Is pivoting natural selection or intelligent design?
Pivoting is not particular to tech startups. Many of the largest companies we know today have done it throughout the years to adapt to new times or even to survive. The list surprises lots of people:
- Berkshire Hathaway: Textiles → Private equity
- BMW: Aircraft engines → Vehicles
- IBM: Office machinery → Computers → IT Consulting
- Nintendo: Playing cards → Video games
- Nokia: Rubber boots → Cell phones
- Pixar: Animation tools → Animated movies
- Sony: Rice cookers → Various electronics
Pivoting as pre-planned strategy is probably rare, most companies do it because they have to do it. It’s however very common to the new generation of tech startups to figure out things one step at a time and be able to understand what/when to pivot. Eric Ries nailed a definition for it:
…The idea that successful startups change directions but stay grounded in what they’ve learned. They keep one foot in the past and place one foot in a new possible future. Over time, this pivoting may lead them far afield from their original vision, but if you look carefully, you’ll be able to detect common threads that link each iteration.
Interestingly enough the two leading startups in the hottest space right now have come to where they are through different pivot paths. (It says something about the group buying business model with such low barrier-entry that practically any web business can pivot to it.)
Groupon started as The Point, a website that let people create a campaign asking people to give money or do something as a group and leveraged their technology to implement group buying after struggling to get traction.
LivingSocial started as a Facebook platform developer. They were all over the place until they acquired BuyYourFriendADrink and e-commerce site that allowed users to buy gift certificates for friends towards any of the bars in their network. One of their salespeople identified the opportunity that triggered the pivot.
Watch these companies founders explain how they ended up being where they are. Natural selection or intelligent design? Leave a comment…
