Pivoting: When and how to do it effectively
If you’re thinking about changing your business model, it’s because you know something isn’t quite working. Whether you’re pivoting to help your company recover from a tough period or to survive after facing new competition that made the original business model unsustainable, the decision is never easy.
So when should you pivot and what do you need to keep in mind?
According to Ali Tabbalat, Chief Executive of Amman-based micro-lending platform Solfeh, a start-up should only pivot after assessing factors such as the sustainability of the new business model, market acceptance of the product or service, expected revenue, pricing, potential market expansion and the customer being targeted.
“When we started, it was with another fintech for budgeting finances and expenses on a monthly basis. At the time, banks and users were risk averse, and we couldn’t find a sustainable business model. So, we decided to pivot,” Tabbalat said.
“We determined that the existing model didn’t look promising and we had to look at a different one. What’s important is that you pivot to something that makes more sense,” he added.
What do your customers think?
Rola Fayyad, founder of Jordan-based travel app ViaVii, decided to re-brand the business three years after launching and testing it in the regional market. Founded in 2016 as Friendture, the app is designed to help travelers discover local experiences in the MENA region based on their location and interests.
In the new version, Fayyad added features to provide more tailored services that made the experience stand out from the competition. These include an AI-powered travel recommendation engine and chatbot to curate popular local experiences and make them bookable on the platform.
“Pivoting is challenging, I must admit. I know because I did it twice. It’s not easy to decide or implement. It needs to come with a lot of experience, failures, learnings, facts, feedback and insights, and most importantly, the will to reach your vision,” Fayyad said.
While we all make wrong decisions in life, be it on a personal level or work-related, what is important is to reflect on these mistakes and turn them into opportunities, she said.
“Entrepreneurs at such a stage need to back up their new strategy with facts and ROIs and keep in mind how their customers would feel about it. Because it’s all about the customer, after all.”
For Noor El-Fadl, founder of Amman-based tasmeemME.com, the region’s first platform dedicated to promoting Arab designers and creatives, pivoting was a crucial step. The site connects creative freelancers to service seekers, offering job matchmaking, online learning, collaboration and networking, and a digital marketplace.
After five years of running tasmeemME.com in English, El-Fadl realized that in order to benefit her target market, she would need to develop an Arabic version.
“That’s where the gap was. There is a segment of society that can speak English, has studied abroad, and can work abroad; these people will continue to use sites like Behance and Dribbble. They have no problem putting up their portfolio on international websites, and they may use tasmeemME.com only if they want to take up jobs in the region,” she said.
“But I had to tweak my platform to benefit my audience. I had to change it to cater to Arabic speakers because I realized the design scene in the Arab world was nowhere near where it was in the West. So, it’s about figuring out things that will work where you are, and bringing maximum benefit to the people around you.”
Not a quick fix
The Jordanian entrepreneur, who is a graphic designer by profession, also realized that being successful was not only about generating revenue or having millions of users. It’s about making the business sustainable and scalable.
Most importantly, El-Fadl’s decision to pivot came after careful consideration of her options and not out of despair.
“Pivoting involves a lot of damage control in a start-up. It’s about trying to fix things when they go wrong, whether it’s on the technical side or with human capital or even with your business model,” she said.
“At times, I got desperate in terms of fundraising. I was thinking of different directions and it was coming out of despair, and that’s wrong. Pivoting should happen because you’ve worked on it long enough to know that you need to take another route. You make a better decision then, and you think more clearly. You might mess up if you do it from a point of desperation.”
Start-ups considering a pivot should also avoid rushing into big decisions as soon as they hit a wall, said El-Fadl. “Allow yourself time to observe and don’t just pivot because of the first problem. It’s not a new lifeline. You pivot because one thing is not working and you can see another area where it will work.”
Testing plan
Having a testing plan from the beginning, with indicators that can be used to measure performance, is a great way to figure out if you need to pivot, said Mohammad Abu Musa, an independent marketing automation consultant based in Amman, who has worked with more than 40 start-ups in the region and beyond.
“When the start-up finishes the testing phase, which should last six to eight months, they can decide which assumptions worked and which didn’t.”
The variables should be clear, he says. They may include the number of customers a start-up gets, the cashflow it has, and how much profit has been generated. By looking at these variables, the start-up can determine whether the business model is sustainable or whether they need to pivot to something else.
“The ‘how’ should be based on interviews with customers, delivery of service, and completion of the cycle, from understanding the market to the after-sale and customer support. Based on this journey, and the problems they find, they can decide if they are ready to pivot.”
