Previously published in the Phoenix Business Journal
At some point all entrepreneurs encounter a failure. Sometimes it’s a monumental catastrophe and other times it’s a minor glitch. What distinguishes not the failure but the outcome, can sometimes be simply a test of pivoting. Often what you think will work, doesn’t. And in this critical moment you must pivot quickly to overcome difficulties.
Forget everything you know.
For starters, begin with a blank slate. You have the power to create new opportunities. It may take leaving everything you know about a situation behind. But be creative. Look at alternative sales funnels regardless if they sound absurd.
Let’s look at some examples of how a few giant corporations took a failure and turned them into global phenomenon.
Airbnb, the infamous rental housing platform used in practically every nation, continent and country, began in 2007 when designers Brian Chesky and Joe Gebbia were in dire straits and couldn’t afford their rent. They began renting their room out for an incoming conference with pictures of their three air mattresses on the floor and promised to cook breakfast for anyone who came. Their idea eventually grew traction and now they are worth $30 billion. Just because you can’t afford rent, doesn’t mean you should admit defeat.
Western Union, a popular money transfer platform, was originally created for sending and receiving telegrams. It was practically rendered obsolete with the invention of the telephone and the internet. After a realization of practicality, the company made a massive switch from sending telegrams to sending and receiving money orders. A completely different product, managed by a swift acting response to an almost sunk ship.
So, keep your feet steady and keep going. Even when you feel like you’ve come to your biggest failure, do what many businesses have done before and monetize it. If you’re a restaurant, and you found fresh produce at a great price, resell extras directly to consumers. If you’re are a clothing retailer, take orders for PPE, i.e. masks and gowns. Keep asking yourself, “what else can I do?”: Change your pricing model, change your product or your target market.
Keep options open
It doesn’t have to be a big production or a big shift. Any increment that brings you closer to what customers want right now is a win. Monetize the best you can, and even when you think you lost a lot, you still have plenty of options.
Here are five tips on how you can succeed in pivoting from a disaster to a success:
1. Take a minute to examine the core elements of your business. The core elements of the business are the essence of what you do; the ‘atoms’ that render all other activities possible. They are often perceived as a ‘mechanism’ but they are actually the heart of the business.
For example, for a restaurant you would think that having a chef is essential to the business. But your supply chain is the core of the business – if you can’t buy excellent products at great pricing, you have no business – that’s why during the quarantine, some restaurateurs were able to maintain income by selling products without transformation. Their main physical asset is their venue. That’s why you can say that McDonalds is actually in the real estate business.
2. Talk to your customers as a person and listen to what keeps them up at night. One example of a client pivot comes from a funeral home. Even in this most traditional type of business, there were opportunities to pivot for the better. By examining the trends it was evident that funeral homes were not complying with consumers’ increasing concerns for eco-friendly products. It meant pivoting to ‘green burials’, or ecological funerals, while also introducing new services like counseling to guide people through grief and childcare options for families to leave their toddlers and small children while attending funeral services. This meant funeral homes had to leverage their main physical asset; their venue. They had to make accommodation for new demands, including opening up to other celebrations as well, even some like weddings.
3. What needs to be tweaked to connect the core of your business to the customer’s needs? Is it your pricing model? Is it your product? Etc. Be honest with yourself and in some cases make a radical transformation.
4. Focus, and quickly create and test your new solutions. Here’s an example. A technology company developed a defrosting solution for commercial aircraft to prevent the formation of ice at a cheaper cost and greater efficiency than what existed on the market. But they were targeting wrong and they didn’t realize how long the runway to commercialization would be to a highly regulated industry. The company’s core value was to minimize the aggregation of ice to the surface, so our firm introduced them to ski manufacturers who had been looking to find a way to improve the gliding factor of their equipment. Immediate revenue generation and new product applications were applied.
5. There is no magic formula or algorithm to ensure you’re making the right decision. Everyone makes mistakes, but even the small ones may result in big losses. That is why it is important to go through the validation of your assessment.
Asking third parties for help doesn’t mean you’re squandering your budget. Retaining help can be a small investment to avoid running down the wrong path. If you go this route, don’t hesitate to ask questions and do your due diligence to find a business advisers you’re comfortable with.