PIVOT YOUR BUSINESS TO RECOVER FROM THIS ECONOMIC DOWNTURN

Posted on February 06, 2024 by BJ Jhaveri, One of Thousands of Business Coaches on Noomii.

Pivot is a shift in your strategy to test a new customer segment for your products or services. It could lead to positioning your company into a new market or vertical.

When you began this year, your business strategy would have been designed with the assumption that the external market factors and conditions will be almost the same as the previous year. The COVID-19 crisis totally changed this scenario causing a critical need to alter your strategy. Changing your existing business model is far less risky than doing nothing as you already know that inaction will lead to a failed business or a substantial reduction in achieving your sales revenue and profits. Thus, pivoting your business model to help in navigating a way through this economic crisis becomes foremost on the minds of business owners.

You could do a customer segment pivot to position your product or service for a new user segment that you were not initially targeting. It could be due to the reduced demand for your product or service in the current user base that you were focused on until this crisis happened.

Some recently successful pivots:

> Beverage & perfume brands are shifting to produce sanitizers.

> Fabric & garment manufacturers are modifying their factories to deliver masks and gowns.

> Industrial product manufacturers are altering their plants to make personal protective equipment.

> Device companies are revamping to produce health monitoring & testing products.

> Nutrient companies are diversifying into producing immunity-boosting supplements.

One of the most essential aspects of a successful pivot is to challenge traditional thinking and generate enough ideas to identify pivots that could make a difference in your industry. Some good areas to generate ideas for pivots would be to introspect target markets, potential partners, product differentiation, commercialization methods, unfulfilled needs, higher value creation, solutions broadening, delivery mechanism, repurposing resources, rethinking product-service mix, distribution channels, etc.

As observed by Jeff Bezos of Amazon, companies taking lots of small risks and failing will find the one or two efforts that will enable their business to succeed.

To increase your likelihood of big gains:

1. Do a pivot as early as you can

2. Be open to several iterations and evaluations

3. Re-use existing work that you have done so far

4. Solicit feedback from your current customers

At its simplest level, it could begin with two factors: DEMAND and ADAPTABILITY. This would lead to four quadrants for further analysis & decision making:

High Demand, High Adaptability: This is a high potential area as your product or service can be easily adapted to service this customer segment that has a surge in demand. For example: masks, gloves, sanitizers, shields, scrubs, personal protective equipment, grocery delivery, food delivery, health monitoring & advisory, sanitation services, online training, etc.

High Demand, Low Adaptability: This area does have high demand even though your current product or service cannot immediately be adapted to this need. You need to introspect and see if you could either zoom-in or zoom-out to develop some new products or services to cater to this demand. Based on your evaluation, you may decide to pursue or pass this opportunity.

Low Demand, High Adaptability: This you may be catering to already or can easily cater to with the least amount of modifications. Continue leveraging this segment for generating cash-flow to invest in the ‘High Demand’ market segment.

Low Demand, Low Adaptability: This is the least lucrative area to focus on. So consciously choose to de-prioritize your investment in this segment.

While doing the pivot, remember that a change in your business model will impact all sides of your business model including marketing, operations, people, sales, service, et al. By further analyzing and brainstorming using this framework, you could decide where to focus your resources, time, and money. Sometimes your analysis could help your business model to pivot from an erstwhile high-margin, low-volume business to a low-margin, high-volume business. Selecting the best option and deciding to implement it can help in re-energizing your organization to achieve your goals.