Is it Time for Your Company to Pivot?

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Twitter started as an audio podcasting service.

YouTube came online as a video dating service.

Nokia started as a paper mill.

Flickr was once a role playing game.

Nintendo once sold playing cards and instant rice.

And when Groupon launched, they organized political protests.

All of those ideas don’t even seem close to their current business models.

That’s because somewhere early in the launch of the business, they made a pivot.  From something that wasn’t working well to something that would scale.  They shifted to a different product, a better service or a better idea.

There is power in the pivot, not just for these companies, but for your organization.

When your idea isn’t working the way you thought it would, you might need to pivot.

A change of this magnitude a brave decision, but it’s more common than you may think.  The New York Times reports as many as 15-20% of companies go through a major pivot in search for sustainability.

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If you’re stuck, or you can’t scale, here are three types of pivots you could make.

  1.  A product pivot.

Wrigley – the famous chewing gum company and the reason it’s called Wrigley Field- didn’t start that way.  They were a soap company.

They offered free baking powder to boost soap purchases, and the baking powder was more popular than the soap.  So they shifted the business and made baking powder the main product.

Since the freebie strategy worked so well the first time, they wanted to include another freebie with the baking powder.

Gum.

That pivot proved to be valuable, and it made the company what it is today.

When they learned an auxiliary product was what the market wanted, they didn’t stubbornly hold on to the need to sell baking soda or soap.  They were willing to pivot to meet market needs because they found out their customer wanted something different.

How well does your product or serve match up to the true needs of your customers?

A lot of companies solve problems that only exist in the minds of the company’s founders.

A lot of startups set out to solve a problem people don’t really have.

A lot of businesses are pushing products nobody wants.

Sure, a great salesman can sell ice to an Eskimo, but an Eskimo doesn’t need ice.  Don’t be afraid to pivot you products to meet the needs of the people you’re trying to help.

  1.  A people pivot.

We started Church Fuel with a desire to serve church leaders and provide practical training for the church.  But after several months of shipping early products, we realized we needed to make a people pivot and niche down our audience even more.

During our initial planning, we got a lot of things right.  But once we started selling products and interacting with real customers, we realized a small change was in order.

We decided to create resources and products for Senior Pastors, not church leaders. And not just all senior pastors, but senior pastors of churches that were willing to grow.  That might seem small, but it’s really a big filter for us.

One of our first courses taught church leaders how to use content marketing to grow the church.  It was a really practical, top-quality product.  It still is.

But most senior pastors are not interested in that topic. They should be, but they are not.  It wasn’t the type of course they could easily understand with a baked in benefit.  We had to overcome a communication barrier just to describe it.

So we pivoted our focus and communication to creating resources FOR senior pastors.  Our next course was called Breaking 200.  The benefit to the senior pastor is baked right into the title.  And the launch was far more successful.  The quality of the course didn’t change, but the audience was more focused.

For most startups, going after the smallest possible segment is preferable than attempting to launch a product or service with mass appeal.  It’s easier to identify and reach a smaller segment.

The reason a small town, local pet store can survive even though they are located right next to the giant pet store chain is focus.  The local store specializes in snakes and reptiles, not dog food and cat food.

The reason a travel website can make it despite the competition is the travel website focus exclusively on helping people travel with their pets.

The riches are in the niches.

  1.  A price pivot.

The third type of pivot you can make in your business is price.

Just because you started at one price point or payment option doesn’t mean that’s the right place for you now.  Maybe the market has changed, you cost of goods has decreased or your systems allow you to scale.

It could be time to change your price.

But be careful.

You don’t want to price your product or service higher or lower as a careless reaction to a bad month.  Sure a flash sale or a fire sale can generate revenue, but you need to consider what it will do to your brand long term.  You need a careful pivot not a careless reaction.

And it’s likely your price pivot should be an increase not a decrease.  There will always be someone to sell it cheaper than you so competing on price alone probably isn’t smart.  Understanding a niche audience and tailoring your product to meet a very real need of that audience will allow you to charge a premium.

If your product or service meets a real need, would your customers be willing to pay more?  Should you offer payment plans or to make it more budget-friendly or should you keep one price point to keep it simple?  Should you add personalized services and create a top tier or should you remove options and sell an entry level service?  And where does price really rank on a customers top three decision points?

It’s tricky, but don’t be afraid to make a pivot.

These are just three of the pivots your business could make.  But you could really apply the pivot to any part of your business model.

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Design to Grow: How Coca-Cola Learned to Combine Scale and Agility [Book Notes]

Here are my notes from Design to Grow. 

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It’s not enough to be big.  At the peak, Blockbuster had about 9,000 retail stores across the United States.

Systems thinking is a discipline for seeing wholes.  A system is “a set of things – people, cells, molecules, or whatever – interconnected in such a way that they produce their own pattern of behavior over time.” – Donella Meadows

Two sports teams can have similar players, but the way the players behave and connect with one other creates the power.  Coca-Cola is actually a system of small companies.

For it’s first 70 years, the Coca-Cola Company had one brand, one product, one package size, and, for the most part, one price.

Design is not an esoteric discipline owned by an elite team at corporate headquarters, but an everyday responsibility that extends to every area of the company.

Everything you see is designed by somebody.  We’re all designers.

Design is about intentionally connecting things to solve problems.  Design is only good if it solves a problem.  Good design makes something easier to read, easier to understand, easier to use.  Good design makes a difficult task less complicated.

When you design the solution as a system, you can begin to solve many connected problems, across your business. Success comes from how the elements work with all the others.

To achieve scale, everything must be simplified and standardized to integrate with the least amount of friction.

Great design means getting the details right.  Simplify to the fewest number of elements.

You must understand the critical details that make your product unique – the specific things that people love – and then codify them so that they remain fixed over time and across geographies.

Embrace intentional limits.  18-minute TED talks and 140 characters don’t inhibit communication.  They enhance it.

Nobody really cares about innovation.  What people really care about is what innovation can generate – growth.  Innovation that doesn’t lead to growth is a distraction.

Coca-Cola is actually the world’s largest juice company.  1 in 6 oranges grown globally is used by the company.

Think big but start small.  Look for someone with a problem and work with them to solve it.  In the beginning, it’s the only way to get traction.

Startups are not smaller versions of big companies.  They aren’t even small versions of small companies.  A startup is a temporary organization designed to search for a repeatable and scalable business model.

Legos are more than a toy for kids.  They are a modular system.

Less, but better.

It’s too easy to fall in love with a solution, get it funded and then search for proof it was a good idea.

Search for shark bite problems, not mosquito bite problems.

Don’t be afraid to pivot.  Without a pivot, Twitter might still trying to make audio podcasting work.  YouTube might still be a video dating site.  And Groupon might still be organizing political protests.

Hack, release, repeat.

Global juice identity system had three parts:

  1.  Brand identity elements (fixed and flexible)
  2.  Information architecture (the logic)
  3.  Standards (the rules)

Open systems are better because of rules.  You can’t change the font on Wikipedia.

It’s easier than ever to start a business, but harder than ever to scale a business.  The next wave of business will be scale-ups, not startups.

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The Medium is the Message

“Everything is changing: you, your family, your education, your neighborhood, your job, your government, your relation to others. And they’re changing dramatically.  All media work us over completely. They are so pervasive in their personal, political, economic, aesthetic, psychological, moral, ethical and social consequences that they leave no part of us untouched, unaffected, unaltered.  The medium is the message.”

– Marshall McLuhan, 1967.

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Uncommon Service: How to Win by Putting Customers are the Core of Your Business [Book Notes]

Here are my notes from Uncommon Service, by Frances Frei and Anne Morriss.  41082h8uPbL

Uncommon service is not born from attitude and effort, but from design choices made in the very blueprint of a business model.

You can’t be good at everything. To deliver great service on the dimensions your customers value most, you must underperform on dimensions they value less.  Where can you afford to be bad?

Continued stories about the customer service hero is actually a red flag.  Someone who has to save the day, while heroic, is a sign of a systems problem.

Truth #1: You can’t be good at everything.

Commerce Bank was able to meet customer needs by being open at non-traditional banking hours.  They paid for it by paying the lowest interest rates and being unapologetic about it.  Bad was in the service of great.

Walmart executives are not shocked to learn their stores are harshly lit environments with sporadic sales support.  Their choices fund their excellence.  Honor constraints. Underperform strategically.

Go ask your customers what makes them choose you and what makes them choose someone else.  Don’t guess; ask them.

Truth #2: Someone has to pay for it.

  1.  Sometimes, customers are happy to pay more.  Hotel Cipriani charges 50% more than competitors and customers willingly pay it.  But US Airways, who successfully started charging for checked baggage, discovered it overstepped when it started charging for bottled water.
  1.  Lower costs can improve service. Progressive Insurance shows up at accident scenes and writes checks on the spot.  But in reality, this greatly reduces insurance fraud.
  1.  Improved service can lower costs. Amazon essentially wins on ease of use and makes it’s customers comfortable buying everything on the site.
  1. You can reduce costs by having customers serve themselves.  The Salad Bar, self-check out, airline kiosk check in.

Truth #3: It’s not your employees’ fault.

You can’t lead with the team you wish you had.

The average employee is drowning in complexity.  We are designing jobs for super-humans and it turns out people are flesh and blood.

Employee training should quickly weed out people.  Don’t spend money on people who are not deeply energized by your mission and vision.

Culture often trumps salary.  There’s a correlation of less than 11 percent between the quality of the service and the size of the tip. (Cornell University Study)

Truth #4: You must manage customers.  

The Soup Nazi got it wrong (no soup for you!), but Starbucks got it right.  Ordering a drink at Starbucks can be confusing, but their staff is trained to repeat back orders the correct way (and others in line overhear)

Zipper works hard to remind you that you’re joining a community with clear obligations to other members of the community who are just like you.

Say no to grandma.  The founder of Southwest Airlines once sent a lengthly response to a customer complaint about how difficult it was for grandma to travel since the airline wouldn’t transfer her bags to another airline.  The point-by-point response defended the company’s actions.

Listen to your customers strategically.  Customize where you deliver real value and get paid for it without breaking havoc on your operations – but not where you make a few customers happy at the expense of large swaths of employees, stock-holders, and other customers.

Customers typically don’t understand the implication of their request.  It’s your obligation to put their demands in context, to evaluate the trade-offs of expanding your offering. 

Culture is Key

IDEO produces creative content, but their culture facilitates it.  No dress code.  Employee-created work space.  A salvage-yard style display to foster creative thinking.  Brainstorming meetings with creative structure.  Praising failure.

At Zappos, 75% of it’s business comes from repeat customers, despite the fact that its prices are not the lowest.  This is directly relate to company culture, modeled by the CEO.   In 2005, when the company’s call center moved from the Bay Area to Las Vegas, 80% of it’s California employees relocated – for a $13-an-hour job.

Publix promises to “never knowingly disappoint you.”  Those words are put everywhere and its part of the supermarket’s culture.

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Who Do You Use for That?

I love helping leaders.

Sometimes, that help is in depth and spans months.  This is my favorite way to work with clients because we can get so much done. But sometimes, help comes in the form of a quick answer to a quick question.

One of the quick questions I get from leaders around the world is “Who do you use for ________?”  Every time I get this question, I’m reminded that a personal recommendation from a trusted source is more important than any kind of marketing.

So in the spirit of helpfulness, here’s my current list of who I use for various services.

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Email Marketing: At Church Fuel, we use InfusionSoft to handle all of our email marketing.  It also handles our order forms, shopping cart and several other vital services.  On my personal site, I still use MailChimp.

Landing Pages: We use LeadPages to generate sign up pages for giveaways, webinars, and eBooks. I’ve been really happy with them.

Web Hosting: We recently switched the Church Fuel site to WP Engine and that’s been a great decision.  On my personal sites, I still use BlueHost.

Website Management: I absolutely love WP Curve.  At least twice a week, I sent them an email with something to update or fix on the site, and they do it within a few hours.  It’s like having a website guy for a fraction of the cost.

Membership Site: We deliver our courses and resources through a WordPress plugin called WishList Member.  I like that it works with WordPress which means I can

Design:  For websites, there’s nobody better than FoType.  I’ve worked with Chad for nearly a decade now.  For graphic design, I often use Canvas Agency.  I also use tasks at 99 Designs to make quick changes and get fast projects done.  I absolutely love that service.

Webinars: We’ve been really happy using Google Hangouts, but we recently upgraded to Webinar Jam.  They use Google hangouts but add a bunch of features on the top.

Recorded Webinars: I use ScreenFlow for Mac to pre-record a lot of teaching content or webinars.  I’ve been very happy with this tool throughout the years.

eBook Creation: Believe it or not, I create a lot of free eBooks in Keynote.  Even though it’s presentation software, it’s really easy to use and exporting to a PDF is a snap.  For more detailed designs, I use Adobe InDesign.

Merchant Processing: We actually have two credit card processors in case something happens with one.  On my personal site, I use Stripe.

File Storage: I use Dropbox to share files with the team.  In fact, ALL of my files are stored on Dropbox so I can access them anywhere.  But when we need to share a link with customers to access something they purchased, we put those files on Amazon S3.  If we’re giving people links to download videos, we actually just use Vimeo (we have a PRO account).

Accounting: Quickbooks is still the standard and that’s what we use.

Communication:  Our team is remote, so to stay connected we use Basecamp, work chat in Evernote (also keep feedback and ideas in a shared folder), Google Hangouts, and Dropbox.

If I left anything out, leave a comment and I’ll let you know what we do.  And if you’ve got a good recommendation, be sure to share.

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