Playing To Win
Playing to Win & Pivoting
I have previously discussed trendy business terms like ‘sales motion’ and ‘go-to-market’ and ‘dev ops.’ But maybe the hippest of them all these days is ‘pivot.’ The coolest thing to do in business these days is to pivot from one strategy or business model to another. Because it is so trendy, I get questions about it, like “how can I use the Playing to Win framework to execute a pivot in my business?” I will attempt to answer that question and more in my 52nd Year III Playing to Win/Practitioner Insights piece to: Playing to Win & Pivoting: Being Effective, not Random. You can find the previous 162 PTW/PI here. (BTW: There will be a 53rd Year III PTW/PI because I added one mid-week post to celebrate crossing the million-view mark.)
Where did Pivot Come From?
‘Pivot’ as a business term came from the fertile mind of friend Eric Ries, the famed author of
The Lean Startup. In 2009, two years before the book-selling book came out, Eric wrote a blog post introducing and defining the term pivot in the context of entrepreneurship/startups: Pivot, Don’t Jump to a New Vision.
He had a pretty clear view of what he meant by the concept and even created a typology of pivots. In a segment pivot, the company uses the existing offering (whether product or service) and applies it to solve a similar problem for a different set of customers. In a customer problem pivot, the company seeks to solve a different problem for the same customer group. And in a feature pivot, the company picks a particular feature from the current offering and reorients the whole company around that feature.
What I Like about the Idea of Pivoting
I like the idea of being flexible when it comes to strategy. Nothing is perfect in advance. The famous saying “No plan survives first contact with the enemy,” attributed to Prussian Field Marshall Helmuth von Moltke the Elder circa 1871 (and repeated numerous further times by many others including Carl von Clausewitz and Dwight Eisenhower) synoptically summarizes the challenge.
Business strategy is much like business strategy on this front. I like learning and improving and am a fan of jet fighter guru and theorist John Boyd’s OODA (Observe, Orient, Decide, Act) Loop. Even the best strategies need to be tweaked. One of my favorite strategies in all of business is that of Vanguard Group. When Exchange Traded Funds (ETFs) came to the mutual fund world, Vanguard founder and visionary Jack Bogle hated them — because he thought traditional mutual funds were better for customers. But in due course Vanguard embraced them and became the leader in Index ETFs.
The idea of pivoting puts this kind of flexibility in a positive light, so I like that about the idea.
What I Don’t Like about the Application of the Idea of Pivoting
I don’t like that now the term gets used for every change. ‘Strategy pivot’ gets 72 million results with a Google search! Every change is a pivot, and it is typically stated in a braggadocious way. When somebody tells me that they have pivoted, I get the feeling that I am supposed to respond with: How awesome!
It is a bit like what happens with Playing to Win (PTW), which is also very popular. Lots of people read the book and tell themselves that they now have a Where-to-Play and a How-to-Win (WTP/HTW) — it is what they are doing now, placed in a box in the Strategy Choice Cascade. And they wonder why their ‘PTW strategy’ doesn’t lead to massive success!
In like fashion, pivoting isn’t an inherently good thing if it just means changing what you are doing now, just like whatever you are doing now doesn’t become more meritorious if you put it in the HTW box on the Cascade. A pivot is a good thing only if it shifts a company from a weak WTP/HTW choice to a powerful one. Changing just because what you are doing now doesn’t appear to be working well is a recipe for never giving your strategy a chance to work.
It is like Marshall Admiral Yamamoto during the (dare I say) pivotal Battle of Midway in World War II, who contributed mightily to the Japanese defeat by pivoting repeatedly mid-battle between arming his planes with torpedoes (to attack enemy ships) versus bombs (to destroy the airfields on Midway). While he was shifting weapons, two of his three carriers were sunk — and that was the beginning of the end for Japanese naval power in World War II.
How to Use PTW Tools to Guide Your Pivot
Given that there is potential merit to a pivot, the challenge is how to determine whether a pivot is in order and if so, in what direction. The answer is to deploy PTW tools for this particular purpose.
You may or may not have developed a strategy using the Strategic Choice Structuring process, as discussed at length in Chapter 8 of the Playing to Win book. If not, you can still use the Strategic Choice Cascade to characterize your strategy. Remember strategy is what you do not what you say. That means that every company has a strategy, whether it is written down or not. It is what the company is currently doing. You can reverse-engineer your strategy by asking what must we be thinking to be doing what we are doing? That is the What Would Have to be True (WWHTBT) for the logic of the strategy to hold. If you did use the Strategic Choice Structuring to create your strategy, you will automatically have the WWHTBT for your chosen strategy.
If there is a WWHTBT for your strategy that demonstrably is not true, you can be confident that your strategy needs a pivot. For example, customers aren’t responding the way we thought they would and needed them to do. Or the customer segment is smaller than we assumed (and needed) it to be. Competitors have responded in a different way than we assumed — and dangerously so.
Discovering a substantial flaw in the WWHTBT of your strategy can provide the confidence that a pivot is in order, but perhaps more importantly, can give you a hint in what direction to pivot.
I will provide a now-ancient example from when I consulted to office furniture giant Herman Miller (now Miller Knoll) in the early 1990s. Miller had extremely advanced office design capabilities which it included in its value proposition to its corporate customers. That is, it would help design the office space for the furniture that it provided to the client. It was an expensive capability for Miller to build, maintain and deliver. The WWHTBT for that aspect of its strategy was that customers needed to place a high value on that aspect of the overall product offering.
However, over time, it seemed to be working less well and the company was losing deals it thought it should win. A deep dive into understanding customers revealed that the WWHTBT for customers wasn’t nearly as universally true as it had once been. Some large customers had built large internal facility design capabilities. These customers didn’t value Miller’s design capability and felt that they were implicitly paying for something they didn’t need. In fact, the facility design folks at some customers were threatened and intimidated by Miller’s folks and preferred to work with other furniture companies that didn’t push that capability.
Based on this WWHTBT-driven insight, Miller pivoted to provide a simplified offer that didn’t include advice and was easy for internal facility design folks to use. It ended up utilizing two very different offerings for what revealed themselves to be two distinct segments.
Strategy is a theory — a theory about how to compete in an always uncertain future world. When that theory is tested against that unfolding world, its validity is either confirmed or not. In the latter case, it is a signal that it is time to pivot — but not randomly.
The pivot needs to be informed by a new theory, including a new WWHTBT. Without a theory/WWHTBT, you won’t be able to test whether it is sound. A pivot without a WTP/HTW theory will likely keep being practiced for better or worse because there isn’t a clear standard by which its efficacy can be judged. And if it is going not particularly well, it will be hard to develop a new theory based on what about the previous theory was flawed.
There is always a tension in the adoption of concepts. The creator of the concept usually has a very specific meaning of the concept, having typically spent a lot of time and mental energy developing it. Those on the adopting end of a concept will have a specific context in which to utilize the concept. They will inevitably customize it for their own purposes. If they couldn’t customize at all, they would adopt less frequently, and the concept would be less used. So, customization for user purposes is a good thing. You want users to make it their own.
But there is a productive limit to the customization. If users make it anything that they want it to be, it won’t be a very powerful concept. It will be an amorphous mush. The key for users is to not lose touch with the fundamental principles of the context. Playing to Win means making a powerful and unique set of choices, not simply characterizing your existing choices in the framework.
Similarly, pivot doesn’t mean throwing successive handfuls of spaghetti at the wall. It means performing a thoughtful evaluation of your strategy and looking for clues in its interaction with the marketplace that suggests it is time to adjust your choices and in what direction — or gives you confidence to hold your course.