Evolve or Die

Don't get trapped in an obsolete business plan. Business and market conditions evolve. To succeed, so must you.

Gary Levitt

Four years ago, South African immi­grant Gary Levitt started Mad Mimi, a New York City–based e-mail mar­ket­ing com­pany. A bass gui­tarist, he intended for the busi­ness to be aimed at musi­cians. But, over a period of sev­eral months, Levitt real­ized he needed to pivot. The con­cept, he saw, deserved a big­ger mar­ket. So, he decided to change his tar­get, to make it a more gen­eral busi­ness audi­ence. It was a smart move. The busi­ness now has about $5 mil­lion in rev­enues and 100,000 customers.

The abil­ity to rec­og­nize that your orig­i­nal con­cept needs to be recalibrated—or overhauled—is cen­tral to entre­pre­neur­ial success.

Levitt is by far not the only entre­pre­neur to change an ini­tial busi­ness con­cept. In fact, such piv­ot­ing is com­mon to many, if not most, new busi­nesses. While Levitt’s approach focused on chang­ing his tar­get mar­ket, other com­pa­nies do every­thing from tweak­ing their dis­tri­b­u­tion sys­tems to revamp­ing their prod­uct design.

“If you’re fail­ing in your orig­i­nal busi­ness model and you’re about to run out of money, it’s pretty late in the game to be mak­ing changes.”

 

What­ever the spe­cific change, how­ever, the abil­ity to rec­og­nize that your orig­i­nal con­cept needs to be recalibrated—or overhauled—is cen­tral to entre­pre­neur­ial suc­cess, says Ken Gae­bler, a small-company expert who heads Gae­bler Ven­tures, a busi­ness incu­ba­tor in Chicago. What’s more, get­ting the tim­ing right is of crit­i­cal impor­tance. “You need to pivot when you have the resources to do it,” he says. “If you’re fail­ing in your orig­i­nal busi­ness model and you’re about to run out of money, it’s pretty late in the game to be mak­ing changes.”

For­tu­nately, accord­ing to Gae­bler, there are steps you can take to ensure you’re ready, will­ing and able to pivot, if the time comes. He sug­gests try­ing these six moves:

1. Talk to the mar­ket continually.

You can’t assume you know what your tar­get audi­ence wants. That means you con­stantly need to reach out to exist­ing customers—or poten­tial ones, if you don’t have any yet—as well as friends, fam­ily, and col­leagues, look­ing for clues that could mean you need to take the busi­ness in a dif­fer­ent direction.

2. Run struc­tured pivot exer­cises.

Peri­od­i­cally ask your­self spe­cific ques­tions that could lead to a change in strat­egy. Some exam­ples: If we were not suc­cess­ful in our orig­i­nal con­cept, what would our Plan B be? Is there another type of cus­tomer who might find value in what we’re doing and what would we need to do to deliver on that value? (For more ques­tions, see below).

3. Get an out­side perspective.

You shouldn’t go it alone. Bring in out­siders who can eval­u­ate what you’re doing and pro­vide insights about whether there might be a bet­ter way to tap your mar­ket or whether you should con­sider alter­ing the busi­ness in another way. The same goes for your staff. Encour­age a rich exchange of ideas among your team members—and ques­tions about the cur­rent busi­ness model. “It’s from these can­did dis­cus­sions that great entre­pre­neur­ial con­cepts often emerge,” says Gae­bler. You can con­sider com­pen­sat­ing employ­ees in some way for their par­tic­i­pa­tion, so they  under­stand you’re sin­cere in your desire for them to speak up.

4. Keep an “assump­tions” journal.

Write down all the assump­tions you  have about your busi­ness. Then play devil’s advo­cate and think through whether those con­sid­er­a­tions are jus­ti­fied. The goals is to ensure that you don’t let the heady eupho­ria of entre­pre­neur­ship get in the way of mak­ing smart decisions.

5. Watch the suc­cess of other entrepreneurs.

If you see a com­pany in a sim­i­lar indus­try that’s doing well, ana­lyze why it’s suc­cess­ful. Your con­clu­sion might be there’s noth­ing for you to learn. But, in some case, you might decide the other busi­ness is doing some­thing you should be con­sid­er­ing, too. “You want to see how to apply those same tac­tics to get sim­i­lar results in your own busi­ness,” says Gaebler.

6. Bud­get time to refresh your brain.

The more weary and stressed out you are, the less likely it is you’ll be open to new, cre­ative approaches. “If you’re work­ing all the time, you’ll never be able to pivot,” says Gaebler.

 

Do You Need To Pivot? Answer the­se ques­tions to find out:

* Is my orig­i­nal busi­ness plan going the way I had hoped? If not, how can we fix it?

* Are we tar­get­ing the right mar­ket? What other audi­ence could we con­sider? And what would we have to do to tap into that market?

* The last time I met with prospects, what did they say that was sur­pris­ing and could be fod­der for a change in my busi­ness plan?

* If we couldn’t sell to our tar­get mar­ket, how could we reshape the com­pany to be profitable?

* Is there a way to change our prod­uct or ser­vice rad­i­cally? What are the pos­si­ble ways to do that and what is the poten­tial of each alternative?

* Is there some­thing that could be done with respect to finance that could change our model for the bet­ter? What about our prod­uct mix? Pric­ing? Mar­ket­ing?  Sales channel?

* Would some­one ever want to buy us? Is there another direc­tion we could take that might increase our value?

* What could we do to stop a com­peti­tor from copy­ing our busi­ness model and cap­tur­ing mar­ket share? How could we stop that from happening?

 

Related Con­tent

South African imm­pre­neur piv­ots and makes $5 million.

From worm poop to inter­na­tional licens­ing — Terracycle’s suc­cess­ful $13 mil­lion evolution

 

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