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Serious question — how many times is it okay to pivot from one line of work or one business to another?
And as a part B to that, how do you know if the pivot is strategic in the sense that you mean to do it and you see some value in it or is it flailing in the water because we don’t know what else to do.
There’re some famous examples out there of companies that morphed over the years as their customers changed as the environment changed the environment that they did business in but also the environment of the world in general as economics changed and as needs changed.
So, a great example is of course our very own, many people’s favorite, Apple computer.
First, people used to call it Apple Computer and now they just call it Apple.
So that tells you something.
But everyone has heard the story that Apple computer, the computer that you can have at home and that was considered a breakthrough.
The idea that you could have a computing device, not very high power, not very multifaceted compared to what we can do today, but it was a light-years step from those giant machines that needed the equivalent of warehouses to house them.
And so it was a revolutionary step, years ago for a regular person who was not necessarily well-off but comfortable enough that you could own a house in a car, that you could also own your own computer and do a variety of interesting tasks for your work or your personal life at home.
But if you fast forward to today, what is Apple famous for by the end of it?
It’s not the devices anymore, is it?
It’s the ecosystem.
It is the connectivity of a seamless experience of information that we both receive, store and transmit and the ability to do anything anywhere on any of our devices, many of which might be owned by this or produced by the same company in this example Apple.
So, you want Apple would love it if we had an Apple, let’s say desktop for travel and Apple laptop or tablet, the iPad and iPhone and possibly these days a watch, right?
Then of course there’s the additional devices like headphones, VR devices and so much more.
But the idea being that it was not so much the individual devices that made it worth it to be an Apple customer. It was the way they worked together to give you a composite experience, be it in terms of your entertainment, your videos, your music, movies, your documents, your files, pictures, anything else you can think of that’s relevant to electronics.
It happened almost overnight, very quietly, that Apple stopped having computers as its flagship revenue winner and until recently anyway, two thirds of its income came from iPhone sales.
It’s gotten so out of whack that you can take an iPhone quarterly revenue report just one product and its various models, and many people use that in the same breath as one might use a CPI inflation report.
It might sound silly, but a lot of people look at that because they’re looking at things like the ability of the consumer to purchase, the ability of the producer to deliver, the supply chain, quality, and consumer sentiment.
It was the same way as people used to have the Big Mac index and so what McDonald’s burger cost in the US versus another country gave you a rough idea of how expensive it was to live and eat and work in various countries.
So that’s a lot of background and context to come back to the point of pivoting.
Why did Apple pivot as much as it has?
Apple may have realized that the biggest shift is the movement from the consumer’s desire for great products to a desire for a great experience overall… a user experience.
The biggest pivot is beyond just the iPhone and beyond just the individual devices, the payment system, the ability to pay for anything without inputting your credit card or clicking a variety of sequences of buttons and it’s just done.
Enabled consumer purchasing, that is one of the most phenomenal add-ons, not just of Apple but of the other competing companies, all put together, it was a strategic pivot that built upon all the things that came before it.
So then how do you know that the kind of pivot that you are deploying is worthwhile or not?
To be honest, sometimes you don’t know.
What you can hope for as a past client of mine once found out is that enough connective tissue exists between the demographics of your existing products and services and the demographic of your planned product and services that the two complement each other.
Say for example, supposing I was a fast-food restaurant and I’m trying to improve my revenue numbers. What if I brought the food to the customer?
Think about it. Many a time you’ll go to a grocery store, and you’ll see your favorite fast-food companies have product lines which you can buy off the shelf.
Some of you might enjoy the chicken at Chick-fil-A. Whether or not you do is up to you, but the point is you can buy their special sauce the same way that you would buy ketchup at a grocery store.
But what about a true pivot like a complete change of what somebody used to do and what somebody does now?
A great example of that might be Netflix.
Think about the vast difference in supply chain that is needed for a company that mails out DVDs versus a company that stores thousands if not hundreds of thousands, of titles for streaming.
So although the end product, the movie or the TV show is still the same, they are vastly different in one being a physical product that has to be stored and packaged in transported on trucks or through the mail system versus an electronically delivered piece of information; data centers need to be built so that the movies can be stored and relayed, and then of course algorithms have to be built so that better choices can be given to people.
There’s so much more to it than just mailing DVDs.
So, if you put it all back together, your pivot works if your pre-pivot customer is close enough to the customer that you plan to have, you might be on to something and it’s worth a shot.
The more different the two customers are the more of a risk you’re taking because now you’re stepping into a realm where people don’t know you, people have other preferred providers perhaps.
Now, they might be disgruntled with them and that gives you an opportunity, but still, it’s tricky.
So, to put it all together, when is a pivot strategic and when is it a risk?
It’s strategic when it still relies on some core competency that you have.
Maybe it’s a new delivery system that you’re pivoting to, maybe there’s a slight difference between the customer you have and the customer you want to have.
That is as opposed to a vastly different customer who never used your product before, maybe heard of you but was not interested.
But now that you are in the space that they were interested in, suddenly you have their attention.
So, because there was a time, that there was no such thing as an iPhone and there were these die-hard blackberry customers who would live and die by that particular device and they would never give it up or change for anything.
And lo and behold, here it comes, the iPhone.
People had complaints the first couple of times, but Apple believed enough in the connective tissue of the prior customer and the future customer that they went for it nonetheless.
So even the people that weren’t with them in the beginning, the blackberry people for example, at some point they had no choice because they just couldn’t get the same value from their old blackberry that they could from the iPhone.
That’s not to say that the iPhone is necessarily a better product, but it gives certain value that those people were forced to reckon with and therefore the rest of it, the numbers speak for themselves.
Ultimately, the Apple team understands something most companies don’t — you can pivot from your product, but NEVER from your brand, your customer.
You meet the customer where they are and show up with the same great experience they know you for, adapting to changing times and technology, but never forgetting what people love about you.
Hey, that’s advice we could use in life too, I guess.
Change with the times, just never forget who you are.