article and video on changing business models by an investor of Chegg/Twitter.

…Mike Maples gave a talk about what he calls “pivots” and “thunder lizards.” Thunder lizards are startups born from atomic eggs that “emerge with attitude” want to disrupt and chew up their competition– both new world and old. They are big, chaotic, relentless and when successful, become huge companies. What helps make a thunder lizard successful is something Maples calls the “pivot.”

This isn’t about product iteration– the pivot has to do with business model. Business model shouldn’t be confused with “business plan,” Maples says. A business plan is a static thing, a business model charts money flowing out to create a product and money flowing back in from that product. A startup’s entire reason to exist is to have  more arrows going back in than arrows going out, and it’s always changing…

Of course this doesn’t mean change willy nily at the slightest hint of failure but there needs to be a balance, which makes this decision is even difficult. And you should throw out the old model completely instead of trying to do more than one thing at the same time.

There’s a parallel in the real world of course: It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. ~Charles Darwin

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