Pivoting for business survival

One of the key skills in running a business is knowing when to change direction, to ‘pivot’ in the language of Silicon Valley.

Last week I had the privilege of interviewing Jonathan Barouch, founder of social analysis company Local Measure about the service’s pivot from Roamz.

Jonathan’s observations about pivoting businesses reflected my own experiences where adapting your products, systems and entire business model to market reality are essential to running a successful enterprise.

My second business, PC Rescue, was born out of a pivot and its ultimate demise was due to the failure of the company’s management, and my own, to move decisively when it was clear the business wasn’t working as planned.

The founding of PC Rescue happened out of a virtual assistant service my wife and I set up in 1995. We’d been victims of the curiously insular attitude of Australian managers towards employing expats so starting our own business seemed to be the right option.

So Office Magic was born.

Office Magic was a good business, but in talking to clients it became quickly apparent there was a bigger need for computer training and repairs. Most small businesses were struggling to find reliable techs to help them out with their IT services.

So Office Magic pivoted into PC Rescue.

For the next 10 years PC Rescue was a profitable business, the problem I had was the classic small business proprietor’s dilemma – I couldn’t get the right people.

The staff and contractors I had were good computer techs but I couldn’t find one with the skills or motivation to take over the day-to-day supervisor role so I could work on growing the business. I was stuck in the trap described by Michael Gerber in his book the e-myth.

Originally, PC Rescue’s business plan had been a five-year strategy – two years validating, two years executing and one year exiting. The exit I particularly liked was creating a computer support franchise operation.

This didn’t happen because the company lacked the human capital required; my wife and I lacked the management resources to move PC Rescue to the next stage.

When this became apparent we should have pivoted the business. We didn’t because I was too busy with the day-to-day stresses of keeping customers and staff happy.

Eventually we achieved an exit of sorts, 10 years later than intended and not in a satisfactory way. The business remained undercapitalised and the new partners turned out not to have the expertise or driver required to grow the operation.

Which make Jonathan’s pivot of Roamz so much more interesting: He listened to customers, looked at the direction of the industry and realised where the company’s strengths lay.

Rather than doubling down on a model which was struggling, he took the business in a new direction.

Having that flexibility is probably one of the greatest assets for small and start-up businesses as larger corporations struggle with executing massive changes.

As markets evolve and the rate of economic change accelerates, having the skills and mindset to execute successful pivots could be the difference between survival and failure for many big and small businesses.

Paul Wallbank‘s latest book, eBu$iness, Seven Steps to Online Success, shows how business can get online quickly and cost effectively using web 2.0, cloud computing, social media and e-commerce tools.