What is a Pivot and How It Can Save Your Business

What is a Pivot?

In the TV show Friends, one of the most memorable scenes involves Ross, Chandler, and Rachel struggling to carry a couch up a narrow staircase. Ross, trying to direct the process, keeps shouting, "Pivot!"

In the business world, the term pivot refers to a significant change in direction or strategy. This could involve shifting the business model, repositioning the brand, or even changing the company's name.

The concept is explored in Eric Ries’ book The Lean Startup, although he refers to it as a "turn" rather than a pivot. Ries describes pivoting as one of the key ways a startup can adjust its trajectory.

For a startup, a pivot can either mark a fresh start or be the last chance to succeed. However, looking at the success stories of many companies, pivoting often seems like a natural path for startups, becoming a crucial part of their strategic development.

This kind of pivot has saved many companies—some of which have gone on to become industry giants.

A must-read for those who want to build a startup

Pivot Examples

Here are a few examples of startups that made successful pivots and are now well-known companies.

YouTube — From a Dating Platform to Video Hosting

YouTube was created when Steve Chen and Chad Hurley (two of YouTube’s three founders, along with Jawed Karim) noticed the absence of online videos for two notable events — Justin Timberlake's wardrobe malfunction incident with Janet Jackson during the Super Bowl, and the aftermath of the devastating 2004 tsunami in Asia.

Initially, instead of launching a video-hosting platform, they created YouTube as a dating site, even registering the domain on February 14th. However, the idea failed — not a single user attempted to find a date on YouTube within the first few weeks.

Instead, users started uploading videos about themselves, their pets, hobbies, and travels — not for dating, but for sharing. The founders pivoted, removing the dating focus, and allowed people to use YouTube as a video-sharing platform, leading to the site we know today.

Slack — From a Game to a Messaging Platform

The team behind Slack originally developed an online game called Neverending. While the game didn’t take off, it did attract some users. At the same time, players actively used the chat and photo-sharing features within the game, which eventually led to the creation of the photo-sharing platform Flickr, where players exchanged photos.

Later, the team revamped the game, launching a new version called Glitch. Unfortunately, it too failed to gain significant traction. However, the messaging system within the game became more and more popular.

As a result, the company pivoted and turned this messaging tool into Slack, the now-popular workplace communication platform. This is a perfect example of a pivot where a small part of a product evolves into a successful standalone business, demonstrating the importance of adaptability and perseverance.

Nokia — From Rubber Boots to Mobile Phones

Nokia, which later became famous for its durable mobile phones, began in the 19th century producing a variety of products such as rubber boots, paper goods, and bicycle parts.

Over time, Nokia diversified into areas such as chemicals, aluminum, and plastics. In the mid-20th century, a division focused on electronics, mainly consumer electronics, split from the parent company and joined forces with Salora, a company specializing in communications. Together, they started producing mobile phones.

This is an example of a pivot through gradual transformation rather than a sudden shift, where diversification and focus on a new industry ultimately led to great success in mobile telecommunications.

Other Examples of Successful Pivots

Several well-known companies have undergone notable pivots to reach their current success.

Initially, X was conceived as a platform for group communication, where users could exchange short messages. Over time, it evolved into a global social media platform, allowing users to share thoughts, news, and engage in public discussions.

Now famous for selling discount coupons, Groupon started as The Point, a platform focused on collective purchasing of goods and services. The pivot to its current discount-focused model significantly boosted its popularity and success.

Instagram originally launched as Burbn, an app centered around location check-ins. The founders later shifted the focus to photo sharing, transforming it into the highly successful app that reshaped social media.

Developed initially as a treatment for high blood pressure, Viagra became famous for its unexpected effectiveness in treating erectile dysfunction, a pivot that turned it into one of the best-known pharmaceutical products globally.

When to Consider a Pivot

There are several key indicators that suggest a startup may be facing a crisis and should consider a pivot.

🔹 The audience doesn’t need the product or business in its current form. It’s quite common for a startup to enter the market with an innovative product that hasn’t yet gained traction with its target audience. This is normal for startups, as they often introduce products that are still seeking market validation.

🔹 The product no longer meets market demands. This typically happens when a product becomes outdated or fails to fully meet customer needs. Market conditions can change due to new laws, emerging competitors, shifts in trends, or changes in consumer behavior, leaving the product behind.

🔹 Competitors have introduced a superior solution. This type of market shift can be more abrupt. Competitors may come up with unexpected innovations that force you to make unplanned changes to your product to stay competitive.

🔹 The business model is inefficient.If the business model isn’t financially viable. For instance, if customers are unwilling to switch to a subscription model because they don’t find the premium features valuable, or if development costs outweigh revenue — it may be time to pivot.

🔹 New technologies. This doesn’t necessarily indicate a crisis, but rather new opportunities. Leveraging new technologies could open up paths for innovation and justify a pivot to take advantage of these advancements.

Ways to Pivot — or Different Types of Pivots

A pivot doesn’t always mean a drastic 90-degree shift for the entire business. Often, only part of the business changes, and this is usually the most strategic and healthy decision.

It’s important to note that some pivots involve a complete transformation of the business and product format, even leading to a name change. Groupon, for example, started as The Point, which focused on collective purchases, before evolving into the coupon-based platform it is today.

Here are four common types of pivots that don’t involve such radical changes:

⬛️ Zoom-in Pivot

This happens when a small feature of a product becomes a successful, standalone product. A great example is Slack, which grew out of an internal chat tool used in a game and evolved into a widely used messaging platform.

◾️ Zoom-out Pivot

In this scenario, the core product becomes independent from a larger system. For instance, PayPal started as an online payment service for eBay, and then pivoted to become a standalone payment platform.

💎 Spin-off Pivot

This occurs when a part of the product is discontinued because it’s unprofitable, unnecessary, or too resource-intensive to develop. A classic example is Google, which decided to shut down Google Plus after it struggled to compete with other social networks. Google chose to focus on its more successful products like Search, YouTube, and Android.

➕ Feature Expansion Pivot

While pivots often involve new features, in this case, the addition of new features drives the pivot. Dropbox, for instance, started as a simple cloud storage platform, but later expanded with features for collaboration, which facilitated its pivot.

🔄 Target Audience Shift

Sometimes, a product designed for one audience becomes unexpectedly successful with a different group. For example, children’s toys like Lego have found a new fanbase among adult collectors, leading the company to cater to both demographics.

Source: Reddit

🔀 Problem Redefinition Pivot

This type of pivot occurs when the product remains the same, but the problem it solves changes. For example, a dishwasher detergent may be rebranded as a window cleaner, or a blood pressure medication becomes repurposed as the famous blue pill for treating erectile dysfunction.

How to Execute a Pivot

Here’s what to consider when planning a pivot.

Analyze the Current Situation

The need for a pivot usually arises when a business is facing challenges. Therefore, the first step is a thorough analysis of the problem.

You need to analyze both internal and external factors affecting your business.

For internal analysis, consider these questions:

For external analysis, consider these questions:

🔧  Some useful tools at this stage include:

Develop a New Idea

Coming up with a new idea can be daunting, but if you’ve thoroughly analyzed the business’s internal and external challenges, the process becomes more feasible.

Gather your team for a brainstorming session to generate new ideas for products, target audiences, business models, and other potential changes.

After you’ve collected a range of ideas, evaluate them based on relevant criteria, such as growth potential, alignment with company resources, and associated risks.

Develop a New Plan

After identifying a hypothesis or new idea, it’s time to plan your next steps.

✅ This includes outlining the pivot's implementation — from a high-level strategy to immediate action plans. You’ll need a new financial plan, updated business model, and revised marketing strategy.

The detailed plan may also involve developing new features, sourcing new resources and tools, finding new promotional channels, and exploring different ways to monetize the business.

This step is too intricate to fully explain in a single text — or even in an entire book. There’s no universal formula for it.

To wrap up, let’s turn to a quote from Eric Ries’ The Lean Startup, which reminds us that pivoting is an essential part of business growth and a strategic approach:

Eric Ries

in the book The Lean Startup

A pivot is not just a chance to change. It’s a specific type of structured change aimed at testing a new fundamental hypothesis about the product, business model, and growth strategy. This is the core of the lean startup methodology. It’s what allows companies following lean principles to survive challenges: if we’ve made a wrong turn, we have the tools to realize it and the strength to find another way.

By the way, if you're dreaming of starting your own business, we highly recommend starting with this book — it’s full of practical advice and specific, actionable insights.

Key Takeaways

✔️ A pivot is a significant change in a business model or direction. It’s a way for startups to evolve when their original idea doesn’t pan out.

✔️ Pivoting is an essential part of business growth. Companies like YouTube, Slack, and PayPal all pivoted and came out stronger. However, in some cases, a pivot may be the final move for a failing business.

✔️ To successfully pivot, you need to thoroughly analyze your current challenges: take a deep dive into your business, your company’s operations, and the market conditions.

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