The global economic recession triggered by the Covid-19 shutdown has wreaked havoc on almost all types of businesses . On the background of all this we have been hearing various predictions which all profess the need of a thorough transformation of entire companies. It could well be the case but reality on the ground is that many companies are achieving a certain level of success by doing something else – they are pivoting. What is Pivoting?

Pivoting refers to adjustment to business models conducive to short-term survival along with a path for long-term resilience and growth. Pivoting is a lateral move that creates enough value for the customer and the firm to share. Whether this will be enough in the long term is still debatable and it could likely be the case that more needs to be done, along the lines of the transformation mentioned earlier, but short-term results are showing that there is surely some value and benefit for businesses to pivot to survive to the next stage.

If we take the case of restaurants, we all know that they have been battered by the restrictive measures, with many owners pondering whether to close for good. The usual way to think about restaurants includes envisioning a seating area next to a kitchen. However, restaurants are kitchens whose output can be delivered to customers in a number of ways and using various kinds of business models. Eat-in, take-out, delivery and catering are just the tip of the iceberg. One pivot would be to offer a flat rate for a set number of meals per week or per month, with limited menu choices. Restaurants could increase their margins as they learned how to manage captive demand. Another pivot would be to offer a combination of precooked dishes with sides or additions that could be prepared at home using ingredients supplied by the restaurant. The restaurant could send a link to a video that walks the customer through preparation, thus incorporating an experiential and learning element. Deliveries could be in amounts large enough for several meals in a given week. Both pivots would lead to a greater variety of business models, which could become a permanent feature of the restaurant landscape, especially if the trend toward remote work from home consolidates over the long run.

You might think that this pivoting thing is only relevant for small business. You are wrong. Research is showing that even large incumbent companies are pivoting during the crisis. A case in point is the fact that as demand has soared for essential products, a company like Unilever has pivoted to prioritise its packaged food, surface cleaners and personal hygiene product brands over other products, such as skin care, where demand has fallen. The company does not yet know which changes might become permanent. If the upswing in remote work endures, Unilever might find that some of its pivots will remain in place. In fact, the move toward in-home consumption might require a repositioning of not only food brands but also personal care offerings.

So is this pivot thing just a free for all to experiment? Not really. Not all pivots result in good business performance. There three conditions which are necessary for such pivots or lateral moves to work.

First, a pivot must align the firm with one or more of the long-term trends created or intensified by the pandemic, including remote work, shorter supply chains, social distancing, consumer introspection and enhanced use of technology.

Second, a pivot must be a lateral extension of the firm’s existing capabilities, cementing — not undermining — its strategic intent.

Third, pivots must offer a sustainable path to profitability, one that preserves and enhances brand value in the minds of consumers.

In essence, let us not be catastrophic more than we have to be. The economic crisis triggered by the pandemic does not necessarily spell the end of entire industries. It however will weed out business models that fail to pivot towards the new reality characterised by shorter value chains, remote work, social distancing, consumer introspection and enhanced technology use. Change you must or you will perish.

At EMCS we specialise in change management and executing successful change processes. A change process rests on making a clear case for change and winning the hearts and minds of the people effected by the change. Change is tough, taxing and filled with risks, which is why many change efforts fail.