Episode 21: Pivoting
What would you do if you woke up to a newspaper headline calling you the Merchant of Death? Would you re-think the course you were on and pivot to a new path? In this episode, Glenn relates the story of a person who did just that – a person whose pivot has inspired countless innovators and their ideas. But a pivot does not always work out and is not an easy call for an entrepreneur to make. Listen in as Doug and Glenn talk about some of the reasons to pivot and some of the reasons it can be so hard to do.
Transcript
Glenn Suart 0:00
And suddenly, you’ve got a whole infrastructure and a business that was going one way, now you’ve got to come up with a totally different solution for your business and you got no time to do it and probably no money.
Doug Ross 0:22
Welcome to Conversations on Startups, a podcast brought to you by Douglas Ross, author of the book, Spark Click Go: How to Bring Your Creative Business Idea to Life, and Glenn Suart, of Today’s Great Idea, a radio series featuring over 300 origin stories of businesses, brands and inventions that have changed the culture. Welcome to today’s conversation.
Glenn Suart 0:45
So today, I think Doug, we decided we were going to focus on pivoting, what is pivoting in your mind?
Doug Ross 0:52
I would define it as a shift in direction of your company from the original direction you were on, or a correction of some kind, but a significant one.
Glenn Suart 1:05
I think that’s a really good description. And I’ve got a terrific story to tell you about somebody who made a terrific pivot. So Al was stunned because he opened the newspaper in the morning, and he was stunned for two reasons: One, because he read his own obituary in the newspaper.
Doug Ross 1:26
Oh, my God! I hope it was good.
Glenn Suart 1:28
No, that was the problem. The paper called him the Merchant of Death.
Doug Ross 1:35
Oh, my God. This is terrible.
Glenn Suart 1:36
It’s a terrible morning, you know, for sure. And nobody wants to be remembered that way, of course. So, he’d grown up trying to help people and he liked to invent things. And he was good at it. He had, like, 350 patents to his name. And having a newspaper call him the Merchant of Death was because the one thing he had done, which made him both rich and famous, was inventing dynamite. So he invented it thinking this would be a great thing that would stop wars, actually. He didn’t think it would be used in wars. But he was so stunned by this that he decided to pivot, right there – devote himself and his fortune to changing the world for the better in a meaningful way, and that’s what he did. And today, Al’s legacy is celebrated every December. In fact, his name has become synonymous for doing something exceptional for the benefit of mankind. Any ideas?
Doug Ross 1:37
Al…Truism, maybe?
Glenn Suart 1:38
No, it’s Alfred Nobel, and the Nobel Prize, named after… [ah, of course]… so, you know, he had an explosive idea. I had to throw that in there, sorry.
Doug Ross 1:48
Love it. Boom.
Glenn Suart 1:49
But you know, this is exactly the story of pivoting. You’re going down this one way, you think you’re doing fantastic and you realize that maybe your business would have – or idea – wasn’t what you thought it was. And suddenly you’re smacked in the face and you have to pivot to something new. And he chose a specific way of doing it – he certainly had the dollars to do it – but he went 180 degrees in terms of public perception. Nobody remembers him for being the inventor of dynamite. They remember Alfred Nobel for really doing things for the benefit of mankind. Rewarding people who do great things. So I think that’s a terrific pivot story.
Doug Ross 3:26
That is a great pivot story, and it’s just punctuated by waking up and reading your own obituary. “Rumors of my death are premature”, is something that kind of comes to mind.
Glenn Suart 3:38
Mark Twain, isn’t it?
Doug Ross 3:39
Mark Twain, yeah.
Din 3:42
You’re listening to Conversations on Startups with Doug and Glenn. Thanks for joining us. Let’s get back to the show.
Doug Ross 3:52
Okay, so you can… probably most entrepreneurs will not wake up to such a shock and what really forces them to pivot is their personal mission in life and their reputation. What kinds of things do come up for entrepreneurs that make them pivot? Because I can think of a few categories…
Glenn Suart 4:13
Oh, absolutely. Well, one thing that I’ve seen happen is you lose your major customer, you know, you put all your eggs in one basket, and suddenly they’ve gone bankrupt or they’ve closed the doors or they found, worst – they found a better supplier, somebody else. And suddenly, you’ve got a whole infrastructure and a business that was going one way, now you’ve got to come up with a totally different solution for your business and you got no time to do it and probably no money to do it. Alright so, when it comes to pivoting, it can be an external thing, but it probably could be internal as well. You know, you have a disaster.
Doug Ross 4:48
Yeah, like you could lose a partner and with that partner all kinds of skill sets or relationships or something like that.
Glenn Suart 4:55
This is it like…there was a guy in – I don’t remember all the details of the story – but I think his name was Richard. I’m sure I’ll get it wrong, and somebody will correct me. They were in Minnesota, and they had a small store that sold electronics. He had maybe five or six stores, but their main store was wiped out by a tornado.
Doug Ross 5:16
Is this recent history? Like…
Glenn Suart 5:18
This is about 40 to 50 years ago. The thing was, though, where all the electronics were stored, the TVs, etc, etc, was in actually in a protected part of the building. So it survived. But they didn’t know what to do. And they had no cash. So they basically had a blowout sale. And they advertised, you know, the best buys you could get, you know. Come on down, we have to get rid of all this stuff.
Doug Ross 5:40
And did Alfred Nobel invent that phrase too? A blowout sale?
Glenn Suart 5:45
No, but Richard invented the best buy. So, and that was how BestBuy started, because they suddenly were faced with a disaster and when they did that they had this problem, they had too much inventory, they had no cash because of what’s going on, so in their parking lot they basically had a tent sale and, you know, they advertised the best buy and in a three day weekend made more than they ever did in a month. And they realized they had to change their business model to make that work. If they did this crazy advertising and promoted these big sales and lowest prices, it worked. And that’s how BestBuy grew so dramatically at the beginning. So they pivoted because of an external event in that particular case. But your question was, What are the triggers for that? Those – I mentioned two of them – there must be other ones that you’ve seen, besides natural disaster or losing a client?
Doug Ross 6:40
Yeah, and I have certainly seen those that you mentioned. There can be positive things as well or something that’s opportunistic. So this is the old, when it snows like Hell – if you’re an entrepreneur and you’re a young kid – you pick up a snow shovel and you go and sell yourself out to people in the neighborhood to clean their driveway. That’s an opportunistically driven entrepreneur. And I’ve seen that as well. So something that comes up – still external in the environment – but not a bad thing directly, necessarily for your business – and you… you pivot either short term because you can and quickly make money on something or you might hope that this will lead you to something long term. So I can see those short term opportunities cropping up. In the business that I’m embedded with now, we do diagnostics, and when COVID came along that became an opportunity for us and we pivoted to it. Another thing that can happen is your customers can move somewhere. If you don’t move too, you can be in a whole lot of trouble.
Doug Ross 7:47
So this can be… the biggest example of this is people moving online. So if they’re moving online, let’s say it’s even just for how they hear about you, where are they getting messages – advertising messages, let’s say or even word of mouth – if they’ve moved online – which many businesses are now – then you’ve got to move there too. And in the future, Glenn, we are going to have the metaverse and we’re all going to live online forever, even more. So go where your customers are, if you want to stay current, that’s a reason to pivot.
Doug Ross 8:23
I could see some other things that would be business model related that would make you change. So let’s say you’ve got a decent business going, especially sales wise, that’s great but profitability is an issue. So you might step back and say, hmmm, we’re selling a lot of these things but we’re not a lot making a lot of money. Obvious things would come up. Can I increase price? Do some of these sorts of things. Can I work on my manufacturing a little bit? And if that still doesn’t get you where you need to be then that can create the need for a pivot too. Perhaps you’re in the wrong business. Maybe you’re distributing items now and you’re making just a fraction of sales in profit and you might shift to something more like product development – like go higher up in the chain and do your own product development.
Doug Ross 9:16
Hey podcast listeners, we’re gonna take a short break now. If you’re enjoying the show, feel free to invite your friends, remember to subscribe, and if you want to help spread the word leave us a review on Apple Podcasts or your favorite podcast app. Each episode of Conversations on Startups focuses on a single topic. If you want to comment on something you’ve heard on the podcast, or suggest a topic for us to cover in a future episode, send an email to:go@todaysgreatidea.com or douglas@sparkclickgo.com. Glenn and I appreciate you and hope you find our uncut and unrehearsed stories, perspectives, and tips helpful. Speaking of helpful stuff-let’s pick up where we left off.
Glenn Suart 10:01
So what I’m hearing is, pivoting is not… doesn’t have to be forced on you, and it doesn’t happen instantly, like a tornado suddenly… makes you pivot right away. You can pivot over time because you realize with the analysis that the destination you’re going, or your customers are going, could be different so therefore you’ve got to plan for doing something different, because you have to pivot to get out of where you are. So it’s not just a short term thing.
Doug Ross 10:27
Yeah, I think most often not a short term thing, usually something is not working. We sometimes talk about musical groups on this podcast, and one that comes to mind is Rush, which is a Canadian band. Massive selling band, something like 31 platinum albums, and a lot of people in the world haven’t even heard of them. But… when they started out – and this is what they call a prog rock band, as you probably know- they started out doing covers of beach tunes. So can you imagine that this would be how this band started. And they clearly made the pivot to… no, this is not working, we’re just one other band and by the way, we’re not really even very good at this. What can we do? Maybe we need to make a shift in personnel, which they did. And they started to create their own music and that took off from a radio show that started playing their music out of Cleveland. This is a Toronto based band.
Glenn Suart 10:54
Interesting.
Doug Ross 10:58
So that was a pivot to something original. And they… like I think in a lot of businesses when you do pivot like this, you really have to think about it. I say, look before you leap because there are implications here and it’s important. You often have the grass is greener on the other side kind of thinking. Oh, we’re having a problem here. We’ve got headwinds. We should pivot over to here and you think that everything’s going to be easy and that’s not always the case. You have to think through the implications. Do I have the right talent on board right now? What other resources might I need? Do I need to shift how I go to market or the channel I sell through? And you really have to think about those things because if you don’t have the right talent in place – and people buying into this pivot – you’re gonna have a new problem just in a different direction as you go forward.
Glenn Suart 12:20
Yep, no, it’s… the lessons here are… are plenty. To do a successful pivot, you have to be prepared in a lot of cases. And you have to have the team as you just said, or the idea, or know where the market’s going. That means some research. And so this is something you should be doing all the time because you may want to pivot, you don’t want it to be forced upon you, you want to choose where you’re gonna go as you said earlier too, so…
Doug Ross 12:44
And perhaps you can do a small experiment as well in that area. [Yep] You think that there’s a promising opportunity, or, you know, that you want to pursue. Maybe do a small experiment first before you completely shift over the entire company.
Glenn Suart 12:58
Again, you know, we talked about Kodak and digital cameras in a previous episode. That’s a good example of a company that didn’t pivot when they should have.
Doug Ross 13:07
I love that example. And why don’t people pivot when they should? What are some of the reasons people don’t pivot?
Glenn Suart 13:13
Well, because it’s hard. You don’t know, you know? You know the market in the Kodak case – for listeners who didn’t know that story – Kodak was, of course, a very famous photography company and invented the digital camera, actually, But they were so wedded to the chemical production of films that they could not see a way of… this digital future was coming. They didn’t want to cannibalize that huge business. So that’s one of the reasons people don’t do something, they’re afraid they’re gonna lose what they already have. Or there’s – it’s so lucrative – or they can’t imagine a future without their business. So when it comes, it’s a natural disaster. It is a challenge to do so. So people don’t do things because they… they’re scared, I think in a lot of cases, or they, the other one is, arrogant. They think the smartest people…
Glenn Suart cont’d
They know how to do what they’re doing. They know how to do film extremely well. They may be the biggest in the world at the time. They can do it well and they’ve got all the expertise there.
Glenn Suart 14:15
Just ask the founders of Myspace.
Doug Ross 14:19
Who?
Glenn Suart 14:20
Yeah, exactly. Right. MySpace, of course, was this wonderful social media platform before Facebook but… and it was huge, and then it was nothing because it didn’t pivot at the right time. [Yeah] Even with lots of money and investment from lots of famous people it couldn’t do what it needed to do. And so, you need to challenge yourself. And in that case, – you brought it up, you know, in terms of testing – Kodak could have easily tested the digital camera under a separate banner or done something to prove it out. But they didn’t do it.
Doug Ross 14:52
Many ways they could have done that, no question about it. It’s a real tragedy, but they’re just emblematic of that problem that people have once they’re entrenched in an area. I think people as well, they overestimate sunk costs. And those sunk costs become so heavy in their thinking that they just can’t do it. I put in my personal money here, other people have as well. Blood, sweat, and tears. It’s going to work some day. And we had another episode one of our very first ones when we talked about persistence and we held it up as a virtue and it is a virtue. But sooner than… you know, you have to know when to quit. And some of these things are taking into account the sunk cost. And getting around… you said arrogance, but you know, maybe you think something’s great but if the market is not responding in kind, you have to take that as really strong data over and above what your own thoughts are. So it’s tough to know when to quit – because that’s what you’re essentially doing, you’re quitting some big part of your business and you’re going in a new direction.
Glenn Suart 15:15
You gotta know when to hold them and [know] when to fold ’em.
Doug Ross 16:04
Easier said than done, right Glenn?
Glenn Suart 16:06
Very much so.
Ben 16:08
You’re listening to Conversations on Startups with Doug and Glenn. Thanks for joining us.
Glenn Suart 16:16
And I guess, most recent example, of course worldwide, is COVID. And businesses of all types were forced to pivot in many ways, not only from the way they sold or produced their goods or their services… and now they had to take care of things in a different way. And it forced people to evaluate all the processes that went into their business, and some of them came out stronger as a result. A lot of other businesses didn’t because they couldn’t adapt to a new environment or they didn’t pivot well enough. And there’s no guarantee to pivoting, that’s for sure but you want to have the resources and the people if you can, always thinking about this. Alright, well, this has been a good episode I think on pivoting. I think most people would comment back to us that it’s something that they do think about and nobody wants [it] to be forced on them so therefore go do it yourself. Any last thoughts on pivoting before we talk about ideas for next week’s episode?
Doug Ross 17:12
Yeah, I don’t really think any final comments on that. Just watch the signals. Don’t take it lightly. That’s probably about… about it. It’s a big topic. It’s an important topic and not to be taken lightly. But I think that it’s really one that has so many facets, so many different things you can do when you pivot… product, you can pivot your business model, your customer segment, so many things that we’ve touched on today. So important topic, Glenn. But speaking of pivoting, let’s pivot to next time we’re together. What do you think we should cover in the next episode of Conversations on Startups?
Glenn Suart 17:53
Well, there’s… there’s a lot of great ideas out there and a lot of great products, but a lot of products aren’t quite right and you sort of know it when you see it type of thing. So we’re going to talk I think next week about product design, and how you do it, why you do it, how to make it better. Design is really important. We’re not going to talk about so much about the design of the business but more about product design, what goes into it. Right, does that makes sense to you?
Doug Ross 18:22
All right. That’s a great topic. Absolutely. Let’s do that. So until then, I’m Doug Ross. Glenn, thanks for another great conversation.
Glenn Suart 18:30
We’ll talk to you guys next week.
Doug Ross 18:41
Conversations on Startups is a production of Glenn Suart and Douglas Ross. We hope you’re having fun listening but mostly that you take action on your business idea. For more inspiration visit our websites: todaysgreatidea.com and sparkclickgo.com. Another episode of Conversations on Startups will drop soon, or is already available to binge. Thanks for joining us, and remember to subscribe and invite your friends. See ya next time!
Transcribed by https://otter.ai