Pivoting
In my business we have decided to try to pivot. Let me try to explain what I mean by that. Life is about flexibility and change. When a business faces a roadblock, especially an insurmountable one, the only sensible thing to do is to alter direction to get around the roadblock. By most standards, that is considered intelligent management. In a hedge fund that is called style-drift and is deadly to investors as it signals an inability to find and realize on sustainable arbitrage opportunities. In a start-up company it can be a very tricky maneuver where it matters how one executes the change of direction.
To abandon one’s vision is to admit that the premise of the enterprise was misguided. If that is so, then so be it. But more often it was just not as easy or not as quick or not as dramatic as expected. It mostly comes down to time and money and time is just a measure of money, so it’s really all about money. It always costs money to make progress, so the calculus of success is the basic calculation of the time value of money and how much it will cost to acquire success. And once in a while the world around you changes or gets changed and all the calculus needs to adjust. But sometimes the world shifts and opens up a path that wasn’t obvious before. If that path is more attractive and the old path looks rockier than expected, one might decide that what is needed is a slight course correction. Note that I don’t call it a change of direction, but rather a slight shift.
Mighty oaks crash to the ground in a windstorm according to Aesop, but the winsome willow perseveres. Abraham Lincoln admonished the old Dutch farmer to not change horses in midstream. So is it better to stay the course or stay loose? The answer, by necessity, is that it depends. I imagine the Dutch farmer might still be best advised to change horses rather than drown if those are his two options. So, let’s agree that how and why we get flexible is important.
There are lots of ways to change things up. Lou Gerstner got famous teaching the elephant to dance when he got IBM turned around twenty years ago. Dancing elephants must surely pivot in every direction. And dancing elephants are dangerous beasts that can fall on you at any moment as they try to execute a dance step that they are simply not engineered to accomplish. But a start-up company is not an elephant, it is, by definition a lithe and nimble beast that should be able to be very adaptable. In fact, it is not inappropriate to suggest that start-ups must be able to adapt or die. It is too trite to say that few start-ups are so omniscient that they can divine the exact needs of the market and the exact steps that are needed and doable to intercept those market needs. Change for a start-up is on page one of the start-up playbook.
So let’s go back to the manner of change. In a perfect world we could erase all that we said or did and be allowed to approach all existing or potential investors and counter-parties with a clean slate, but that is rarely the case. Investors with flagging memory get amazingly accurate in their recollections when it comes to nailing an entrepreneur to the cross of his prior commitments and his failures to achieve his targets. Since conviction is a necessary ingredient for any entrepreneurial endeavor, it is unlikely that the past can be ignored. There are two ways an investor can see this. He can say the entrepreneur is a failure and not worthy. He can say that the art of entrepreneurial effort is a never-ending process of failing and getting-up again until success is achieved. Let’s put up a few of those famous quotes:
“Success is stumbling from failure to failure with no loss of enthusiasm.”
– Winston Churchill
“Only those who dare to fail greatly can ever achieve greatly.”
– Robert F. Kennedy
“Failure isn’t fatal, but failure to change might be”
– John Wooden
For my money, I believe that making a very rational change when it is called for by changing circumstances, new information or specific experience is essential to successful entrepreneurship. This is where the pivot comes in. It is not just a convenient word, it is an actual tactic that is only sometimes possible. Giving up and trying something different is not necessarily a pivot. In baseball, a pivot is a great element of a double play where the second baseman catches, tags and throws in one synchronous motion. It is a elegant thing to watch and is an essential element of high-performance play. In basketball, the pivot is an even more interesting thing that is actually part of the rules of the game. There are strict rules of what you can and cannot do to use this basic and routine court tactic. It is all about pausing to get a lay of the land and then adjusting play within the confines of the allowable movement of the ball. I like to think that an entrepreneurial pivot is the best of both of those examples. It should be a part of the playbook and needs to be intelligently executed, but that if it is well-executed it should be considered a thing of tactical beauty that is fully appreciated and rewarded (in this case with additional funding to play out the hand).
Pivoting seems very natural to me. Stopping to think and pausing to reassess always seems sensible and enlightened. Yes, it involves some acceptance of failure, otherwise you would not be pivoting, but rather barreling forward. But I am comfortable and actually quite proud of being able to find good pivot points. Get your arguments for the pivot pulled together, explain the difference in the path, argue the consistency of the vision, commit and be compelling. No one ever invested in wish-washy. Believe in what you do and do what you believe. Pivot to success.