Pivoting vs Failing: Definitions and Differentiations

I hear a lot of misuses of the word “pivot” and criticisms of the act of pivoting. 

Some criticize “pivoters” by saying they really just failed.

Some startups say they’ve pivoted but really just started an entirely new company.

So what exactly is pivoting? And what exactly is failing for that matter? This post examines those questions and more…

Steve blank defines a startup as “an organization formed to search for a repeatable and scalable business model.” I love that definition.

It differentiates a startup from an established company. It differentiates between a company that’s reached product/market fit and a company that hasn’t.

A company that hasn’t reached product/market fit is on a search for product/market fit.

An entrepreneur without significant traction/growth is necessarily on a search to find traction/growth. To explain further, a startup or an entrepreneur has a set of hypothesis about customer needs, how to meet those needs (product), how to acquire customers, how to make money, etc.

In order to build the product to meet customer needs, find a repeatable, scalable, and profitable business distribution channel, etc., a startup must pivot according to qualitative customer research (i.e. customer development interviews) and data (i.e. traction/growth metrics, revenue, etc.).

What exactly is a pivot? A pivot is an adjustment to product, customer segment, strategy, or other business aspect based on qualitative and quantitative feedback.

What exactly is “failing”? In terms of a startup, it usually means running out of money or just giving up.

Why do startups run out of money or give up? I’ll offer 3 plausible scenarios…

  • Not pivoting and spending time/money trying to build and sell something that can’t actually be a business.

  • Not having enough money to be able to pivot again.

  • Execution. Effectively finding a “repeatable and scalable business model”, but failing to execute on it.

Is being wrong a failure? Is a pivot a failure because the entrepreneur was wrong about the hypotheses around customer needs, etc.? Maybe…but per Steve Blank’s definition of a startup…not really. Testing hypotheses and adapting to customer needs is all part of the search process a startup goes through.

In my opinion, and to make matters more confusing, failing to pivot would be a failure :)

Think about it…not adapting to customer needs, would cause a startup to fail if the product/service was not meeting customer needs. Not adjusting a distribution strategy or revenue model would cause a startup to fail if it wasn’t working.

Execution can’t cure lack of product/market fit. Executing on the wrong product will not be profitable. Continuing to try sell a product that does not meet customer needs and that they will not buy will lead to failure.

Failure due to lack of execution is the worst kind of failure. Being “wrong” and pivoting based on data is just part of the game.

Pivoting the product and business so that it does meet customer needs and is profitable and scalable is the entrepreneur’s job.

Pivoting is different than failing in that pivoting is expected and planed. It’s part of the entrepreneurial journey.

Key Takeaways:

  • An early stage startup is a on a search for product/market fit.
  • A pivot is an adjustment to the product or business based on qualitative and quantitative feedback.
  • Failure happens a result of failure to gather data, react to data, and/or execute.
  • Pivoting is different than failing in that pivoting is an expected and planed part of the entrepreneurial process.
  • David Telleen-Lawton

    Mike, I like your clarity.
    * An early stage startup is a on a search for product/market fit.
    * A pivot is an adjustment to the product or business based on qualitative and quantitative feedback.

    One might ask, “Well, if the startup is “searching”, what’s the big deal about calling an adjustment a “pivot”?

    The big deal is that the value of the feedback/results/reaction you get from your search is directly related to the specificity of your “product” and all of it’s characteristics (pricing, channels, color, etc.).

    That means, you must be as specific as possible about the product with your future customers or partners or else you are likely to get poor data…they thought it was a subscription model, but you are thinking about a purchase model, for example. You said the data would be refreshed regularly (meaning monthly), they thought that meant every second.

    I twist around the ol’ computer saying, Garbage In, Garbage Out and make it centric to you, the presenter. Garbage Out-It cures cancer, Garbage In – I’ll need three.

    So a pivot is an adjustment that should be noticeable to part of your product from a product-market fit perspective.

    Personally, I don’t like the word “pivot” because I always think of basketball where a pivot has one foot stationary and the rest of the body moving. For a startup, pivoting is typically most factors remaining and a few changing.

    • MFishbein

      Interesting take. Thanks David!