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Lean startup - what is pivot


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Lean startup - what is pivot

  1. 1. Lean StartupWhat is Pivot? Yuki Sekiguchi
  2. 2. Pivot is a structured course correctiondesigned to test a new fundamentalhypothesis about the product, businessmodel, and engine of growth.→One of the core concepts of Lean Startup. “Pivot orPersevere” decision is made once the company getsthrough a Build-Measure-Learn feedback loop.
  3. 3. Companies that cannot bring themselvesto pivot to a new direction on the basis offeedback from the marketplace can getstuck in the land of the living dead.*The state where a company is neither growing enough nordying, consuming resources and commitment from employeesand other stakeholders but not moving ahead. It is a terribledrain of human energy.
  4. 4. A pivot is better understood as a newstrategic hypothesis that will require anew MVP (minimum viable product) totest. Successful pivots put a company on apath toward growing a sustainablebusiness.→Pivots are a permanent fact of life for any growingbusiness. Even after a company achieves initialsuccess, it must continue to pivot. Decision on whenand how to pivot cannot be made formulaically. Itrequires human judgment.
  5. 5. As a goal of a startup is to find a pathtoward growing a sustainable business,runway should be measured by howmany pivots a startup has left: thenumber of opportunities it has to make afundamental change to its businessstrategy.The startup has to find ways to get toeach pivot faster and cheaper in thatsense.
  6. 6. Many business books talk aboutimportance of pivot-like changes, but lackspecifics.With Lean Startup, the pivot is built in themethodology and processes. It is whatmakes the companies that follow LeanStartup resilient in the face of mistakes: ifwe take a wrong turn, we have the toolswe need to realize it and the agility to findanother path.
  7. 7. Sample Types of Pivots (1/4)#1: Zoom-in PivotWhat previously was considered a single feature in a productbecomes the whole product.#2: Zoom-out PivotWhat previously was considered the whole product becomes asingle feature of a much larger product.#3: Customer Segment PivotA company changes customer segment when it realizes thatthe product it is building solves a real problem for realcustomers but that they are not the type of customers itoriginally planned to serve.
  8. 8. Sample Types of Pivots (2/4)#4: Customer Need PivotA company changes product when it realizes that the targetcustomer has a problem worth solving, but just not the onethat was originally anticipated.#5: Platform PivotA changes from an application to a platform or vice versa.#6: Business Architecture PivotSwitching of architectures such as from high margin, lowvolume (primarily B2B) to low margin, high volume (primarilyB2C).
  9. 9. Sample Types of Pivots (3/4)#7: Value Capture PivotA company changes the way it captures value (i.e. Commonlyreferred to changes to monetization or revenue models).#8: Engine of Growth PivotA company changes its growth strategy (e.g. the viral, sticky,and paid growth models) to seek faster or more profitablegrowth.
  10. 10. Sample Types of Pivots (4/4)#9: Channel PivotA company changes the sales or distribution channels (e.g.from dealership sales to direct sales) when the same basicsolution could be delivered through a different channel withgreater effectiveness. (A channel often determines productfeature, price, and competitive landscape.)#10: Technology PivotA company provides the same solution by using a completelydifferent technology when the new technology can providesuperior price and/or performance compared with the existingtechnology. Much more common in established businesses.