Since March, I’ve been focusing on a variety of organizations that did some really amazing pivots during the first few months of the lockdown. There were some innovative actions companies took to keep their customers and stakeholders engaged, stay relevant, strengthen relationships, build loyalty, create new products, and maintain some level of revenue as the world around us changed so dramatically.
But in the last 60 days, it’s become abundantly clear that things are not going to settle into a “new normal” anytime soon (which is part of the reason that phrase has been overplayed). We are collectively in unchartered waters, and the only constant – at least for the time being – will be continuous change.
So how do we respond as business leaders?
The answer isn’t to pivot again… it’s to develop a culture of pivoting.
I know this may be a radical departure from how you ran your business even six months ago, but this isn’t a time for adhering to the “we’ve-always-done-it-this-way” processes: it’s a time for nimbleness. And if you aren’t sure where to start, here are 3 tips to help your business continuously navigate this period of uncertainty and change:
1. Define What Kind of Pivots You are Making – and Make Them
The word “pivot” has been bantered about quite frequently since this all started, but it is actually a term that’s been used in the business community for decades. For the sake of this article (and clarity everywhere), let me share the distinction I developed for a presentation to Club E in July between two types of pivots: Business Pivots and Market Pivots.
A Business Pivot is when your company makes a fundamentally strategic change to stop doing X and instead do Y. For example, your company used to make tennis balls, and now you make potato chips (this was Mitch Hedberg’s theory on the origin of Pringles). Or a real-world example is Shopify, which started as a Canadian D2C snowboard outfitter and ended up redefining the modern eCommerce platform. These are Business Pivots where you move in a different direction – and don’t look back.
A Market Pivot, on the other hand, is when a company starts doing something as a direct result of a temporary market condition, but has every intention of returning to their original line of work when the market shifts again. An extreme example of this is how Ford and GM (and to a lesser extent FCA) shut down their automotive assembly lines and started making ventilators, face shields, and other PPE. As soon as the emergency need for these items passes, they will go back to making cars and trucks with 100% of their effort. Why? Because designing and assembling passenger vehicles are still their core competencies, and let’s be honest: the Big 3 have enough to worry about in the race to develop autonomous vehicles and net-zero emissions powertrains; they do not need the distraction of a side hustle building complex medical equipment.
As you think about how your business can pivot during this time, you should be clear whether this is something you are doing to stay afloat until there is a vaccine/cure, or whether it’s a viable business opportunity that is a great use of your resources even without COVID-19. And keep in mind it could be both – you can keep doing the new thing even as the opportunities for your original business return.
But either way, this is a time to seriously evaluate (and reevaluate) every opportunity your business may have to keep delighting your customers and finding new ones – even if it’s only a temporary move. And the best way to know how to pivot is to…
2. Keep Listening, Keep Solving Problems
Whenever I start working with a client as a fractional CMO, I always ask if they really understand what the pain points of their customers are (and specifically, what are those problems that your products or services solve for them). If the answer isn’t clear, the first step is usually a series of phone calls, because the only way to know for sure is to be in dialogue with your customers – and listen to them.
Here’s the reality: the problems your customers and business partners are facing today are not what they were 120 days ago, and they most likely will be different again 120 days from now. How will you know? You have to keep asking them.
As I told the Minnesota Executive Group back in April, this is a time when you should be continuously talking to your customers and business partners to build and strengthen relationships. Taking an interest in their businesses and the problems they are facing may lead to some creative solutions that can benefit both of you.
One example of what this can look like is the Ohio-based sports recovery drink company O2. When the lockdown began in March, their owner, Dave Colina, was already pivoting to focus on more D2C online sales, but he also recognized that their main source of physical distribution – namely 2,600 independent gyms and yoga studios – were going to get financially crushed in April by having to close their doors. To support their distribution channel, the O2 team developed a unique coupon program where the profits of any O2 products purchased online by members of these gyms/studios would be shared with those gyms/studios – and they enlisted five other brands to join them. The net result was more than $230,000 generated for those independent businesses.
As May was approaching – and it became clear that things were still not ready to open back up in much of the country – many gym/studio owners feared this would trigger the cancellation of a significant number of their memberships. In response, O2 partnered with three of the brands from their original program to create $100 gift cards ($25 from each brand) for anyone who kept their gym memberships active. Many gyms responded that this action was what kept them in business – more than any help they were receiving from banks or the government (according to an article inEntrepreneur’s Startups magazine).
This is a great example of how listening to your customers and creating partnerships can be a win-win. O2 could have just abandoned the independent gyms, circled the wagons, and focus exclusively on D2C online sales. But they didn’t. Instead, they supported the gyms/studios in a way that helped keep those business partners viable – and then they did it again. And I’m sure both of these actions actually increased product trial with a lot of new customers who may never have given O2 a shot if they hadn’t.
Now like most of us, O2 didn’t have a lot of time to plan things out in March (although having well-defined core values definitely brought clarity and expediency to the solutions they developed — the importance of which I cover here). But as we step back to think about what may come next, a great exercise to go through is…
3. Scenario Planning
Of all the tools to have in the toolbox during this period of incredible uncertainty, a solid scenario planning model has got to be one of the most useful. At its core, a scenario planning model lays out different versions of the future, so you can devise the best business strategies and plans to deal with each of the potential outcomes.
Now before you start scouring the internet for PowerPoint templates full of decision trees and 2×2 matrices, be warned that many scenario planning models can get really esoteric, as there is an entire cottage industry that is continuously trying to model what the world could look like as far away as 10 years from now. And some larger corporations do this exercise every few years as part of their ongoing operations (trust me, I spent 6 months on one of these projects at Ford – incredibly interesting, but more academic than actionable).
Let’s keep it simple and applicable. To build on the great article by Peter Beaumont last month, if you are trying to figure out how to plan for the next calendar year (which all of you EOS companies should already be starting to think about), I’d suggest you keep it straightforward and just consider three different scenarios:
A. Status Quo – Start your planning here. If we assume that our existing reality – most things are open with reduced capacities/social distancing/wearing masks/checking temperatures/self-quarantining – is going to be with us for the foreseeable future, plan for how your business can survive and grow in this version of reality for the next 12 months. This should be a pretty straightforward exercise, and you can use the same approaches you would have for planning had there not been a pandemic – just consider current market conditions, volumes, etc. in your assumptions.
B. Sorry, We’re Closed. Again. – Now I know some of you jumped into this reality in mid-March solely based on the type of business you are in, and I am incredibly sympathetic for anyone in that space (hey, it’s not always easy to feel sorry for Richard Branson when the dude is worth $4.6B and owns his own island, but seriously… what a disastrous time to try to launch a new cruise line while still owning a significant stake in several airlines). Regardless, I hope you all have been able to resume some level of operations at present.
But let’s assume things go very wrong in the next four months: the vaccines fail, virus cases spike out of control, consumer confidence plummets, and everything closes again rather suddenly – what is your “Pandemic MVP” (in this case, your Minimum Viable Practice) to keep the business afloat? And how long can you realistically operate at that level? And what comes next?
This may seem like an exercise in doom-and-gloom, but knowing the worst-case scenario is incredibly freeing because it turns an unknown fear into a known one – so write it down. And this is where the scenario planning comes in: if you’ve identified the worst that can happen (based on circumstances you cannot control), is there anything that you can do to mitigate the damage to your business – or even avoid it?
If you’ve never gone through this kind of exercise, here’s one way to start: if you had known the March 2020 shutdown was coming, what would you have started doing in Q3/Q4 2019 to prepare… and can you do any of that now? Think through every aspect of your business. For example, can you put anything (money, equipment, resources) into reserves to help ride things out for a longer period of time? Can you adjust or reduce any expenses now (except marketing of course – because as a reader of my work, you know marketing is an investment and not an expense, right)? Is there a chance to pivot into something else? These types of critical questions can help you prepare for the worst if we end up shutting things down again. You may not choose to implement them today – but you will be ready with a plan if you have to execute it.
C. Explosive Growth – On the other hand, what happens if there are significant breakthroughs and a safe vaccine (or cure) is developed in record time? If consumer confidence explodes and the entire economy goes into hypergrowth mode, will you be ready to scale up quickly? Do any of your Market Pivots have the potential to become Business Pivots?
Think about what it would take to meet that level of demand. Give yourself a reasonable stretch target: for example, if demand increased 20% over whatever you were originally planning for 2020, how would you handle it? What money/equipment/resources/manufacturing capacity/people will you need to deliver that volume? And will you have the marketing and sales budget to get in front of all of those customers?
Take some time to think through exactly what would be needed to scale, and have those plans ready to go. And this is not an exercise in futility: we absolutely will get through this pandemic at some point, so documenting what it would take to grow is always a good idea. You will be ready and know what to do when the time comes.
Which brings up the key point of this article: once you’ve completed this exercise, do not put these scenario plans on the shelf until next year. We are in a period of extreme volatility, so you are going to need to pull things out every 60-90 days to see which assumptions are still valid, what new information you have, and whether you want to adjust any of your scenario assumptions and strategies to address them. If you don’t, you may easily slip back into crisis mode when things change – and I guarantee they will change – and your days will be consumed by putting out a constant stream of fires. Like many of you, I’ve worked for this kind of organization before – and it’s exhausting even in the best of times.
COVID-19 has caused all of us to stop and reevaluate an incredible number of things in our personal and professional lives. But right now is a chance to reinvent your business – not just in terms of navigating a series of market or business pivots as you plan for different versions of the future – but instead, to create a more nimble, responsive organization that is ready to put your customers’ needs first – whatever the future may hold.