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Don’t be a freezing frog. Pivot.

 Don’t be a freezing frog. Pivot.

In the 19th century a cruel yet fascinating science experiment was done*. Researchers put a frog in a pan of boiling water and the frog quickly jumped out. But when they put a frog in cold water and put the water to boil, the frog wouldn’t move and slowly boil to death. The hypothesis is that the change in temperature is so gradual, the frog doesn’t perceive the danger and will not move until it’s too late.

So, what does this have to do with business? Well, a lot. It’s the same reason why external advisors, consultants and research firms are extremely important for most companies: the companies themselves don’t dare to go outside and see what’s happening around them. It’s more comfortable to hang on to what you’ve been doing all these years than change. Change implies uncertainty and chaos – and nobody wants that. Uncertainty goes against our nature, which is: to survive.

We crave for certainty

It’s ironic, really: we crave for certainty – yet nothing is certain anymore. Technology is rapidly changing the world, social media empowers consumers more than ever and with all the competition worldwide, customers become more and more demanding. It’s no longer about who is the biggest, best and cheapest any more: because tomorrow someone else might be. Companies must continuously add value to the lives of their customer, even (or: especially!) when customer demands suddenly shifts. I know a company that was always selling diapers, but due to the ageing of society they are now selling more diapers to the elderly than to babies! This company didn’t freeze in the boiling water: they jumped out to see what was going on the world and benefitted – substantially!

Learning from Eric Ries; the pivot

The most successful companies know how to deal with chaos. In their search for a successful way to create, deliver and capture value, they continuously ‘pivot’. This term, introduced by entrepreneur and thought leader Eric Ries, describes how a presumably failure transforms into a new course: one that might work better.

A pivot doesn’t necessarily involve the product, although that seems to be the most obvious one: change or add an extra feature and suddenly customers buy your product. You should think more broadly about a pivot, because you’re also pivoting when you change your customer segment (e.g. men instead of women) or revenue streams (e.g. fixed fee instead of hourly rate).

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How to avoid slow cooking

The Business Model Canvas can help you with discovering ways to pivot. This video briefly explains how you can plot your entire business in a visual way. It forces you to be very concrete and specific about your business model. With seemingly simple questions you create a helicopter view of your business:

  • Who is your customer (customer segment)?
  • What problem are you solving and what do you offer (value proposition)?
  • How do you make money (revenue stream)?
  • How do your customers know your products exist and how can they buy/receive this (channel)?
  • What relationship do you have with your customer (customer relationship)?
  • What do you own that (almost) nobody can take away from you (key resources)?
  • What are your main activities (key activities)?
  • Which partners do you pay to help you run your business (key partners)?
  • What are your biggest costs (cost structure)?

Once you’ve identified the nine building blocks of your business, you can pick any block to pivot from. Be sure to use customer insights for your pivot; don’t try to pivot and change a building block based on your assumptions. All companies pivot some part of their business model sooner or later. But the ones that act upon customer feedback and truly understand customer behaviour, are the ones that pivot successfully.

Don’t be a frog. Reshape your business model to stay relevant.

 

*Many researchers question this frog-experiment and claim it’s a myth. But whether it’s true or not, it’s a powerful metaphor for the need of being aware what’s happening around you. 

Picture credits: Mateja Bedenčič

 

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 Martine de Ridder

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Martine

Strategy Designer at HQ Amsterdam. Helps organizations with validation.

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