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Two of the most axiomatic principles of business success appear to be someone in conflict, raising the question of whether it is better to persist or pivot.
Over the past six years, I have hosted over 1,000 different people as guests on my show to talk about social entrepreneurship, impact investing or other ways to change the world for good. That has given me 1,000 opportunities to ask people about the most important lessons they’ve learned.
Time and again, people say that persistence is the key to success.
Investors, however, often point to the pivot as the key. It is a willingness to shift away from the original course to a better one that brings ultimate success.
Social entrepreneurs face a dual challenge in that they have both a social mission and a business strategy. Thus, they have two different fronts on which to consider persisting or pivoting, giving us the following four quadrants:
While the mission and business strategy may align well, it is rare that they line up perfectly. For most social enterprises, financial success is at least somewhat independent of mission.
Consider a hypothetical company that makes solar lanterns intended for use in the developing world, increasing the ability of families to study and work after the sun sets, reducing the use of wood or kerosene. The company’s mission is to improve health and economic outcomes, while reducing deforestation and the use of fossil fuels. For every light the company sells, its mission is accomplished, right?
Now imagine that in our hypothetical, they determine that affluent campers in the developed world are a more profitable market. There are now a variety of options available to them, influenced by whether they wish to pivot only on business strategy or on both mission and strategy.
If executives choose to sell only to campers, they must also choose a new mission because the original mission won’t be accomplished by the strategy pivot. They could choose to sell to both markets and thus persist with their mission, acknowledging that some company resources and returns will no longer be tied directly to the mission. They could even reject the opportunity to sell to campers in order to persist purely in the original mission.
For social entrepreneurs and impact investors, pivoting on mission may seem to be a betrayal of the purpose of the business. On the other hand, a business that cannot make a profit (even a nonprofit needs a surplus of revenue over expenses) cannot persist in fulfilling its social mission for long.
We also see that successful ventures seek constant improvement and innovation. Every new product, product line or market represents a test of the persist or pivot question.
There is no universal answer to the question. Recognizing when you are implicitly asking the question and then bringing it forward for discussion and analysis will make it easier to make the right decision.
March 4, 2019 at 09:15AM
Forbes – Entrepreneurs