ENTREPRENEURSHIP

EVERY PIVOT NEEDS A STORY
FOUNDERS KNOW THAT no matter what their original business plan,
managing a start-up requires navigating a fast-moving stream of
hypotheses, experiments, and redirections, which often result in
the adoption of a very diferent model. But even entrepreneurs who
celebrate the pivot don’t always recognize the need to share the
underlying rationale with customers, investors, and journalists, who
might otherwise be confused or disappointed by the change in direction.
New research that analyzed the communications of two start-ups
over a six-year period ofers a three-part theoretical framework to
guide ledgling irms through their own strategic shifts. Although the
companies studied had similar proiles, pivots, and end products (both
eventually decided to ofer automated investment tools), one grew
into a $2 billion company, while the other held a ire sale of assets and
folded. The diference, the researchers say, was how course corrections
were explained. Founders should craft an “abstract product frame”
that gives them room to maneuver (the failed irm in the study got
hemmed in by overly narrow initial claims); use language that links
any new position to their founding principles, creating a sense of
continuity; and pair major pivots with carefully paced conciliatory
rhetoric to mollify supporters of the original idea.
“How startups explain strategic reorientations may matter as
much as or more than the changes themselves,” the researchers
write. “Entrepreneurs resemble scientists in that they generate and
test hypotheses to ind viable product solutions; but they must also
resemble adept politicians by convincingly justifying deviations from
plan to diverse constituencies.” ■
ABOUT THE RESEARCH “Pivoting Isn’t Enough: Principled Pragmatism and Strategic Reorientation in
New Ventures,” by Rory McDonald and Cheng Gao (working paper)