The Silicon Valley Strategic “Pivot”

The first time I heard the word “pivot” in the context of business strategy was about nine months ago.  As a student of language, my ears perked up when I heard it.  I remember thinking, “pivot … interesting, haven’t heard that one before, … strong buzzword potential, … nice metaphor, with one foot stationary and the other moving.”

Silicon Valley being Silicon Valley, with more fashion around language than clothing, today you hear it all the time.  Some sample usage:

  • “Yeah, dude, we had to pivot after our A-round, but after that we really got traction.”
  • “I think you know like, we’re running on our 401k round, just trying to figure out the core product, then we’ll expose it to the market, through a pre-alpha and pivot from there.”
  • “Like, you know, every startup needs to  pivot like two or three times before locking-in on its final strategy.  That’s the nature of innovation.”

Extending the metaphor, one wonders in the last example if your board can call the CEO for strategic traveling.  

Despite my general buzzword aversion, I like the pivot metaphor precisely because one foot is stationary.  A complete strategy change is therefore not a pivot but a traveling violation because you entirely abandon the old strategy as opposed to changing direction in a way that leaves one foot in the old strategy and one foot in the new.

I also like the pivot metaphor because I agree with the idea that from inception to $100M that a company will need to pivot and probably a few times.  (Think pivoting multiple times in a game, but not on one ball.)  That truly is the nature of innovation and Silicon Valley companies do it all the time.

The two interesting questions then become:

  • How do you know if you’re traveling vs. pivoting?
  • How you know if the pivot worked?

I answer the first question by evaluating the degree of continuity between the old and the new strategy.  I’d evaluate the second question by the revenue and margin contribution of the old strategy vs. the new one.  If the old strategy is driving all the revenue, then you may have pivoted, but it’s not working.  If the new strategy is driving the lion’s share of revenue and margin, then — and only then — have you done a successful pivot.

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6 responses to “The Silicon Valley Strategic “Pivot”

  1. This reminds me of the Dilbert cartoon: “The sound of paradigm shifting without a clutch.”

    Even when shifting radically, you still need one foot down to the floor.

  2. You really avoided hearing the word “pivot” as a business strategy buzzword until 9 months ago?! I love the counter-metaphor of a traveling violation. It takes this discussion to the next level — and, at the end of the day, we’re just trying to create value for our paradigm-shifting solutions. For America!

    No, seriously, I think it’s a great comeback to anyone who uses “pivoting” as a euphemism for a complete restart.

    • Thanks, yes, somehow I missed the buzzword for it seems quite some time. Perhaps it started in bigger companies and percolated down, dunno? The first time I heard it was from a senior Microsoft executive.

  3. I too dislike canned responses but the fact is that words whose meanings resonate with people become ‘buzz’ words because they help communicate something perhaps complex in nice tidy little package.

    When ‘buzz’ words start replacing active, critical thinking then there are problems … we see it all the time in technology, where developers espouse agility (and are not), architectures (RESTful but poor URI construction) and algorithmic principles( MAP REDUCE but never actually use).

    At worst, ‘buzz’ words are used by people to try and convince others of shared knowledge when there actually isn’t … of which many job recruiters seem to be masters of (apologies to those good recruiters out there!). Getting into someone’s confidence through use of common terminology doesn’t last very long in some domains (like programming) but I suspect that in the more commercial world you can travel quite far by just slinging around lingo.

    David this interesting post confirms once again that you have active pinging engaged and see through the ‘buzz’ with critical analysis and find the value in the term used … can’t wait to see what you do next in the commercial world!

  4. Might have to give a nod to Joe Jennings, a Regis McKenna disciple, who in the 1990s talked often of pivoting. It was part of Joe’s signature vocabulary and, most important, part of his ethic for calling plays.

  5. Pingback: Thoughts on the Splunk IPO and S-1 | Kellblog

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