BC Business
Scrapping Plan A in a business pivot can be the kiss of death – or mark the birth of a legend. There’s a new buzzword going around the startup world: “pivot.” It’s a euphemism for abrupt change in the business plan. Like a basketball player spinning away to avoid an opponent, a business is supposedly executing a planned manoeuvre as opposed to a simple short-term survival tactic.?
Business pivot | BCBusinessA business pivot can be a beautiful thing – or a turn in the absolute wrong direction.
There’s a new buzzword going around the startup world: “pivot.” It’s a euphemism for abrupt change in the business plan. Like a basketball player spinning away to avoid an opponent, a business is supposedly executing a planned manoeuvre as opposed to a simple short-term survival tactic.
Twitter, for example, pivoted deftly away from relying on SMS text messaging as its primary input method to become a web-based micro-blogging platform. Sounds like a brilliant strategic move, right? Well, it turns out that you can rewrite history a bit and make pivots sound more glorious than they probably were at the time. Investors in early-stage companies come to expect some degree of pivot in a strategy; it is indeed rare that a company launches on a particular path to market and succeeds on that original plan.
But for every pivot that leads to success, my guess is that there are 10 that lead to disaster. It is often a desperate move to try and save a flailing business, which is why I am a bit cynical. There have been many interesting pivots in B.C.-based technology companies, some successful, some not. For example, Geoff Ballard decided to pivot away from the battery business he had built in the ’70s and early ’80s and into fuel-cell technology. Ballard did become the world leader in fuel cells and came close to single-handedly pushing the auto industry into a new pollution-free age. While that might sound like a successful pivot, the battery business he divested was lithium ion batteries for transportation (submarines at the time). Oops.
Two hugely successful companies in B.C. have pivoted from their original businesses. Creo was making optical tape storage machines in the late ’80s. Its pivot to digitizing the printing industry with its Platesetter technology was a company-maker that set up for a buyout by Kodak in 2005. Then there’s Pivotal Corp., once makers of the Pen Magic software for Apple’s disastrous Newton, which became a pioneer in CRM, or customer relationship management.
My favourite pivot story involves an individual raised in Vancouver who would be 110 years old today if he were alive (he made it to 102). Born in England, Cecil Green (yes, the UBC park and residence bear his name) found himself stranded with his mother in San Francisco after the great 1906 earthquake, and shortly thereafter ended up in Vancouver. He was educated at UBC, MIT and Stanford. His doctorate in the late 1920s was in ground-penetrating sonar. He joined a company called Geophysical Sciences Inc. (GSI) and applied the technology in west Texas to find oil. And they found tons of it. He rose through the ranks of GSI to senior management, and in November 1941 helped fund a management buyout of the company. He said in his biography that it might have ended up being the stupidest thing he had done. He mortgaged everything he had to invest in the now private company, a couple of days before Pearl Harbor.
In early 1942, President Roosevelt told the nation’s industries that they needed to help the war effort. They came to GSI and said that they had enough oil. What they needed was GSI’s brilliant engineers focused on war needs. The company was given a week to come up with a business plan (a “forced” pivot) or risk conscription of some of its staff. Four very stressed individuals gathered at Green’s house in February 1942 to decide what to do. They concluded that they would mothball GSI for the duration of the war and create an electronic engineering company subsidiary. Now all it needed was a name. They kept it simple and to the point. They called it Texas Instruments.
I think that was one of the most amazing pivots in technology business history. And if we are going to abuse this buzzword, let’s have a worthy story to attach to it.
Brent Holliday heads the technology practice for Capital West Partners. Follow him on Twitter: @bholly.