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The Innovation Pivot
Our First Pivot is this Rebrand
Attention Readers. “The Innovator’s Cookbook” is making a product pivot and rebranding to “The Innovation Pivot.“
Why The Innovation Pivot
Innovation does not simply appear (unlike wild pokemon). It is a deliberate and intentional action, not a naturally occurring phenomenon. As the world around us changes, humans have had to change as well, developing language, villages, tools, governance… all innovative technologies that have seen our civilization grow by orders of magnitude in size, complexity and creative output. These “Innovation Pivots” are the key to how we adapt, invent, and thrive.
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Similarly, this blog will now take a more intentional focus on these Pivots. We aim to do more than pontificate on the concept of Innovation, and help our readers act in the real world by creating Innovation Pivots that change their companies, their lives, and the world.
In this blog, we will teach readers how to recognize when an Innovation Pivot is needed. We will explore how to ideate and build strategies. We will investigate various related aspects, including user behavior, corporate culture, business models, and even personal habits. We will utilize exercises that help hone our skills and develop the innovator’s mindset. We will do all this, because the successful execution of an Innovation Pivot, while difficult, can transform people, companies, and industries and ultimately drive our civilization forward.
Success Stories: you can do it too
Here are some inspirational stories of companies that had at least one critical innovation pivot:
Nintendo: Originally a playing card company, Nintendo pivoted to video games and consoles, leading to iconic products like the Nintendo Entertainment System (NES) and popular franchises like Super Mario and Pokémon. Yahoo!
Wrigley's: Originally a soap and baking powder company, Wrigley's pivoted to selling chewing gum as a promotional item with their products. Eventually, chewing gum became their primary focus, and they became one of the leading gum manufacturers in the world.
Netflix: Initially a DVD rental service, Netflix pivoted to online streaming, revolutionizing the way people consume entertainment. Today, it produces original content and has invented phrases such as “binge-watching” and “Netflix and Chill.”
Slack: Slack started as a gaming company called Tiny Speck but shifted its focus to team communication software. Its innovative approach to workplace communication made it a widely used platform for businesses and teams. I believe the next generation will attribute this company as the originator of the term “to slack off”.
Nokia: Originally a paper mill and then a rubber company, Nokia pivoted to the telecommunications industry, becoming one of the leading mobile phone manufacturers in the world. However, with the decline of traditional mobile phones, Nokia pivoted again to focus on network infrastructure and technology services.
When to Pivot
Pivoting is scary. It requires taking much of what you know and what you have built and throwing it out the window. Your instinctual brain will try to reject change, and so if you suspect you need to pivot, you probably do. Large companies in particular can be especially resistant to change. Here are some warning signs:
Stagnating Growth: If your company's growth has plateaued or slowed significantly despite your best efforts, it may be a sign that your current business model or strategy is no longer effective.
Changing Market Dynamics: External factors like shifts in customer preferences, technological advancements, or changes in the competitive landscape can make your current business model less viable.
Customer Feedback: Pay attention to customer feedback and complaints. If you consistently receive feedback about your product or service not meeting customer needs or expectations, it's a sign that changes may be necessary.
Financial Challenges: Continuous financial struggles, such as declining revenues, shrinking profit margins, or an inability to secure funding, can signal that your current business model is unsustainable.
Difficulty in Scaling: If you encounter significant challenges when trying to scale your business, such as operational inefficiencies or an inability to reach new markets, a pivot may be needed to address these issues.
Competitive Pressures: Intense competition or the emergence of disruptive competitors can threaten your business's viability. Consider pivoting to differentiate your offering or enter new markets.
Technology Shifts: If new technologies are rendering your current products or services obsolete, it's crucial to adapt or pivot to stay relevant. Yes, AI falls into this category.
Regulatory Changes: Changes in regulations or compliance requirements can impact your business model significantly. Pivoting may be necessary to align with new legal standards.
Startups have a few extra things to watch out for:
Inability to Raise Capital: If you're struggling to secure funding from investors or lenders because they don't see the potential in your current strategy, it might be time to pivot to a more attractive proposition (like AI is all the rage).
Market Validation: Sometimes, market experiments, pilot projects, or testing new strategies can provide validation that a pivot is necessary.
Lack of Product-Market Fit: If your product or service doesn't seem to resonate with your target audience or isn't gaining traction in the market, it may be time to reassess your product-market fit.
What are my Other Options?
Yes, we know something’s wrong, but how do we fix it? Innovation Pivots aren’t the only way to move forward. Here are some options:
Cost Reduction: Evaluate operational costs and find ways to cut unnecessary expenses without compromising the quality of products or services. This might involve renegotiating contracts, optimizing supply chains, or reducing non-essential expenditures. And yes, this also means layoffs.
Market Retrenchment: Focus on core products or services and withdraw from less profitable or non-strategic markets. This can help the company concentrate its resources where they are most needed and profitable.
Talent Management: Assess the skills and capabilities of the existing workforce. Training and re-skilling employees can enhance productivity and adaptability. Additionally, attracting new talent with relevant expertise can bring fresh perspectives to the organization (anti-layoffs if you will).
Financial Restructuring: Explore options such as refinancing, debt restructuring, or seeking new investment. Proper financial management can alleviate immediate financial pressures and provide resources for strategic initiatives.
Operational Efficiency: Streamline internal processes and workflows to improve efficiency. Automation and technology adoption can reduce errors, save time, and cut operational costs.
Rebranding and Marketing: Evaluate the company's branding and marketing strategies. A refreshed brand image and targeted marketing campaigns can reignite interest in the company's offerings.
Exit Strategies: In extreme cases, consider options like mergers, acquisitions, or divestitures. Selling non-core assets or business divisions can generate capital and allow the company to focus on its core strengths. Yes, this does feel like giving up, but that may be the best choice for you personally.
When an Innovation Pivot is Best
The above strategies can often work when things are just a little but out of whack. But sometimes small tweaks won’t be enough. Or maybe it’ll be just enough to get by. But if “getting by” doesn’t really run in your vocabulary and you want to thrive and shoot for the moon, then you need an innovation pivot. You can also use one of the above strategies to buy you time and resources to invest in an innovation pivot.
An Innovation Pivot is a combination of innovation AND a business plan. You take a proven business strategy for pivoting and explore how innovation can make that transition faster and more effective. Here are some business strategies that tech innovation could catalyze:
Revenue Diversification: Explore new revenue streams or expand existing ones. This could involve entering new markets, developing new products or services, or creating partnerships with complementary businesses. To do this successfully, think of your core IP and technical strengths and finding adjacent markets where you can leverage those strengths.
Digital Transformation: This is largely a way for traditionally non-tech companies to reduce their operating costs by implementing digital technologies. However, it can also be flipped around and act as a way for tech-forward companies to enter traditional industries at much lower costs, a true innovation.
Strategic Partnerships and Alliances: Form alliances with other companies to share resources, expand market reach, or collaborate on research and development. Think about how technology you provide can have outsized value to a collaborator or vice versa.
Innovation and R&D: Invest in research and development to create innovative products or services that can give the company a competitive edge or be sold on its own. This makes sense if you have a strong technical core in the company. Expanding these efforts could yield high dividends.
Customer Focus: Improve customer satisfaction and loyalty through better customer service, personalized offerings, and addressing customer feedback. Satisfied customers are more likely to remain loyal and recommend the company to others, and the advent of GenAI offers low-cost ways to vastly improve the customer experience.
What You’ll Need to Succeed
Innovation Pivots are Hard. It’s a lot more complicated than you’ll find in a single blog post, or even a series of posts (though if you subscribe, more posts will come). To execute an innovation pivot, here are a few things you will need:
Leadership Advocacy: It is not enough to have leadership “bought in”. Someone in the C-suite must be an active advocate and willing to drive the process. A large pivot like this will meet with constant resistance from across the company.
Cross-functional Participation: Crafting and executing an innovation pivot will require the knowledge and expertise of everyone: operations, engineering, design, product, customer support, marketing, sales, and legal.
State of the Union: You’ll need to make an honest assessment of your company’s physical, intellectual, and human assets and strengths as well as your market, brand, and customer assets. You need to do a retrospective on where your product and company has succeeded and where you have failed. Use this to create a list of valuable insights all stakeholders agree to.
Innovation Lead: You need an experienced and empathic facilitator to drive the brainstorming and strategy sessions. Though it helps if this person is creative and well-versed in the industry, she is not responsible for coming up with the solutions, just helping your cross-functional experts develop insights. It may make sense to bring on a consultant (such as Product Maestro) for this role.
Time and Money: Pivots aren’t instant. You need to start working on this before you run out of money. This will require moving resources away from other initiatives, and thus requires long-term executive support. Many companies give up before their investment bears fruit. View this as a startup venture (especially if you ARE a startup) and have open and transparent expectations on how much time and money should be invested before certain milestones are reached.
Grit: Fully expect that more pivots will be required along this journey. Though the final result may look like one presciently clever pivot, in reality it’s the result of many small pivots along the way. Keep adjusting, keep inventing, and dance your way to success.
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