Pivoting

Part one: Pivoting

[Visual: Title slide displayed with the text "Part One: Pivoting". Background music plays.]

What is a pivot?

Speaker: Kelly

Welcome back to the adapting to change workshop. [Music] Let's move on to part one, pivoting.

So, what is a pivot? [Music] When do we pivot? How do we know when to pivot?

[Visual: Slide heading changes to "What is a pivot?"]

Well, let's go through all of that in part one.

[Visual: Slide displays the definition: "A fundamental shift in your business in response to unmet market needs or in response to big changes in market structure."]

By definition, a pivot is a fundamental shift in your business in response to an unmet market need or in response to big changes in market structure.

Now, a lot of people think that a pivot means a complete business overhaul. And that's often not the case.

We see many successful businesses pivot gradually over time in response to small changes continually happening out there in the market.

Reactive and proactive pivoting

[Visual: Comparison slide appears showing two types of pivoting: Reactive and Proactive.]

[Visual: Reactive pivoting characteristics listed: Responding after pressure or disruption; Often urgent; Focused on survival; Less time and flexibility.]

[Visual: Proactive pivoting characteristics listed: Responding early to pressure or disruption; Often planned; Focused on opportunity; More time to test and adapt.]

Now, if we look at the types of pivots, we can break this down into reactive and proactive.

Reactive pivots are responding after pressure or disruption. It's often urgent and there's a lot of stress involved. It's often focused on survival and there is less time and flexibility.

If we look at a proactive pivot on the other hand, this is about responding early to a pressure or disruption because it's often planned. There's often a real focus on opportunity. So, we've spotted market trends or gaps in the market and we are seizing those opportunities and there is more time to test and adapt.

Look, sometimes we have to reactively pivot. But if we have our finger on the pulse of the market, this gives us the opportunity to continually proactively pivot.

[Visual: Additional text appears: "Businesses that adapt early often have more options available to them."]

Now, businesses that adapt often have more options available to them. And that's what we want to really focus on today.

Why pivot?

And so, what's the point of pivoting?

Well, put very bluntly, businesses that don't pivot don't survive in the long term. And we'll see some of those examples throughout this workshop.

What does a pivot look like?

[Visual: Slide titled "What does a pivot look like?" shows examples including New product, New market, New sales channel, Repositioning, and Process improvement.]

So, what does a pivot look like?

Well, more often than not, it's not a full business overhaul. It is small iterations over time.

These could be creating new products or services.

It could be servicing a new market, for example, a new geographical location or customer segment.

It could be utilizing new marketing sales channels, for example, going from bricks and mortar stores to e-commerce.

It could also be things like rebranding or repositioning an existing product or service or internal things like implementing a process improvement. For example, implementation of AI into your business.

Regional case studies

[Visual: Slide titled "Regional Case Studies" appears with examples.]

Now, first up, we look at some examples of reactive pivoting.

As I mentioned, sometimes we have to reactively pivot.

And if we look at the COVID-19 lockdowns in New Zealand, Nanam Filipino restaurant saw an opportunity to create a new takeaway menu called Nam Hits Home.

They also launched food kits for customers to assemble a few of their key signature dishes at home because they spotted a trend in the market where people were spending more time at home with their families. They wanted that at-home quality time experience.

So whilst it was a pivot for survival, they were still able to identify an opportunity that differentiated themselves from their competition.

Some additional examples of COVID-19 pivots.

Annah Stretton created beautiful colourful face masks.

Good George created hand sanitiser. Not that much of a pivot away from alcohol, but some beautifully branded hand sanitiser. Think of those sitting on desks at home. Great marketing opportunity.

Also, now if we think of a proactive pivot and I say Lewis Road Creamery, probably what comes to mind is the Whittaker's Chocolate Milk. Well, that's not where they started.

So, they started as a small dairy producer selling standard fresh milk and butter. Pretty standard category, a lot of competition.

In the early 2010s, they spotted a new trend. They started noticing that the consumer wanted premium artisan products. There was more of an interest in quality, provenance and natural ingredients, and there was a growing demand for indulgent treat beverages.

So what did they do? They spotted this opportunity. They pivoted to create their premium line of milks, most famously the Whittaker's collaboration chocolate milk.

And if you see their butters in the supermarket, you'll also notice they are in a premium brand category.

How to pivot

[Visual: Title slide displayed: "How to Pivot".]

Now that we know what a pivot is by definition and the types of pivots we'll cover off throughout this workshop, let's talk about how to pivot.

In this section, we'll talk through how to assess the current state of the market and your business, which will allow you to find growth opportunities.

Now, we've broken these down into steps.

Step one: Identify change

[Visual: Slide titled "Identify Change". Subtitle: "Assess changes in the market structure and consumer behaviour that may affect your business."]

Step one being identify change.

This is all about understanding the external changes in the market and the downstream effects these have on your business.

So at a broad level we want to consider two things. How this impacts your business operations and how it impacts your customers, which in turn impacts you.

Change can come from many directions

[Visual: Slide titled "Change can come from many directions". Categories listed: Economic, Political & Legal, Environmental, Health, Demographics, Social & Ethical, and Technology.]

Now change can come from many directions.

It can be things like economic. We're seeing the cost of living pressures at the moment. Rising business costs, unemployment, talent shortages.

There's always political or legal elements happening out there in the market which could be things like policy changes.

The environment. Natural disasters, weather changes, climate change. We're all very aware of that.

Health. Global pandemics. COVID-19 was a big one.

We're also seeing changes in demographics, age, nationality, occupation, and income.

And social and ethical is changing a lot now too. Changes in attitudes towards certain products or services, values, expectations and beliefs.

And definitely worth mentioning, AI, automation and digital tools are on the move as well.

Exercise #1

[Visual: Exercise slide displayed. Text: "Identify 2-3 key changes in the market structure and consumer behaviours that are likely to impact your business."]

This comes to your first exercise in your workbook.

I want you to take a moment to identify two to three key changes in market structure and consumer behaviours that are likely to impact your business.

Feel free to pause this video now. Complete the exercise and I'll see you soon.

Understanding downstream impacts

Welcome back. Let's move on.

Now, we want to understand the downstream impacts of these changes.

Why?

Because understanding the flow-on effect of who and what else may be impacted can help us spot opportunities we otherwise may not see.

Now, let me provide an example of that.

[Visual: Diagram titled "Downstream Impacts of Change" showing COVID-19 lockdowns as the trigger. Green pathways indicate potential increases and darker pathways indicate potential decreases.]

[Visual: Examples of increases include more time at home, homeschooling, online learning, devices, plagiarism detection software, at-home exams, takeaway food, and home delivery.]

[Visual: Examples of decreases include dining out and restaurant/café visits.]

If we look at the COVID-19 lockdowns and you look at the green colour, that is an increase in that particular activity.

So for example, we all know we spent more time at home.

What did that then mean?

Well, it meant that homeschooling increased. It meant there was at-home exams and there was an increased need for plagiarism detection software.

There was also an increase in online learning and the use of devices and laptops.

If my business sat in one of those industries, I would be looking at things like how can I increase my offering for online learning, for example, to seize that opportunity in the market.

If we're looking at the right-hand side, obviously eating at home increased, takeaways and home delivery increased, as we all probably know.

But what decreased during that time was dining out in restaurants and cafés.

Now, Nanam Filipino restaurant was able to seize this opportunity. They were able to look at these market changes, the flow-on impact of that, and seize the opportunity.

Exercise #2

[Visual: Exercise slide displayed asking participants to map downstream impacts and identify increasing or decreasing business opportunities.]

It's now time for exercise two.

I want you to pick one key change you identified earlier. Draw a map of the downstream impacts of this change and think about what products or business opportunities are likely to increase or decrease as a result of this change.

Ask yourself what changes because of that.

What happens next?

And who else could be affected?

You never know what you might uncover.

Pause this video, complete the exercise, and I will see you soon.

Step two: Understanding the type of change

[Visual: Slide titled "Understanding the Type of Change". Subtitle: "Assessing whether a change is temporary, long-term, accelerating, or an existing trend."]

Welcome back to the adapting to change workshop.

In our last video, we covered step one of how to pivot.

Now, let's move on to step two.

Step two is all about understanding the type of change and its time frame.

This will help us assess whether it's worthwhile investing considerable time, money, effort, or resources to go after a new opportunity or whether it's something we need to adapt to temporarily to survive.

Policy and law changes, for example, are likely to be long-term changes, whereas behavioural changes in the market may be harder to assess.

For these behavioural shifts, we'd want to consider whether these existed before a certain event, for example, COVID-19, or if they began around the same time.

Identify the type of change and its timeframe

[Visual: Matrix displayed with Temporary vs Structural on one axis and Existing Trend vs New Trend on the other.]

[Visual: Quadrants defined as:

• Boost: Temporary acceleration
• Catalyst: Lasting acceleration
• Displacement: Temporary shift
• Disruption: Lasting shift]

A great way to visualize this is by plotting our changes on the matrix you can see in front of you.

So, if we start in the top left-hand corner, is what we call a boost.

This is a temporary acceleration, a trend or a change that was already on an upward movement. It receives a short-term boost after a certain event.

And we'll look at some examples of this very shortly.

But if we look at the bottom left-hand corner, we can see displacement.

Again, a temporary shift. This is a temporary change away from existing behaviours or activities and something that will revert back eventually.

So this may be an area where you don't want to invest considerable time, effort, or long-term resource. It may be something that you need to weather for the storm.

Now, if we look on the top right-hand corner, we can see a catalyst.

This is something that is lasting.

So, it was already on the upward trend and it receives a long-term boost after a certain event.

Now, if we look at bottom right, we have disruption.

Again, a lasting shift, a long-term change away from existing behaviours or activities which will continue to grow.

Examples

[Visual: Examples are progressively placed within the matrix: • Panic buying during lockdowns • Remote/hybrid working • Temporary tourism and hospitality surges around major events • AI adoption in business]

Now, let's look at some examples of this.

Panic buying during lockdown. Obviously a temporary shift.

Remote or hybrid working. This change was already in play before COVID-19. COVID-19 being the catalyst for this change.

Then we have a temporary acceleration. So temporary tourism and hospitality surges around major events.

Now I will note there's still opportunity here but again really understanding the time frame that it is going to be temporary, that's going to help you understand what resources you invest into this opportunity.

And finally, the one we're all familiar with, AI adoption in business.

Now, this is a lasting shift. It will be a long-term change away from existing behaviours, and it will continue to grow.

Exercise #3

[Visual: Exercise slide instructs participants to classify changes by temporary/structural and existing/new trend and place them on the matrix.]

Now, it's time for exercise three.

Using the changes you identified in exercise one, decide whether each change is temporary or structural, consider whether it is an existing trend or a new trend and place each change into the appropriate section of the matrix.

Now, I will note that sometimes it's not 100% clear to decide whether a new trend or change is going to be temporary or lasting.

That's okay. Just note that down.

Step three: Assess business impacts

Welcome back.

Let's move on to step three.

Now, in step three, we want to assess how these changes may impact your business.

Now that we know what's happening on a grander scale, we want to look at your business individually.

We'd want to think about the impact that these changes could have on your customer, the way you serve them, and on your operations and production.

Now, we can split these into two key areas.

Operational impacts and market or customer impacts

Operational impacts and market or customer impacts.

When we look at operational impacts, we want to ask ourselves how these changes impact things like supply and raw material costs, production or delivery, staff or talent, your teams, systems and processes, suppliers or logistics.

On the other side, if we look at market and customer impacts, we want to understand how these changes impact things like our customers' purchasing behaviour, their expectations, what does that then mean for our business, financial pressures they could be under or changing buying habits, new customer problems that we may be able to solve.

Example: Nanam Filipino restaurant

Now if we go back to Nanam Filipino restaurant, we've mapped out the changes and the flow-on effects of those.

We know the external change is the COVID-19 lockdowns.

Now we can look at the two separate areas, operational impacts and customer buying changes.

So for this business in particular during COVID-19, from an operational side of things, there was a reduction in dining customers.

There was a lot of pressure on the restaurant revenue and there was a big disruption to normal operations.

On the customer side of things, there was an increased demand for takeaways.

Obviously, there was more eating at home and customers wanted restaurant quality experiences at home.

Now, this was the opportunity that Nanam Filipino restaurant was able to spot and pivot into as we have touched on earlier.

Exercise #4

Now, it's time for exercise four.

Selecting one of the market changes you have identified in exercise one, note down the impacts this could have on different aspects of your business.

Then take a moment to rank the severity of these impacts in your business.

Are they high, medium or low?

Now I will say that there is no right or wrong here. How these rank in terms of severity is completely up to you and your individual business.

Take a moment to complete this exercise and we'll see you back in the next video.