No battle plan survives contact with the enemy.
~ Helmuth von Moltke
Innovation without profit is nothing.
~ Jeffrey Immelt
One of the areas I have seen executives struggle with is the decision to pivot or persevere on a product or business idea. I can totally understand this and even struggle with it myself at times. Many leaders have a vision of what they are trying to build and feel a deep responsibility to achieve it at any cost. The challenge with this is that the leaders sometimes forget a key principle of innovation – that if the innovation does not add value then it isn’t real innovation in terms of generating business results. The product or business may be innovative at some level, such as how to use the fur on a bee’s wing to strengthen a fiber, but if you can’t economically bring that innovation to market then it really wasn’t an innovation that will contribute to future results.
An executive’s job is to generate sustainable results. Executives do this by consistently creating, delivering and capturing value. They measure their success by how well they achieve the expected results. A decision in a for-profit business needs to be based on how well it contributes to achieving the expected results.
So how does an executive know when to pivot or persevere on a product or business idea? I recommend the model taught by Eric Ries, the author of The Lean Startup. A core component in Mr. Ries’ lean startup methodology is the build-measure-learn feedback loop. Mr. Ries refers to this as “validated learning – a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty.”
Simply put, you develop what is called a Minimum Viable Product (MVP) and have frequent iterations where you test the product in the market and measure the response. As you do this, you will gain valuable feedback as to the viability of your plans and possibly even learn of opportunities that you didn’t even know existed.
The key is not to be so set on the specifics of your product that you will not be open minded for other opportunities. The objective is to deliver something of value to your market that fulfills your original purpose. If you remember the “why” of what you are doing you won’t be so constrained by the “what.”
A good example of a company that successfully pivoted is YouTube, which began as a video dating site. When that idea didn’t gain traction the founders scrapped the idea and just focused on the video sharing component of the business. In July 2013, Barclays valued YouTube at $21.3 billion. Not a bad pivot.
Twitter, which recently went public with a valuation that reached $24 billion, is another example. Twitter first was a podcasting startup called Odeo that was made irrelevant after the release of iTunes. Seeing the writing on the wall, Twitter began as a side project by the company originating from “hackathons” to identify viable new opportunities. The rest is $24 billion worth of history.
I encourage you to step back and consider the decisions you are making related to your business. How can you increase the testing of their viability? Is there a way to get more information so you can make better decisions? If you increase your feedback loops, you will accelerate your ability to respond to the market and capture the value you are expected to deliver.
Choose to deliver real innovation. Choose greatness.