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    3 Signs It’s Time to Pivot Your Business Model

    Posted By David Nour on Dec 19, 2016 3:02:00 PM

    Current economic projections indicate that your company’s growth curve in 2017 is under threat. No company will outperform the sluggish 1-2% growth predicted without probing whether their business model is still effect. If any part of your business is not hitting on all cylinders, you will need to pivot your business model in the year ahead.


    How do you know you need to pivot? Watch for any of these three signs.

    1. You are confusing the market.

    Are current or potential buyers unaware of ALL that you do? Or maybe they vaguely know your product or service line, but they are confused as to what you do WELL: Market confusion is common if your product or service takes some education to overcome that learning curve. You face an uphill battle if you must constantly try to educate in order to differentiate your offering—especially if you sell in different verticals.

    It is not uncommon for a company to grow into this problem without ever realizing the business model has crossed a dangerous threshold. Case in point—a privately-held company that recently invited me to join its board was started by an engineering type who uncovered a market need and came up with a very clever product for it. Then, like 3M’s legendary invention of the Post-It Note®, the company discovered that their revolutionary product had other applications. A holding company purchased the firm from its technically-minded founder, then figured out that offering multiple solutions was confusing the market. I am intrigued to see whether the company’s leaders are willing to pivot the business model.

    If anything has changed about your product/service line or target market segments, reevaluate your entire strategy. It may be time to pivot to a new go-to-market strategy. 

    Adaptive Innovation Learn More

    1. You’re trying to swim upstream.

    You may be trying to go after the wrong opportunity, or simply not keeping enough earnings from the sales you generate using the current business model. Some models simply require more effort and investment—maybe more than your company can currently support.

    For example, a retail business model requires trying to reach, educate, and persuade end-consumers. Building a consumer brand is very expensive. Selling B2C means high transaction costs, low price tags, and the need for a high volume of low-value sales. Might it be worth it after you reach the top of the mountain? Just ask Sam Walton or Howard Schultz. But first, you have to assess your company’s ability to climb. If you are likely to run out of oxygen before you reach the summit, better take another path. Pivot!

    Another example comes from a painful lesson I learned in the last Internet boom—you cannot buy for $2, sell for $1, and make it up on volume. Selling below cost is another way of swimming upstream. If the sum of your efforts, resources, costs, outweigh the profit potential of your business model, you are never going to get anywhere. Unfortunately too many transactional, short-sighted minds focus on growth at any cost. You have to pivot to a focus on PROFITABLE growth.

    1. You don’t have the right talent in the right roles.

    Jim Collins tells us that “leaders of companies that go from good to great start not with ‘where’ but with ‘who’.” Companies will not thrive in 2017 with the wrong people in the wrong seats on the bus.

    The need to focus on outcomes, not inputs, comes up frequently in my speaking and consulting work. Your success depends on building culture of accountability for outcomes. The definition of accountability is the obligation of an individual to an organization to account for his or her activities, accept responsibility for them, and disclose the results in a transparent manner. Accountability is fundamentally about being responsible for an outcome, not just the input of a set of tasks, or accepting blame when something goes wrong. In 2017, the leaders who outperform the average will be those who have built a team that accepts accountability, through clear expectations, capability, metrics, feedback, and consequences.

    All individuals “on the bus” need to be capable of what is asked of them. I’m reminded of when I was about 5 years old and one of my uncles threw me in the deep end of the pool. He commanded me to swim—but I didn’t know how! I’m perplexed by how often we put people in charge of key projects, initiatives, outcomes, without first determining if they “know how to swim.” In an effort not to disappoint, they will paddle, they’ll kick—they may even stay afloat for a while. But sooner or later they are going to sink like a stone, through no fault of their own. Your business will pay the cost in lost time, poor morale, and more.

    Assess your teams—do the individuals have the capability required for their roles? Are you adequately providing the skills, knowledge, resources, runway that comprise that capability? If not—it’s time to pivot toward a more effective talent strategy.

    If you are seeing upticks in any of these three areas—market confusion, swimming upstream, or misalignment of talent to role—you are looking at an invitation to pivot. If you see all three signs, prepare to pivot without delay! Better to pivot now than later. One day you’ll turn around and the pivot option won’t be there. Most companies take far too long to clearly see the need to pivot.

    The pivot has nothing to do with gross sales this week, this month, this quarter, and everything to do with retained earnings at the end of the period. Success in 2017 is about what you keep, which directly points to the profitability of the business model of any team, division, line of business, or enterprise. If your market environment, your stakeholder ecosystem, or your P&L responsibility is screaming, “something needs to change”—start planning your pivot!

    Nour Takeaways

    1. To accelerate growth under sluggish economic conditions, look for the three signs that you need to pivot.
    1. Pivot if you are confusing the market, trying to swim upstream, o you don’t have the right talent in the right roles.
    1. The pivot is about a profitable bottom line, not simply increasing gross sales.


    433-614744-edited.jpgDavid Nour has spent the past two decades advising executives on building business relationships. In the process, he has developed Relationship Economics® - the art and science of becoming more intentional and strategic in the relationships one chooses to invest in. In a global economy that is becoming increasingly disconnected, The Nour Group, Inc. has worked with clients such as Hilton, ThyssenKrupp, Disney, KPMG and over 100 other marquee organizations. David Nour is a strategic relationship keynote speaker, consultant, and advisor that helps these companies drive profitable growth through unique returns on their strategic relationships. Nour has pioneered the phenomenon that relationships are the greatest off balance sheet asset any organizations possess, large and small, public and private. He is the author of nine books translated into eight languages, including the best-selling Relationship Economics - Revised (Wiley), ConnectAbility (McGraw-Hill), The Entrepreneur’s Guide to Raising Capital (Praeger), Return on Impact (ASAE), and the 2017 forthcoming CO-CREATE (St. Martin’s Press), an essential guide showing C-level leaders how to optimize relationships, create market gravity, and greatly increase revenue. Contact David Nour to learn more, subscribe to the Blog, sign up for the Rendezvous Newsletter or request his speaking schedule availability for your organization’s next event.

    Topics: innovative_ideas

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