How have businesses pivoted their use of technologies to cope with the impact the pandemic has had on their enterprises? Have some been companies more successful with pivoting to new services, technologies, and business practices than others? Are these pivots permanent or just a transitional period before they get back to normal?
Change is never easy. As businesses look towards a post-COVID-19 future, for many enterprises, their established traditional business models, products, and services have had to or must change in the very near future if their companies are to survive.
Research from the payment’s provider SumUp revealed that over half (51%) of small businesses had changed some aspect of their operations directly associated with the pandemic. Also, 5% have completely pivoted their firms over the past year. In the US, the number is even higher; according to GetApp that concluded 92% of small businesses had pivoted since last March.
“All of this seemed to happen overnight,” says Sally Matsumae, owner of Asahi Imports, a small Japanese grocery store and delicatessen in Austin, Texas that has altered its business model to keep up with rapidly evolving customer needs. “With shortened business hours and everyone’s fear of leaving their homes, we had to quickly figure out a way to offer online shopping and curbside services.”
Pivoting a business can be a highly successful and lucrative move to make. Spotify, for example, pivoted to offer podcasts as it saw its ad revenue dramatically reduce as the pandemic took hold. Digital businesses can make almost instant changes, but what of physical enterprises? The restaurant sector is a good example of businesses that pivoted to offer takeaway meals delivered by the established food courier companies.
The key is often to look closely at your company’s strengths and assets and move into parallel markets. Passenger airlines used this approach, moving into more freight transport as passenger numbers fell to zero. The McLaren F1 team had the tools and knowledge to pivot making ventilators while their sport was on hiatus. And a range of companies from the fashion brand Zara and the cosmetics giant Nivea switched to producing PPE and sanitiser.
All these examples are businesses that pivoted for a short time. However, can a pivot become permanent, changing the very nature of an enterprise?
Speaking to Silicon UK, Mel Stoodley, fitness instructor and owner of Believe and Achieve Activewear, explained the challenged pivoting his business: “I think many businesses have been forced to pivot due to the pandemic, merely to survive and have an income, as a fitness instructor, I very quickly transferred my classes to an online platform, obviously thinking it would be temporary, to over 1 year later still offering classes online.”
Stoodley continued: “Challenges for me have been space and technology, living in a small house with no extra rooms, it has been extremely challenging streaming online! On top of that obviously you have the good old Internet that doesn’t always want to play! I think it’s very important to move with the times or you will be left behind! When I initially moved online, I had no idea how I was going to implement it, I just learnt as I went along! I think many larger companies are now thinking of not returning to offices and staying online!! I think we all need to try to stay one step ahead and be prepared!”
A pivot can be transformative if the condition is right and the approach taken builds on an enterprises existing markets and utilises the skills, supply chains and customer awareness to offer new products or services that are in demand.
Innovate and pivot
The conditions for a successful pivot can vary: The most successful pivots use existing skills and resources. Also, a pivot is not just moving your business online or expanding that component of your operations. Pivoting a business is a more fundamental change. Sally Matsumae stated: “We’ve always wanted to do it and COVID just sped the process along.”
CEO and founder Tim Groot, on his innovative events tech start-up Grip, says: “If a business needs to pivot, the first thing it needs is a creative, adaptable and hard-working team who can bolster the company right from the word go and partake in the collective vision required to make pivoting a business a success.
Groot continued: “For us, another key element was having the digital expertise to build out and test Grip’s digital services. Our top priority was to make sure our clients’ events could still go ahead in an online capacity, in a way that allowed them to maximise on the value that they would have had if it was in-person. Within three working days, by the 4th of March, we had launched our comprehensive virtual events solution in its entirety for the first time – ensuring key clients could make the transition to a digital event format.”
And is a pivot also closely linked to the digital transformation roadmaps that enterprises have been re-drawing? Logicalis UK MD Alex Louth explained that the two are clearly integrated: “There are connections between the two. It is essential to note the differences between a business pivot and a digital transformation. Businesses pivoted their tech stacks in March last year, mainly to keep their teams running securely from remote work, mostly as a reactive process.
“Digital transformations are a holistic reshaping of a business’s digital strategy and infrastructure. These have shifted somewhat during the last 18 months, but we have seen that companies that committed to digital transformation before the pandemic have benefitted from improved IT infrastructure because of it. The core goals of a digital transformation are to update infrastructure and make sure a digital-first mindset approach is at the core of all business activity.
Louth closed by concluding: “The pandemic has bought the need for this attitude into sharper relief for many, with TM Forum research showing more businesses embarking on a digital transformation in 2020 than in any other year, despite tighter budgets. As roadmaps shift and the hybrid work future approaches, companies looking at future proofing their work infrastructure benefit hugely from experienced transformation partners to avoid the pitfalls of what can be a perilous but ultimately very profitable journey.”
New business scenarios
Businesses have always innovated and changed. The pandemic has, in some cases, accelerated these changes. According to Accenture’s latest Technology Vision report, 92% of 6,200 business and technology leaders report that their organisation is innovating with urgency and call to action this year. Technology forever changed expectations and behaviours and created entirely new realities across every industry.
“The global pandemic pushed a giant fast forward button to the future. Many organisations stepped up to use technology in extraordinary ways to keep their businesses and communities running – at a pace they thought previously impossible – while others faced the stark reality of their shortcomings, lacking the digital foundation needed to rapidly pivot,” said Paul Daugherty, group chief executive – Technology and chief technology officer at Accenture. “We now have a once-in-a-generation opportunity to turn this moment of truth for technology into a moment of trust – embracing the power of exponential technology change to completely reimagine and rebuild the future of business and human experience.”
A new era of industry competition is dawning – one where companies compete on their IT systems architecture. But building and wielding the most competitive technology stack means thinking about technology differently, making business and technology strategies indistinguishable. Eighty-nine per cent of executives believe that their organisation’s ability to generate business value will increasingly be based on the limitations and opportunities of their technology architecture.
For example, Huib Maat, an in-house perfumer from Pairfum London, explained how their business embraced change and use technology to pivot their business: “We are London’s Niche Perfumery House and traditionally sold our products via independent retailers on the high street in the UK. We believe that perfumery products need to be experienced or sensed in person. In other words, it is very difficult to smell perfume online.”
“The COVID pandemic forced us to rethink and pivot our business model, as independent retailers were hit hardest, and our business essentially stalled. We had noticed over the past years that consumers are increasingly comfortable buying fragranced products online, even if they don’t know the perfume or even the brand.”
Maat concluded: “With this in mind, we switched our business model towards online retail of our niche perfume and to a global audience. It required, however, that we created novel forms of how to convey a fragrance online. For example, Olfactive pyramids, descriptions, imagery, colour, and testers. It is too early to comment on whether we will evolve towards a blended model as the re-opening of the independent retailer on the High Street has only just started. Our key learning is that in an industry where ‘sensing’ products is vital, pivoting to an online business model is feasible, if there are substitutes for the ‘sensorial’ experience.”
Future is different
Pivoting a business can reveal new opportunities and directions that place the company in a stronger financial and market position. The research from GetApp is telling as it found that 96% of businesses would be making some of the changes they made during their pivot permanent, with 43% planning to keep all the changes they made.
The Enterprise Research Centre’s State of Small Business Britain report also concluding nearly one in five it had prompted a ‘pivot’ to entirely different business models. The ERC’s Director, Professor Stephen Roper, said: “We have also seen plenty of evidence this year that SME leaders can be innovative and adaptable in the face of a crisis. A significant proportion of businesses have pivoted and introduced new processes and technologies in 2020, under pressure and at pace, leading to major changes in ways of working and doing business.”
Logicalis’ Alex Louth also advises: “Focus on the wider business objectives and at how technology can expedite your goals. Organisations should avoid concentrating on how technology can enhance individual departments, as this can lead to a lack of buy-in from employees and impact overall productivity and efficiency.
“Aligning a pivot strategy with the business objectives means the end goal is kept in mind and strategies remain aligned with objectives. A business pivot should also be in line with customer needs and demands. If customers are expecting more from an organisation, it’s time to update and pivot or risk losing loyal customers to the competition who are already one step ahead.”
Silicon in Focus
Gautam Saghal is CEO of employee experience platform Perkbox.
Perkbox was founded in 2015 as an employee benefits business and has since grown into a £140m business with investors like UK tennis champ Andy Murray backing it up. Before Perkbox, Gautam was CEO of Thomson Local, a print directory business he had to turn around into a digital proposition. The company not only survived but also become profitable. It’s not the first time he’s been at the helm of a business that has experienced significant change. Last year, he was made CEO of Perkbox, which, as an organisation, has pivoted three times. It’s now about to embark on its fourth pivot – precipitated by COVID.
Has the pandemic forced many businesses to pivot?
“Every industry has been impacted by the pandemic in some way. COVID signalled the death knell for many businesses unable to pivot their proposition to operate under restrictions and significant lifestyle changes. Some were able to reinvent themselves to not only keep the lights on but to thrive. E-commerce exploded, particularly for businesses that provided essential items and groceries.
“If businesses were planning to transition their operations or business model anyway pre-COVID, the pandemic will have catalysed five to six years’ worth of change in one fell swoop. But no matter the company or industry, every organisation has had to deal with the problems of remote working and remote living either directly or indirectly.”
If a business has pivoted, is this permanent or temporary before returning to normal?
“A business might’ve already seen a pivot as necessary before the pandemic because of changes in consumer behaviour, market changes or emerging trends – but the pandemic would have accelerated this process. For other businesses, the requirements of a pivot will be more nuanced. The critical thing is agility. If a company can respond to change with agility, it is more likely to survive the turmoil and economic uncertainty than businesses stymied by cumbersome infrastructure and product.
“COVID showed us that going global was the most important thing we needed to do as a company to grow within tough circumstances. We had to move beyond our two markets (UK and Australia) to create a solution that allowed us to follow our customers anywhere in the world to, after that, being able to sell anywhere in the world. We needed to narrow our focus whilst broadening our reach. For us, this is very much a permanent pivot; a response to the changing face of work influenced by the pandemic.”
What are the key challenges if a business needs to pivot?
“Businesses need to have a profound understanding of the changing needs of their customers before they can determine the strategy for a pivot. The pandemic will have influenced attitudinal shifts or highlighted a problem that did not come to light pre-COVID. But a reappraisal of customer needs is required to make informed decisions about changes to product and proposition. There are many ways this can be done: you can talk to customers directly and get a firm understanding of their pain points; you can analyse data and analyse trends.”
Is a business pivot closely linked to the reshaping of their digital transformation roadmaps?
“I think it’s important to focus first on what the customer’s needs are, and then shape the solution and response through tech innovation, not the other way round. Steve Jobs conveyed this point powerfully when he said that you needed to start with the customer’s experience first and work backwards to the technology. Our business is essentially an integrated technology platform and of course whilst we have been monitoring innovation and changes in HR, employee experience and benefits as part of the process, our pivot has been wholly informed by talking to customers first. One of the most valuable lessons I’ve learnt in the past 12 months through first-hand experience and through mentorship is that if you’re not spending 20-30% of your time at least with customers, you can’t expect the rest of the organisation to be customer centric.”
What key advice would you give to an enterprise thinking of pivoting as we move into a post-COVID business environment?
“If you don’t get the fundamentals right, you become unempathetic to your customer’s needs – leading to the creation of a product that won’t be as relevant as it can be. Understand your customer’s problems and then ask yourself how you can solve those problems. Even then, you need to be targeted. The best strategy is not to try to solve for everyone: identify and focus on what your best customer is and solve only for them.
“For us, when we undertook this process, it was apparent that the core problems faced by organisations was threefold: first, the harmonisation of employee benefits across their subsidiaries, across their territories and across their demographics; second, ensuring cultural alignment and a sense of unity even in organisations with offices sprawled all over the world; and third, providing an employee experience that is suited to everyone – no matter what stage in life they might be. These insights, given straight from the horse’s mouth, allowed us to start shaping our product propositions moving forward and inform our fourth and biggest pivot yet.”
Are some businesses and business sectors easier to pivot than others?
“Yes of course: businesses that are asset-light and people-based are easier to pivot than, for example, a car manufacturer looking to recast its operations from the ground up because of the need to hit sustainability goals and to respond to the innovation in electric vehicles.
“One thing the pandemic will have done is taught us a lot about ourselves and our own agility and strengths. We, as a business, are a microcosm of the kinds of organisations we are trying to serve and solve for. We share the same complications and problems. What we learnt is that that putting our complete trust in our employees would pay off. In turn, it has driven engagement and delivered brilliantly.”