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Lean startup - what is pivot

Yuki Sekiguchi
Yuki Sekiguchi
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Lean Startup
What is Pivot?
 Yuki Sekiguchi
Pivot is a structured course correction
designed to test a new fundamental
hypothesis about the product, business
model, and engine of growth.
→One of the core concepts of Lean Startup. “Pivot or
Persevere” decision is made once the company gets
through a Build-Measure-Learn feedback loop.
Companies that cannot bring themselves
to pivot to a new direction on the basis of
feedback from the marketplace can get
stuck in the land of the living dead.


*The state where a company is neither growing enough nor
dying, consuming resources and commitment from employees
and other stakeholders but not moving ahead. It is a terrible
drain of human energy.
A pivot is better understood as a new
strategic hypothesis that will require a
new MVP (minimum viable product) to
test. Successful pivots put a company on a
path toward growing a sustainable
business.
→Pivots are a permanent fact of life for any growing
business. Even after a company achieves initial
success, it must continue to pivot. Decision on when
and how to pivot cannot be made formulaically. It
requires human judgment.
As a goal of a startup is to find a path
toward growing a sustainable business,
runway should be measured by how
many pivots a startup has left: the
number of opportunities it has to make a
fundamental change to its business
strategy.
The startup has to find ways to get to
each pivot faster and cheaper in that
sense.
Many business books talk about
importance of pivot-like changes, but lack
specifics.
With Lean Startup, the pivot is built in the
methodology and processes. It is what
makes the companies that follow Lean
Startup resilient in the face of mistakes: if
we take a wrong turn, we have the tools
we need to realize it and the agility to find
another path.

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Lean startup - what is pivot

  • 1. Lean Startup What is Pivot? Yuki Sekiguchi
  • 2. Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, business model, and engine of growth. →One of the core concepts of Lean Startup. “Pivot or Persevere” decision is made once the company gets through a Build-Measure-Learn feedback loop.
  • 3. Companies that cannot bring themselves to pivot to a new direction on the basis of feedback from the marketplace can get stuck in the land of the living dead. *The state where a company is neither growing enough nor dying, consuming resources and commitment from employees and other stakeholders but not moving ahead. It is a terrible drain of human energy.
  • 4. A pivot is better understood as a new strategic hypothesis that will require a new MVP (minimum viable product) to test. Successful pivots put a company on a path toward growing a sustainable business. →Pivots are a permanent fact of life for any growing business. Even after a company achieves initial success, it must continue to pivot. Decision on when and how to pivot cannot be made formulaically. It requires human judgment.
  • 5. As a goal of a startup is to find a path toward growing a sustainable business, runway should be measured by how many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy. The startup has to find ways to get to each pivot faster and cheaper in that sense.
  • 6. Many business books talk about importance of pivot-like changes, but lack specifics. With Lean Startup, the pivot is built in the methodology and processes. It is what makes the companies that follow Lean Startup resilient in the face of mistakes: if we take a wrong turn, we have the tools we need to realize it and the agility to find another path.
  • 7. Sample Types of Pivots (1/4) #1: Zoom-in Pivot What previously was considered a single feature in a product becomes the whole product. #2: Zoom-out Pivot What previously was considered the whole product becomes a single feature of a much larger product. #3: Customer Segment Pivot A company changes customer segment when it realizes that the product it is building solves a real problem for real customers but that they are not the type of customers it originally planned to serve.
  • 8. Sample Types of Pivots (2/4) #4: Customer Need Pivot A company changes product when it realizes that the target customer has a problem worth solving, but just not the one that was originally anticipated. #5: Platform Pivot A changes from an application to a platform or vice versa. #6: Business Architecture Pivot Switching of architectures such as from high margin, low volume (primarily B2B) to low margin, high volume (primarily B2C).
  • 9. Sample Types of Pivots (3/4) #7: Value Capture Pivot A company changes the way it captures value (i.e. Commonly referred to changes to monetization or revenue models). #8: Engine of Growth Pivot A company changes its growth strategy (e.g. the viral, sticky, and paid growth models) to seek faster or more profitable growth.
  • 10. Sample Types of Pivots (4/4) #9: Channel Pivot A company changes the sales or distribution channels (e.g. from dealership sales to direct sales) when the same basic solution could be delivered through a different channel with greater effectiveness. (A channel often determines product feature, price, and competitive landscape.) #10: Technology Pivot A company provides the same solution by using a completely different technology when the new technology can provide superior price and/or performance compared with the existing technology. Much more common in established businesses.