When to Pivot? “P” For Pivot OR “P” For Persistence?

The key question then that faces an entrepreneur is – “when to pivot”. There is a counter-force at work – “persistence”.

[Editorial Notes : Guest article by Rajul Garg, Director of Sunstone Business School. Rajul shares his pivoting experience related to his earlier startups – right from Pine Labs to GlobalLogic.]

One of the terms you hear often in the last few years in the entrepreneurial ecosystem is “Pivoting”. An entrepreneur starts with an initial hypothesis but as he/she enters the market, the hypothesis does not prove to be viable or scalable enough. Then the entrepreneur materially alters the business model and executes a new hypothesis. This is called pivoting. A startup may need to do this several times before they find a hypothesis that they stick to.

startup pivots
startup pivots

Let me demonstrate this with a couple of examples. My first company Pine Labs started as a services company and over time pivoted to be a products/solution company. My second company GlobalLogic started as a B2B products company and then pivoted to be an outsourced product development services company. My current company started in the healthcare and wellness space and pivoted to be in the education space!! We have seen several E-commerce companies pivoting to become marketplaces. We have seen even large companies pivoting – Dell has pivoted dramatically from a Direct to Home computer company over years.

The key question then that faces an entrepreneur is – “when to pivot”. There is a counter-force at work – “persistence”. How do you definitively know that you should abandon your current hypothesis in favor of a new one? Are you giving up too early? Many successful entrepreneurs will tell you that entrepreneurship demands zen-like persistence. This is a tough question, but I can offer a few tips from experience:

1. Past is sunk cost, drive your decisions from future: Many entrepreneurs argue – “but we have invested 1 year on this” or 6 months or 2 years.’

The harsh reality is that what you have spent is sunk cost already. Investing more is only increasing your sunk cost and you will have greater red to wipe off. As hard as it is, a new day is a new day and the future is full of promise. Decision-making today has to be driven from where you want to go and only taking learning from the past, not baggage.

All therapists tell us this. (Oh, you haven’t been to one yet?)

2. Will your current model scale: Most entrepreneurs want to grow. That’s their number one aspiration. If you current model, however good it is stops growing or you feel that this business can not scale to your aspirations, that’s a great test to subject yourself to every now and then.

This is also a great reason to pivot.

3. The right pivot makes everything so much easier: Your heart knows things usually a little before your brain can rationalize it. If your current model seems harder and harder every day and you keep wondering how life would be if you were doing something else, chances are that you should put on some serious thinking socks.

I have seen so many businesses pivot quite dramatically and succeed, that my experience in India is that you pivot too late. We tend to stick on to our current ideas too long and do not adopt change quickly. So while you have to persist as an entrepreneur, you have to keep pivoting till you find a model that works.

[About the Author(s): This article, third in the series on “The Science of Entrepreneurship”, has been written by Rajul Garg, Director of Sunstone Business School, which is part of NextBigWhatSelect, a curated set of regular contributors to NextBigWhat who bring actionable insights to NextBigWhat readers.]

Sunstone business SchoolSunstone provides a one year part-time online PGPM program for mid-career Technology professionals, helping them transition to entrepreneurial & business roles. Click here to know more about Sunstone’s PGPM program. Contact id: tapan@sunstone.in]


Recommended Read :
» Is Pivoting Your Latest Excuse To Not Talk To Customers?
» Indian Startups That Pivoted Successfully

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