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Business Pivots. How To Make Successful Pivots
The business pivot from a practitioners point of view
Last month I interviewed Regan Stevenson about his research looking at entrepreneurial pivots. This month I thought I would interview an entrepreneur, business coach and investor about business pivots from their perspective.
Podcast interview with Paul Avins
In this episode I spoke with Paul Avins an entrepreneur, business coach and investor.
Paul is an award winning business coach who is known as one of the most sought after business growth experts in the UK today, helping entrepreneurs and business owners.
How To Pivot –
What The Research Says: Successful entrepreneurial, business and organisational pivots
David’s latest book “How To Pivot – What The Research Says: Successful entrepreneurial, business and organisational pivots” Available now on Amazon
– Welcome back. Today we’re going to be talking about pivots, business pivots and organisational pivots. And I’ve got with me Paul Avins. Who is a long time friend. Welcome Paul.
– Alright Dave, great, thanks to having me on the show, man. It’s a pleasure to be here today.
– It’s an absolute pleasure. So Paul, can you just kick off by just introducing yourself and telling us what you do?
– So obviously you and I have known each other I don’t know, probably about 10 years now, I would say.
– I would say it’s more.
– And for the last 17 years I’ve been helping entrepreneurs, business owners to build what we call kind of grown up businesses. So really going through the stage of how to start scale up and build a grownup business as I like to refer to it. So I’ve been business coaching, consulting, training, running Masterminds, really for the last 17 years, particularly Masterminds the F12 Masteremind now it’s been running for eight years in the UK, but before that I was an entrepreneur. So I was an entrepreneur first and then I came to the industry of coaching, consulting and training really out of a passion to serve and to help people having, you know, started and run five businesses, three successfully and two spectacularly not successfully, which taught me a huge amount and, you know, and I had a passion to really go and share with people and stop people experiencing some of the pain that I’d been through on that journey. But also really and just a fascination as to why is it some businesses seem to succeed and thrive and do stunningly well when other businesses in the same industry just, you know, struggle and fall over. And what is the difference that makes the difference. So for me, that’s kind of been a question that’s driven me the whole of my kind of career up to this point. So obviously during that 17 year period, we’ve had a number of recessions during that period. We’ve had a number of crisis, all kinds of things that we’ve had to help navigate clients through and support them. And it’s just, I became really fascinated with this whole concept of agile, not just agile businesses, but also how do you pivot? How do you really kind of, what have we done over the years that’s worked. And then obviously when your research came out, I was like, oh, this is interesting. ‘Cause it’s research that actually substantiate some of the things that I’ve been saying over the last 17 years, that worked and sadly, and this is the sad thing I think is that too many business owners try and figure out through trial and error and having done trial and error myself. It’s a very expensive, painful way to learn anything. So anytime there’s data research that you can interpret, I think that’s always the challenge for business owners is they’re too busy in what I call the head down space they’re just trying to survive to spend the time to look up and go hang on a second, are we actually doing the right things, you know?
– So like any opportunity to share some of those insights to your audience, who’s listening to this and to serve them and, you know, to help then great I’m happy to share.
– Yeah. And that’s exactly why I wrote the book about pivots and what the research is saying. So Paul, you know, you’ve had direct contact, you know, obviously you’ve had your own businesses and you’ve had direct contact with kind of thousands of businesses kind of from one person band type jobs, right up to multimillion pound operations. That I’m aware of. So just for you and from your experience, what does a pivot actually mean?
– So I think, yeah, I mean, I’m very fortunate today, as well as the coaching business, I own a team training and a consultancy and profiling company as well as a digital online digital marketing agency as well. So, you know, I’ve got three different businesses that I run, but I think the key thing here is I think people need to be aware. There’s a difference between a pivot and a dash for cash. And let me explain what I mean by this, because I think sometimes people assume it’s a pivot when it isn’t it’s a dash for cash. So like if we take a really good example in the last couple of months, so when the coronavirus hit and I’ve got a client who is in the optics field and they had a great distribution network in China and when they were able to access PPE equipment really well, really fast, really early in the cycle. And they were able to get in leverage those contacts. And whilst that their normal business you know, couldn’t really function at the same level, because obviously all the retailers, all the retailers are shut down. There was gonna be this demand for PPE equipment. As businesses started to open back up and they were able to get in there because of their network, they were able to source really high quality products and they were able to get it into the UK. And they were able to actually get onto the pre supply list for some of the major hospitals. And they were able to sort and serve people at a higher level and that’s important. It wasn’t just about making a profit. It was about serving people, which is, you know, for them was a really key part. But the reality was that was never gonna be a sustainable longterm pivot. That was a short term opportunity to fill a real urgent need in the marketplace to leverage some contacts and to generate some revenue and, you know, some point of massive profits, but to be able to generate profits, where the, you know, the business would previously have not been able to generate anything during lockdown. Now the reality is that market is now pretty much collapsed is over supplied. Everything’s become commoditized. There’s very little margin in it now cause everybody’s piled in. So you know that, as I said to them at the time, I said, listen, you probably got, you know, maybe 60 days where you were ahead of the curve because of your relationships. So you can get in serve people make a difference, make some money and then get out. It’s not a longterm sustainable pivot, right. It’s just an opportunity in the short term. I think sometimes there’s a difference here between, as I would say, the money is always moving and pivots are about when you find that new source of flow, that new source of cash flow. So if you assume like in any market, if you’re looking at a market, sometimes the money’s there and then the money moves and the pivot is really just relocating where the money’s gone to and then supplying products and services that go to where that need is. So if you’ve got the mindset that the fact that things are always moving, that the money’s moving, then you’re able to see pivots is just moving ahead of where the money’s gonna go next.
– The truth is that it’s gotta have a level of sustainability. So it’s not a short term thing. You know, it’s gonna last for at least you know, a couple of years or so. The reality is so you’re able to build, repeat customers out of that. It’s not a kind of one time sell and then get out. That’s not a pivot, that’s a dash for cash.
– Yeah. Yeah it’s kind of following the market and being flexible enough to work out where the market’s going and being able to keep up with it rather than kind of going out of business because you stay with a market that’s actually dying.
– I think there’s also a difference here between pivot and what you do and how you do it. So let me give you a good example, right? So in my world, obviously the minute, you know, F12 Mastermind, we met in London in March, but then there was a lockdown literally the week after we met, which meant we couldn’t meet. So we aren’t going to meet in April, May and June. Obviously you might hear some noise behind me. They’re taking the marquee down from yesterday where we met in a marquee, outside my house. They were able to actually hold it outside in the marquee yesterday. But the reality was in interim, we had to figure out how to deliver the value. And then we obviously moved to platforms like Zoom and models like that. Now that wasn’t a change in what we did, what we did was still the same. We were still coaching, training, empowering people and supporting them. But how we did it shifted now that in my mind, that’s not a pivot. That’s more just a shift in how you deliver the value as opposed to a true pivot, if that makes sense. Right? So for me, that’s not a pivot. Lots of people have been posting to us we’ve pivoted to online. No, no, you just shifted how you’re doing what you we’re doing, You know, there’s nothing wrong with that, but that’s not a pivot, right. If you’re just doing it differently, that’s not a true pivot in my mind.
– True pivot involves value creation. And it involves this ability to kind of go look where we can go from value creation to value realisation. We’re able to create it and realise the value. And if you’ve already got a good model for creating value and realising it, you just might be shifting the way you’re realising the value.
– Yeah. Yeah, definitely. And one of the things that’s kind of come out of the research is this kind of clarification of what a pivot, which is really seen, as I say, from a research point of view as kind of a primary method of moving a business into a new direction.
– In effect, it’s what we call it, a strategic reorientation. And it usually the entails kind of repositioning the direction and the aims and the goals of the business or the organisation kind of creating and testing a new direction, which is fundamentally different from the original one. And strategically realigning the business or organisation with current market forces you know, as you say, following the money and the needs of both society, but also the needs of the business.
– Yes demands. So, let me, I’m a great believer in trying to make things real and tangible.
– Go ahead.
– Challenges sometimes with research is it becomes quite intellectual and theoretical and you go, in fact how does that actually really work? So I’ll give you another example from an F12 client of ours. So they’re in the event space. So, in February that are really full events, you know, calendar, right? They’re building exhibition stands. They’re doing, you know, full on events for clients. Obviously the minute the that COVID hits that entire order book disappears. It’s like, you’re talking about millions of pounds of revenue that just disappeared. So the question then becomes, okay, the first thing I think, and this is a critical basis, you’ve got to do it internal audit, right?
– So it’s like you know, what are the internal skills of the organisation? What is the ability that the organisation has to create value? And then ask the question, how could we redeploy those skills, capabilities, and resources to create value where there is a different demand? And what they did was go look, where’s the demand shifted? Well suddenly everyone’s working from home, which means, okay, there’s a massive demand now for people to have at home desks, you know how to work at home desks. There’s a massive demand for people to have laptop, you know, like laptop stands that I’m on now, actually that can actually go on top of a normal desks so that you can have a standing up desk at home. Now they’re able to manufacture all of that in house. They’ve got the capability, they’ve got the raw materials. So that wasn’t an issue with supply chain cause they already had it in stock and they’re 100% environmentally and a hundred percent recyclable, which is a big trend. Obviously everyone wants to get back to being that. So they were able to, the first pivot was to do that. They moved into that market really early. They started making a lot of money. They’re actually able to bring back everybody furlough to actually meet the demand that was generated. And then the next demand that was obviously gonna come through is that the perspect screens for shops and offices, as they started to open up and again, they had supply, they’re able to create it. And they were able to create the first a hundred percent environmentally friendly perspect screen, which at the end of it, if you want, you can send back to them and it gets broken down or reused again. So, and they were able to come out with that ahead of the curve. We helped them build an online sales funnel for it. And we were able to launch, and this is the key is where we’re able to launch really quickly to test the demand before they manufacture the product. You actually test the demand. Will people pay for it? And yeah, absolutely. Then you go out and then you build a distribution network and you partner with people. And next thing you know, they won a contract with, I called Sally Hoover with a major sporting organisation for, you know, for six figures. And you know, you go, well, none of that existed, you know, four weeks ago, but it’s that ability to go, what have we got? What are we good at? Where is there a need and how can we create value and then realise that value rapidly and then scale it.
– Yeah. It’s yeah. So there’s this organisational flexibility. That’s the heart of a pivot, which, because as you say, it’s not just like a short term thing, usually what, you know, a proper pivot is talking about areas where reorganising the kind of structures, the systems, the production and the procedures in order to shift. So it’s a longer term thing. Yeah.
– Yeah. And I think, you know, that if you take this example of the screens, it’s interesting. ‘Cause you know, obviously initially there was a massive amount of people wanting screens for retail and offices and stuff. Now that demand is starting to drop off obviously now is that a dash for cash maybe, but actually the pivot is more about creating environment. They’ve shifted the messaging of the company to be look we’re experts in creating environmentally friendly, a hundred percent recyclable products that keep your employees and customers safe. So that’s the pivot that they’ve got on. They are not just going you know, we used to be an exhibition company. Now we’re a company that creates and manufactures a hundred percent recyclable products that keep your employees and your customers safe. So that’s difference. That’s the strategic pivot. The product mix is gonna change inside that over time, of course, but that’s the strategic messaging and now customers go, okay, I get what you do.
– Yeah and you see, it’s having this. As I would say, you know, it’s having this strategic, but also the resource flexibility to be able to do that. And quite a lot of it’s about the mindset of the people within the organisation and whether they’re open to change and whether the founders or the actual organisations open to change are able to actually be flexible and quickly.
– Yeah, and I think what’s interesting with that one as well is I think it depends, you know, I’ve got a passion for profiling as you know, within the profiling company that I own. It depends on what someone’s profile is as to how easy they are to adapt, to change and pivot and whether they’re resistant to that change and whether they fight it. And I also think there’s a mindset here, which is some people, you know, I’m sure you and I remember the great book Who Moved My Cheese, you know, there’s, if you haven’t read any of it, the whole idea of look someone’s moved the cheese and some people just have a stroke about the fact that the cheese is moved and other people go look for the new cheese. And I think the challenge is when it happens as fast as it sometimes does in markets and in COVID is a great example although we had a great example in 2008 with the economic crisis it happened so fast, some people, some business entrepreneurs and some experts and senior managers in companies, they can’t kind of deal with how rapid that change happens. And they find it very hard to adjust and accept the reality that there’s a new world right now. And you’ve got to change that, you know, some people can do that easier than others. And I think it does a lot on your profile to be honest with you. I think as to whether you’re somebody who can do that fast or you’re… And that’s where the key is to ask for help either from experts or consultants or people who can come in and go look, I can help you make that change because that’s what I do. I’m a change facilitator. You know, that’s part of what I do, but it’s also about having someone else to shift your thinking. It’s hard to do it on your own I think.
– Yeah, I think it is. Well, we, you know, so some of the research that I was involved in the kinda nineties around what we call tolerance for uncertainty probably only about 2% of the population are really comfortable with uncertainty and kind of people would describe chaos, like really comfortable so that they enjoy it. And the what, they are kind of inveterate learners, what they do is they try and work out what the reality is. And they make this assumption that they don’t know as opposed to other people who are trying to make the reality, what they want it to be, which is a very different kind of perspective. And then we get this whole kind of range of range of people, and so right at the bottom of this, and you’re talking about profiles is this idea of people’s tolerance for uncertainty. And also as you were saying, that kind of speed of it. Interesting, really interesting. So, what are the kind of range of pivots that you’ve seen over the years?
– I mean, we’ve seen, I mean, so it depends, I mean, I’ll give you an example, I suppose, for a couple of examples I mean, we’ve seen so many different pivots in terms of, you know, that was a manufacturing example I gave you before, obviously professional services, you know, in terms of pivoting around some of those kinds of things. Giving you an example. So I’ve got a client of mine who runs English language schools and training in the holidays for students from Italy, from China, and from all over the world, really Brazil as well. Obviously when the lockdown happened there is a good example because suddenly nobody was travelling and nobody was coming, but you’ve got this audience. And I think it’s a key thing is to understand who your audience is as well. You have this audience of teachers who would normally come with their students to the UK, who are stuck at home and who are essentially in this position of not having any support. So when you come from a place of like, who are we trying to serve? Who are we try and look after? Who we try to support? You know, they were able to very quickly reach out to that community and, you know, build a Facebook group of, I think it was about 1500 teachers globally who were English teachers. Who’d never had any form of training in how to teach English. They were bringing the kids to the UK and then actually run training courses to train teachers. So teacher training courses online that turned into a whole business of itself. And now, you know, they’ve got online products, they’re creating digital revenue globally, and when the market comes back and people are able to come back to the UK, that will just be another layer of value creation and multiple streams of income. That sits on top of the existing business. So that was really a question of just understanding, you know, who’s in need of support right now. And what could we do to support that community in a way that would at the same time serve, but also generate cash for us as well. And that’s kind of a key thing I think is to learn quickly. I think the research pull that out is about your ability to how quickly can you learn a new set of skills? ‘Cause, you know, they went on online business, there were physical location based business, generating money with, you know, taking schools in the summers or taking universities now and they had to shift to being an online membership and online training business. Now that pivot requires a huge amount of skill development, a retraining of a team, and also an ability to learn a whole new business model.
– Oh yup.
– And I think sometimes the pivot and hats off to the member of F12 Celine, bless I give her a name check, who, you know, she committed to learning like intense learning for two or three months to figure out how to do this and learned this entire business model. So I think part of, you know, when you ask what have I observed? I think the thing that I would say I’ve observed the most is the business owners or the leaders, or the senior managers who are prepared to learn new skills to harness new opportunities, they’re the ones that seem to pivot more successfully than people who go look, I’ve got this skill set and I’m want it to work over here. Sometimes you need to realise actually the current skills you’d got are not the skills you’re gonna need for a successful pivot.
– Yeah, yeah, absolutely. Absolutely. Yeah, and I would agree. And when you look at some of the really famous pivots, you know, Slack is a really nice one, right?
– So, you know, the founder of that Butterfield, he set out with a games company and he had to build some thing so that all his software people who were spread out cause he was using a kind of distributed network of software people. He wanted them all to be able to communicate and he built something for that to happen. And the game didn’t, I think it was called Never-ending didn’t really take off. So he then built another game and that didn’t go. And then he started realise he had this communications tool on his hands. He kind of pivoted that from the second game was called Glitch, I think, which is a nice name. He then pivoted to Slack. Slack now 2020–
– He living on a business, right?
– Yeah, it’s worth about $5.1 billion.
– Well, I think that goes back to an important point. I think, which is Slack was my take on that would be Slack solving a problem. So Slack is solving a real problem for businesses. And I think this is a key thing with pivot as well. I know, we were talking about this yesterday at F12, we’re saying that the fastest way to really kind of change your business. And so we could use pivot in that word is that it’s to change your customer. So he had a B, you know, with the games that’s B to C and you’re selling something people want may or may not want. Whereas actually, when he pivoted, he pivoted his customers much as anything in terms of going well, actually we’re gonna sell to businesses who have a definable problem and actually will pay us, pay to solve that problem. And I think if you’re gonna successfully pivot, you’ve got to ask the question, who is the customer? And has it changed? And do we need to change our customer? Because quite often the most successful pivots have come when businesses changed, who they’re selling to, and then because they were able to solve a much more valuable problem. And that’s a great example of it, you know the games, selling a game. You’re not solving a massive problem for a consumer. You’re trying to create a demand, but you’re not solving a massive problem, but the business who had a communication problem, you’re solving a huge problem. Therefore people will pay you a lot more money for it. So successful pivots, usually in my experience, get really clear about involves changing a customer to some Dixie in terms of who they are, who they’re serving and who they’re selling and who they’re actually trying to do business with. It can fundamentally shift it. I mean, it’s no difference from the exhibition company. They were in the other way, they were B to B and then they weren’t B to C business to consumer selling, you know, desks for homes. And then, you know, that was a pivot into a different customer segmentation.
– Yeah, yeah, yeah and again, it’s going back to this thing about moving into a completely different market and changing everything, you know, the structure and goes back to that whole idea of kind of organisational flexibility. Brilliant. Okay, great.
– Is it helpful by the way? ’cause I think hopefully it’s bringing it alive for people listening to this in terms of going, ’cause I think sometimes you’ll hear about changing the market and it’s sort of, what does that mean? It’s like no just change your customer. think about who it’s like a guide to that question is like, who do we need to serve? Who’s got a problem right now that we have the skills capability to actually be able to help? Like for me if you ask that question, it’s usually gonna to throw up way better answers than like, what are we trying to sell?
– Yeah. Yeah. So there are generally two types of pivot that there are kind of iterative pivots that are the kind of smaller ones. And they’re kind of focused on kind of improving our market positioning and they tend to be triggered by kind of competitive moves or you know, technological developments and things or complete pivots of the type that we’re talking about here, where we move into a completely different space. The business model is different. The whole thing is different because we’ve had this realisation and we completely move into a totally different space and–
– I think you can see that a lot. I think if you, so on the way I would interpret that is if you look at a lot of retailers at the moment, you’ve seen a lot of retailers do iterative pivots into shifting online, closing stores in the high street and moving everything online. That’s to me, that’s kind of like the existing, what you’re selling, isn’t changing and even who you’re selling to isn’t changing. So it’s more of a reiterative kind of like we’re just changing the leverage model, how we’re actually delivering the products or service. That would be my take on it anyway, I think.
– Yeah. No, no, I would agree. Definitely, definitely cool. So just in your experience, you know, what is it that pushes an entrepreneur or business owner into doing a pivot and then seek help.
– Yeah. Good question. I think there’s two things really it’s usually pain, right?
– That’s good.
– You know it’s usually life suddenly got very painful and they suddenly got to a level of pain that’s got their attention. I’d say that’s one or fear. If I was gonna say, I think there’s two things that draw people to do pivots. It’s either fear of realisation that if I don’t pivot I’m not gonna have a business in 90 days, time, all the pain of actually the money’s moved. I haven’t, we’ve got our sales funnels drying up. We’re gonna have a cashflow crisis or we’ve got a cashflow crisis and actually we need to figure out how to fix that. So it’s usually one of those two things in my experience, the sad fact is I think not enough people reach out for help. I think that’s a fundamental thing. I struggled, I think my whole career I’ve… I said the other day that most business owners will pay more money to learn how to get taught, to drive a car than they will to get paid, to get taught to how, to how to pivot their business or learn to build a successful business. And that’s never really made any sense to me. Most, for me the most successful people I’ve had the privilege of working with, and I’ve worked with some incredibly successful entrepreneurs, right? Like millionaires and multimillionaires and some people who’ve just come out of the gates swinging and done really well. The thing is that they’ve been smart enough to know they don’t know they don’t know.
– And that whole kind of look, be addicted to learning. It’s like, look, the game is constantly changing. And if you’re not constantly staying sharp, sharpening your saw, learning new skills, understanding how it’s changing. And you’re not growing as a leader, your organisation is fundamentally gonna get stuck at some point. And I think that most people get to the point where they’re desperate for solutions and that always, if somebody comes to me and says, listen, Paul we’ve got a problem with our business. We’re about to run out of money in 90 days. Can you help us? And I’m like the only answer is you should come and talk to me a year ago, when you, you had warning signs this is gonna happen ’cause you know, you can’t always there aren’t silver bullet solutions. If, to some businesses they’re just too late. Some people come too late for help. So I think for me, it’s like look the first sign that you’ve got a challenge and you might need to pivot is when you should ask for help, do not wait until it’s the gasp. Because most people can’t, you know, you can’t pivot most businesses when they are less than 60 days away from going broke. It’s hard to, it’s incredibly hard to do it though you can, but it requires a level of skill that most people in my experience don’t have to put off on their own. Because at that point it’s like, you get one thing wrong and you’re gonna be wiped out. So for me, it’s like look ask for help early in the process. And there’s a phrase I said there, if you’re not prepared to break your own business model, if you are not looking at it going, how would I compete with myself? Or if I was my competition, how would I beat me? Right. And then set about re-engineering your business models so that you’re better than you are. And you, then you stop that happening. Cause nine times out of 10, the people who come into your market and are gonna cash you out, or the pivots you’re gonna need again are gonna come because you didn’t see something coming.
– Right. Most pivots are caused. Not because of the stuff you can see strategically it’s stuff you never saw coming. That’s what causes a pivot. In my experience. Right? So it’s like the minute it happens, you go to go right? Who can I ask for help on this? Who’s been here before? Who’s got a model? who’s been through this before? I mean just, to give you an example, right? So yesterday, in our meeting here in our marquee, right, we had like, I think it was four of the members in the room shared how last month was their best month ever. Like not just in the crisis, but ever. And some of those businesses have been in business three, five, 10 years. And it’s a mindset thing as well Dave I think in terms of going look you can either see something as a crisis or as an opportunity. That’s a mindset and it entirely goes into where you’re prepared to put your energy and focus. If you choose to see it as a crisis, you’re gonna struggle ’cause mentally you’re gonna be in that fear mindset. If you see it as an opportunity, you’re gonna go, we have an opportunity to redesign the business, we have an opportunity to take it back to basics, which is something most of the clients who’ve been really successful over the last three or four months that I work with have done is that we’ve used the opportunity not just to pivot, but to go back to core. Alright where is the core engine that drives the business? What is the core product that actually we need to sell to really engage customers. And it’s like, some of us, the pivot comes from go back to core first and that’s where the strength is. And then pivot off that core which is your strength.
– Yeah. Yeah. I would go with that. There’s an interesting thing. That’s kind of come out of the research. In fact, I was doing an interview with a researcher from America, Reagan Stevenson, and they did some really interesting research looking at entrepreneurs and found that contrary to what everybody believes about entrepreneurs, entrepreneurs are particularly bad at making pivots largely because what they do is they identify that business with themselves. It kind becomes a part of their identity and they find it very hard to move out of that identity. And because it’s part of their identity, they stick with a business and a business idea and a model way longer than they should do. It’s a very small percentage of entrepreneurs actually, who are the kind of masters of pivoting.
– Well, I think that’s, I’m really fascinated by that because it goes back to something that I’ve always taught, which is about your identity, what’s your identity. So if you come in, if you know, when people qualify, when they join like one of my Mastermind programmes I know you’ve been in one, they come in with the identity of I’m a business owner, right? Which, puts them in the operational mindset. I run the business. And I say, when you start to see yourself as a business builder, right? And this is the business you’re currently choosing to build, then you’re less emotionally attached to it because you go like, I’m a business builder. This is the one I’m building right now and it might have a lifespan of five years, it might have a lifespan of 10, it might have a lifespan of three, you know, and I’ve got a client yesterday he’s had a business for 20 years. He’s done great out of there. Right? He’s done really well. He’s made really good money. The challenge is, and he said it yesterday in the room, is that the industry’s in is contracting at a rate of 40% a year. Now, at some point you’ve got to go, this is not an easy place to build a business anymore. This is just gonna get harder and harder. And actually, I just need to be accepting of the fact that the money’s moved and if I’m a business builder, not a business operator, is that different mindset. And I need to go look for the next opportunity.
– And that’s, I think it’s fascinating. ‘Cause I think it’s the minute you get stuck in that I own this business. No, you you’re operating this business. If you’re a business builder, then you’ll build multiple businesses. Some will fail. Some will succeed. Some will be amazing. Right. But it’s, what’s your identity? And I think identity for me drives behaviour.
– Yeah, definitely.
– And your ego, let’s be honest, Dave, look, if you start your business on your own, you’ve got to have a healthy amount of ego or you wouldn’t try it. Right?
– We wanna be right. We wanna be right. You know, when I had a business failure six years ago, it’s the hardest thing in the world to deal with. Cause you like, you have to admit to yourself that you got it wrong and that’s hard, that’s really hard, ’cause like, you know, you got to admit you don’t know and that’s the thing that it’s like the people who in my mind succeed and pivot the most of the ones that go I’m happy to accept, I don’t know everything and therefore I’m gonna stay in that learning mode. And that’s what leads to successful pivots in my experience anyway.
– Yeah, yeah, yeah. I agree and certainly one of the things that we were kept, well, a couple of the things that we’re seeing coming out of the kind of research on pivots is that decision to pivot is, as you were saying, the kind of fear factor is largely based on, on three aspects, you know, how big the threat is?
– Because it needs to be big enough to push us out of our A, the comfort zone, but also out of our mindset and this sense of ownership. But we also have this sense and I’ve done this in the past where you think I’ve put all this work into this, I don’t want to lose it.
– So we kind of hold on to it. The second one, which is an even bigger factor is how immediate the loss is going to be. And, that’s been shown to be quite a really big, important factor in this. So like how much runway have I got got? Like, am I facing disaster in the immediate future or longer? And what we see is people got longer runway tend to delay the decision to pivot. And then lastly, just about how much uncertainty there is about the future and their own tolerance of uncertainty. And if they don’t have a lot of tolerance of uncertainty, then it becomes a bit of an issue.
– Yeah I love that by the way. And I love that. Can I just talk to you–
– Yeah of course.
– Like this concept of some costs catches a lot of entrepreneurs out. Well, I’ll give an example of like one of the most gutsy experiences I’ve ever had with a client who was confronting this. Can you hear all that in the background or is it just me?
– No I don’t hear it.
– Okay, cool. So I was doing a three day leadership retreat for a software company. And on day two, we were having a conversation about product development and product roadmaps and what we were looking at and where, and, you know, where is the future of the market going and all those kinds of good things. And the topic for discussion for the session of the day was what are we gonna do with this particular product? And the company had sunk about half a million pounds into developing a product, but it still wasn’t right. It still wasn’t great, you know, and all those kinds of things. Anyway, during the course of that conversation, I asked the question, you know, you know, how much is it gonna take to get this product to market and get it monetized and get it making money. And they were like, well, it’s gonna cost the least number two, 300,000. So you can pretty much accept it’s gonna cost a million quid by the time you’re all done. And I’m like alright. If you had half a million quid or 300,000 pounds to invest somewhere else in the business, where would you put it and what would it do? And they had all the answers to that question, right? We’d put it here. It would grow this market. We’d go into the U.S. we do this. We’d do that. They knew all the answers to that. So I’m like, so I said, why are we fighting keeping this thing alive. If we know that it’s gonna take 300,000 pound more, and it’s not really what you wanna do and where you wanna to put your energy. And at the end, they said, because it’s half, we spent three and a half a million quid. I said yeah but it sunk cost. Right? I said, it’s gone. And there’s a great quote by Tim Ferris, who the, all of the four hour work week, which I love. He said, this is so powerful. He said, the big shifts, half of a game. Once he said, when you realise that, the way you sometimes you lose money is not the way you have to make it back.
– Right. And we had this conversation and in fairness to the board, fair credit to the owners as well, the owners just went, do you know what kill it? Like kill it, let’s just kill it right here right now in the room. And I remember the board and the senior management team be like, are you serious? We spent 300 on this. They were like, look, there’s no point coming away for a three day strategic planning event, unless we’re prepared to have the courage to make brave decisions. Right. And this is sunk cost. It doesn’t matter. It’s gone. It’s like, you’ve spent it, it’s gone through the business. It’s been it isn’t delivering value. And I think some of it is like knowing when to quit, you know? And I think too many of us get, there’s the kind of, sort of motivational stuff that drives me crazy. When people go, oh winners don’t quit. No, sometimes you need to quit. Sometimes stuff is just not gonna work. And you’ve got to get out of it. and into something that’s better. And they took the 300,000 pounds. They were going to invest in that. Put it into a different part of the business, create an entirely different division within 12 months, that made them twice what they had lost in that venture before. And I think you’ve got to have the ability to not fear shifting out something that isn’t working to, to finding something that could work better. And there’s sunk cost keeps us trapped mentally because we go, I don’t wanna lose the money when you realise it’s already lost, it’s gone. It’s done and you know, it happens to us all me included, alright. We have to close an office in Australia in the last three months because it just, a person there got ill got sick. It was sunk cost doesn’t matter. And I remember my finance lady getting hot, like literally she goes we put some money. It doesn’t matter. It’s done right. It’s now about energy. Where are we gonna put our energy? And I think that’s where if you’ve gotta pivot, you’ve got to ask the question about what do we need to stop spending time, energy and resources on in order to put the energy and resources into what’s gonna work.
– Because actually sometimes it is about getting rid of clutter to focus on actually what’s gonna move the needle. And I think I love your point about delayed consequences. ‘Cause it, you know, I like health and fitness is a big thing in my life. And I always say, if you went to a a fast food joint and you got sick 24 hours after eating an unhealthy meal, you would still be eating unhealthy food. And that is so true because your success is in small steps and failure is small steps.
– Yeah, definitely, definitely.
– That’s the catch.
– There’s actually two other things that are happening here. So I was doing some work with the NHS couple of years ago. So there’s kind of two concepts that help here. One is what we call cognitive tunnelling. So we get caught in this pipeline of thinking, because we’re heading in a certain direction and all the thinking stays in that kind of pipeline. And then we also get what we call decision-making pipelines. So for example, you go to the doctors and the first doctor diagnoses you with, I don’t know, diabetes, and then sends you to a consultant. The consultants looking at you through the lens and down this pipeline of diabetes. And all of their decision making is in this pipeline. We see the same with projects and that kind of these decision-making pipelines, you can get an awful long way down the pipeline before somebody goes, actually the original diagnosis may not be right. This may not be–
– Whatever it happens. You know, this may not be diabetes for example And the same thing happens in organisations. They make a decision that X is gonna run that we’re gonna to do this. And everybody inside that pipeline is now trying to make that work. And what the not doing is looking at it from the outside or looking out to what’s happening. And they end up just wandering down this pipeline. And, it’s the same in businesses. You know, we are a, again, this identity, we are a publishing company, or we are a manufacturing company, or we are, we do cars or whatever it happens to be, which pushes us into this pipeline. And one of the things that’s very strong in the research is that that kind of thinking really goes against pivots and gets people to be really slow in making a pivot.
– I love that. That’s amazing. I love that. Actually I’m gonna borrow that and use that if that’s okay with you, ’cause I love that.
– Yeah of course.
– But I think it also speaks to a point in the research that came out which is organisations that successfully pivot seek outside help. And I think that’s probably how you overcome that because you get someone else who comes back in and goes, could we get back to the original question that led us down this tunnel in the first place? Like, why did we ask it? Why did we go that way? And somebody who comes in and almost comes in. And I like to say, it’s like, my job sometimes is to ask the dumb question, so it’s like, well, why did we do that in the first place? And somebody goes well, because, and then we’re now, and you go well yeah but that’s based on a whole whole bunch of assumptions that are no longer true. So it’s like sometimes I think the only people who can do those kinds of questions and come in is that external consultants or external advisors, because they walk in without any of the preconceived baggage or beliefs, and they’re not emotionally invested, right. It doesn’t matter to me whether or not this project’s been running for five years or three years. I haven’t got the investment of time and relationship in it. I’ve come in to just fix it and get it working. And therefore there our ability to go look, I just wanna ask the right question. I don’t come with that tunnel vision I think it’s a brilliant insight. Absolutely.
– Yeah, and I, you know, this couples with a number of things, you know, I was talking about that 2% who are really good with uncertainty because they don’t make those assumptions about what they know. They assume they don’t know what they do is they collect information from this variety of sources, kind of 360, you know, including the cleaners. What are you seeing?
– Because they’re trying to work out what the reality of the situation is rather they need to prove what the reality is or do something first. So understanding what the marketplace is, what’s happening out there. And it takes that objectivity and the lack of connection, I suppose, especially. Oops, sorry. I don’t know why that’s up. That lack of emotional connection to be able to do that. And that’s kind of an important part of that process.
– I’d like–
– Yeah go on.
– To speak lightly on that ’cause I love that. ‘Cause I was with a great guy who came and spoke at one of my inner circle meetings recently from South Africa, who goes by the name of Vic. And he shared this incredible, powerful story about how he was running a board of directors, but he used to invite different people from the company to come and chair or be on the board. And in one of the meetings, which I thought was really interesting perspective, just sort of strategically. And he invited the guy who was on the gate, the front of the business to come in and sit in the board meeting and give input, right? And, he said he always used to invite different people from different parts of the business ’cause they would get completely different take on stuff. And during this board meeting, they were thinking about relocating the entire business, sort of five miles down the road or something. And this and this guy who is on the front gate said, that’s a really bad idea and everyone was like, look, it’s gonna make us more money. It’s gonna be this. And the guy on the front gate just went, it’s really bad idea. And everyone went, well, why? And he said, because you know, John and Jill and Mariana, whatever. He said, they won’t be able to come to work anymore. And then everyone was like, what are you talking about? It’s five miles down the road. He said, yeah, but they walk three miles to get to work now that would mean they’d be walking eight miles to get to work and they can’t do that. And then the board had like, it was just a fascinating kind of conversation. And the irony of the whole story is they didn’t move ’cause, you know, they suddenly realised that actually half of their, entire team in South Africa walked to work and they just hadn’t even triggered that. But the funniest part of the story is where they would have moved five miles down the road, a sink hole developed about three years later. And had they go there? The very business would have literally fallen into the ground. So this guy that had on the board and it’s not my story is his story, but this guy they had on the board who was at the front gate, literally saved the company from ending up literally in a hole.
– Yeah, we say this time and time again, particularly in times of uncertainty, it’s that initial kind of, what’s real, you know, what am I seeing here and not making any assumptions or making the assumption that you don’t know rather than say, trying to say, I know. And that makes a big difference. And that’s one of the core differences that these 2%, these kind of what we call generative leaders have.
– They have that ability to be objective and say, I don’t know, I need to discover. So it’s a process of discovery and they ask all around. Yeah interesting.
– Where can you get that, Dave, where can just for those people who are listening in, who might not know where can… Like that kind of research sounds fascinating but where could we get access to that research about generative learners and leaders? Like where would my audience find that for example.
– Yeah. Okay. So I did a book in 2006 called The Ambiguity Advantage, which is–
– Which is over that shoulder.
– There yep. So all that research is in there in a very readable form. So it’s not in a researchy type form. And it talks about that kind of range of reactions to uncertainty.
– Right from what we call technical leaders. And these are the people who deny change. So, you know, you just look at the start of the COVID thing. You know, the political leaders were going, oh, this isn’t a problem. This, you know, is not going to affect us. They were just in denial. They weren’t seeing the data that was coming from all the other countries, right through to, as we say, the generative leaders who have this set of beliefs, they see the world very differently. They’re doing things like some of the things that you were talking about, you know, they’re running experiments, they’re looking for patterns and they’re looking and they’re gathering data from lots of sources that lots of people wouldn’t normally, you know, like the guy on the gate or the cleaner or whatever it happens to be because they’re trying to build up a picture of what on earth is going on here on that assumption that their ego isn’t part of this, they follow the data and the evidence rather than following their own ego or what they’re trying to do. So, and then there’s a whole range. So there’s four main, main modes of being, I suppose, modes of seeing they’re actually worldviews. So there’s four types of worldview that leads you into how good you are at dealing with uncertainty. We’ll do a podcast about it.
– Yeah, sounds fascinating.
– Or a video about it.
– You know, I have figured out it’ll be hugely insightful for people at the minute, because I think how you deal with change is gonna become one of the most important things over the next two, three, four, or five years as a, in whatever you do, right. Whether you…And families are changing, businesses are changing, the world is gonna change and it’s not slowing down. So as we head towards society 5.0, you’ve really gotta figure out how you deal with change and how you need to personally pivot. And I think that’s always important, I think as well. ‘Cause sometimes you think it’s just the business that pivots, and it’s not, you can be, you can pivot as an employee, inside a business to shift the value that you create. And you can also pivot the very industry that you have a job in. So, you know, this mindset that you know, I’m in this industry for life now, forget it. That’s, gonna catch up with you.
– Yeah, and there’s a cognitive pivot just in seeing the new world as it is. And then as we say, getting your head around the new world and working out, what’s how it is part of that kind of cognitive pivot that we, you know, we have to do right at the start of the coronavirus pandemic, but we’re gonna have to do, because this, you know, people say, when we get back to normal, it, you know, it never, it never goes back to normal, no matter what happens. We’re on a one way path here and there is never a back to normal.
– We jumped forward three years in terms of the technical evolution and in terms of opportunity–
– I’d say five, yeah definitely, definitely.
– Three years in three months. And you know, we never go back as a society that we just don’t do that we go forward. We don’t go backwards, right. Otherwise, you know, and it happened when we went from the agrarian age to the manufacturing age, it happened when we went from the manufacturing age to the digital age and is happening now, as we shift into the next wave with AI learning and you know, the big data and all the things that are driving this, the frankly, coronavirus is just, that’s just a trigger in the journey. And I was talking to my Mastermind about this yesterday, about it’s the second wave you wanna pay attention to not the second wave of the virus, but the second wave of change that’s coming, which is gonna be driven by AI, big data, you know, the internet of things, all of those three there’s things that are coming together, that’s gonna drive and accelerate change. And if you think you won’t be affected by it, you are in that space of denial and you will be made irrelevant. You know, that’s the sad fact is like the economy doesn’t care. It will make you irrelevant. If you will not pivot, it will make you irrelevant. You can either be relevant or you can be out, you can be gone, it’s your choice. Right, and that’s brutal, but that’s the world we live in and it doesn’t care. That’s the harsh thing about it. When you realise it’s not personal. So your choice to thrive or your choice to struggle is your choice.
– Yeah. Yeah. They’re kind of considered to be kind of six, well, six drivers of change with six forces that are exerted on us constantly that create the change. And I’ve gotta remember this. This is something I teach the students is called PESTEL, which is political change, which is continual, environmental change, there’s scientific change, technological change, can’t remember the last, economic change and legal change, and then societal change as well. I missed out an S.
– There’s a big shift in societal change going on right now? Right.
– Massive if you would right now you’re getting a whole kind of, there’s a rebalance people craving for rebalancing of the wealth equation. And you know, that’s gonna drive different tax legislation without question, that’s gonna change all kinds of things. So I think, you know, someone said to me on an interview the other day, they said, what’s the number one ability you need to have in business to be successful. And I said, flexibility. That’s it. It’s not marketing, it’s not sales and stuff. It’s flexibility. If you are not flexible, you will struggle, period.
– Yeah, and it’s flexibility in here in the head, cognitive flexibility, that ability to be able to see things as they really are. And then in fact, there are four get this okay. So one of the things that came out of the research for this book was that there are kind of four things that contribute to whether or not an entrepreneur or a business owner is going to pivot.
– Alright so the first one’s the aspirations of the business or the owner themselves. And what they’ve found is higher levels of aspiration that I want to do well, those kinds of things predict to pivot. The proactive personality of the individual. Now this whole idea of proactivity is getting really big in the research world. We’re finding that it’s connected to a lot of activity, particularly around entrepreneurs, but in organisations and things. So higher levels of proactivity, this desire to take action and to do things as opposed to down at the other end laziness.
– Alright, I’m gonna call you on that one mate ’cause I disagree with that language type. I’ll tell you why, ’cause proactivity is something you can test for with the contribution compass profile. We call it activating energy. People with a lot of activating energy can be proactive because they have that inside of them. People who are, let’s just say more sustaining energy. ‘Cause that’s the language we would use. They need activators to get them moving. So they need so like, you know, Becky works for me, Becky is brilliant but Becky has this profile that if I don’t direct Becky and say, go do this, do this, do this. Becky will wait to be given instructions. Now Becky is not lazy at all. Right? But Becky’s entire profile lacks that, you know, You know it right?
– I don’t.
– Becky’s profile lacks, activating energy. So she needs to be activated by somebody with that kind of energy. So for me, this goes back to that whole thing of look, you know, you can’t manage everybody the same. And for me, proactivity is something you can measure. So if you haven’t got enough proactivity in your organisation, you need to recruit more proactivity. And that’s something you can test for, which is kind of quite certain. Sorry, I took you off track there–
– No, no, no, I’ll go with that, go with that definitely. So the level of perseverance or grit that the individuals have, and then higher levels of perseverance also predicts that the chances of either no pivot or a nutritive pivot, and then the level of impulsiveness that has, and high levels of impulsiveness predict a complete pivot, but also predict sometimes lower levels of success in pivots because it’s less thought through. So it’s kind of counterbalanced with those things. So when you–
– Well, I’ve done that in my career as well. I think sometimes you get, sometimes you think it’s a pivot when we’re actually if you’re being honest about it, it’s that you just got bored and you wanted to do something else. And there’s a big difference between a pivot and I’m just bored I wanna do something else.
– Oh, you’re just running away from something.
– Yeah. Oh, I don’t wanna deal with or I was confronted with brutal facts, right?
– So I don’t wanna deal with the reality that this is really uncomfortable.
– Yeah. Okay. So two final questions then.
– Yeah. Great conversation there Dave.
– Yeah I know. It’s really–
– I’m taking loads of notes here. I everyone listening to this ’cause I’ve written like a page and a half of notes. Just on what you are saying.
– Yeah. It was the same as it’s anyway. Yeah, it’s a nice kind of interaction between the research and the kind of practicality.
– Yeah love it.
– Yeah, so just from your experience, you know, what are the factors that lead to successful pivots for SMEs, for example, or organisations?
– Well, I think to be fair, we’ve probably covered most of it in the last kind of five or 10 minutes. I think it’s that the ability to adapt and adopt new ways of working, I think it’s the ability to, you know, I talk about turning fear from a headwind into a tailwind, you know, it’s like, can you turn it into something that drives you forward rather than, you know, the you’re so scared about what if we get it wrong rather than going look, we’re just gonna test rapidly test and evolve, test and evolve, test and evolve and lose this concept of failure. And I think the other thing I would say, and, you know, great, great research over the years by Jim Collins in his book Good to Great talks about this, where I learned it from, which is, you know, he talks about the concept of the bullets, in all cannonballs, where, you know, like the elements that used to be successful were the ones that fired bullets until they knew they hit the target, then they’d follow the cannonball and I think a pivot is about fire small until you know, that you found the flow, you’ve found the new money source and then go big in. I think people who have in my experience failed with their pivots have gone. This is where I think the market is. Let’s go all in only to find out they’ve sunk so much resource into it, that the market actually isn’t there, or doesn’t want what they think. And now they’ve not got enough resources to get out and try again. And that’s usually what leads to failure. So I think get good at testing small and then test and scale, test and scale, test and scale, rather than going, yeah, I think I trust my gut on that nine times out of 10, every time you think you’re right, the market will come back and go, well, not really. And this is, do your research and test small until you found. Yeah great. We found the flow. Here’s where the money flow is. Now let’s start moving into that and keep testing those assumptions. So I think for me, it’s about that, you know, the successful pivots of people of being not afraid to change. Don’t see it as failure just see it as evolving and that are prepared to let go of their current business model, because they may have changed it with a better one. Right.We’ve had clients of ours in the last three or four months. Who’ve ended up with completely different businesses that they’re sitting there thinking so saying to themselves. This is better than what I actually had in January, right. It’s like, it’s actually better. I actually love this one. This one’s better. And it’s like, you know, look pivoting, and change. Isn’t always gonna end up with something worse nine times out of 10 it ends up with stuff better, but you would never have got the opportunity to let go of stuff and refine it without whatever’s being forced upon you being forced upon you. Right?
– Yeah, definitely. Definitely. Yeah, well so, when I was doing the research for the book, we kind of kept, we realised, you know, from the research, there are seven largely success factors for pivots and that, you know, you’ve covered them, which is brilliant. So the first one is what we call organisational ambidexterity that’s that ability to be able to flex and change, but also, so organisational ambidexterity is an idea about being able to keep the money coming in from the existing–
– Yeah that’s true.
– Something going on whilst at the same time innovating and shifting.
– That’s a good point that I know, I just wanna note it, because actually you just bring up something that I think is really critical, right? It’s that most SMEs get stuck because the pivot they either run out of money before they pivot. And that happens and that’s happened a lot in creative arts space where its entire revenue streams have dried up. Did successful pivots happen, you’re right. Where they’re able to start the pivot but at the same time maintain an income stream so that they’ve got the time to test and measure. Whereas if you run out of the existing income stream, again, it creates too much stress, which clouds judgement . Right? So, yeah. Sorry just–
– Oh, no, absolutely. Yeah. You know, and it’s about building up a war chest or a disaster chest just in case, you know, as they say cash is key.
– I would say this. I would say everybody, I know that’s done really well in my client base follow the advice I’ve said for years, which is the minimum you should have in the bank at any given time is 90 days of operating cash minimum. And you should, in all honesty, aim to get to 12 months, you know, Microsoft is famous for always having 12 months in the bank of operating costs, as it grew all the time. So that if anything ever went wrong, they could always, you could weather the storm. You weren’t, in a situation we had to panic. And I think every one of the clients of mine that was reporting really great results yesterday has had at least six to 12 months worth of operating cash in the bank, they’re able to, you know, some cases, two of them actually bought competitors in the last 90 days. ‘Cause they have the liquidity to do it. So, if you’re not liquid, it’s harder, right?
– And that’s delayed gratification. That means not taking every penny out of the business just ’cause you’re doing well. It means go look, winter’s gonna come, spring happened, summer happens, winter happens. It doesn’t matter how good things are now. Winter will come. You need to be preparing for winter. Right. I live on a farm and you know, I watched the farmers and like they get seasonality and seasons and business owners just don’t. We think summer is gonna last forever. No winter will come. Right. Regardless of what you do about it, it will come.
– Yeah. Shift happens.
– Yeah. Anyway. So, what were the other seven?
– Oh now, now, now. So organisational ambidexterity. So yeah, the second one is a learning and a problem solving orientation and a culture within the team, within the organisation.
– And you know, and we’ve talked and talked about this idea of having a learning orientation and being a veteran, trying to find out what’s actually going on learning. And that’s a major thing. Team composition, which is a big issue that I know that you look at.
– Actually I look at that.
– And that includes developing a team that has a learning orientation, that has diversity in what we call domain expertise. So you’ve got enough diversity within the organisation in terms of their knowledge and their ability. Or you can bring it in quickly. Kind of and again, you were talking about this in slightly different terms, having a systematic or scientific approach to experimentation. So he’s not just all over the place. You’re actually following leads of investigation and it’s not just kind of random.
– That links back just if I can. Just to talk about that.
– Yeah please.
– That links back to the team piece and obviously, you know, I’m passionate about teams ’cause I think it’s the biggest thing that makes a difference to successful businesses whether you’ve got the right team. And obviously, you know, hence why I own a company called Team Dynamics, but the reality is everything you’re talking about, there in terms of research and data and analysis is what we would call refining energy in the contribution compass. And if you haven’t got refining energy on the team, you’re gonna struggle because that the contribution people with that energy make is their ability to analyse data, see trends, look at the details and come back and what I call act on fact.
– And that’s where the refining energy adds massive value to the team and that’s his contribution. So if you don’t have a balance of that energy on the team, you’re always gonna be acting on gut or instinct. And actually sometimes you need somebody to go, well, hang on a minute, the data actually doesn’t support remotely what you’re saying.
– Yeah. Yeah and in fact, that brings me to the next thing, which is having an evidence based approach that act on fact, you know, make sure that you’re dealing with evidence here and not just your own assumptions. And the last last thing for the team composition is creativity. So that there’s like, there’s somebody, or at least the team is developing. They can think about things. And then the last four major things are proactivity, open innovation. And what that means is that you’re doing environmental scanning, you’re going out and looking, and you’re keeping your eye on what’s going on out there, the technologies and things, and using them and bringing them in. Following the feedback and the evidence objectively, and then lastly, kind of a systematic testing of hunches and hypotheses. And they’ve been shown as the seven major kind of success factors for pivots.
– Wow, love it. I love it. I mean like what’s interesting is that quite a few of those funny enough almost by design, although it wasn’t intention when I did it that way, you know, at Mastermind actually covers a lot of those off ’cause if you don’t have the creative energy, usually somebody in the Mastermind has the creative ideas and input. So if you’re not creative, there’ll be two or three other people in the Mastermind who can bring the ideas, you can test stuff. We regularly have members who go look, I’m thinking of doing this. They run it by and 11 other business owners go, that’s a good idea, or that sucks. Or I wouldn’t do this way. So you can test stuff in a safe environment. And some of the feedback has saved people, hundreds of thousands of pounds on things they thought were a great idea. And everyone in the room went, nah, that sucks. Don’t do that. That’s awful. Right. And like so I think it’s really interesting ’cause I think Mastermind actually helps facilitate with quite a lot of the seven things, which is probably why so many members in the room yesterday have had really successful pivots in the last four or five months. There’s a reason why it’s helped accelerate that success change, right?
– Yes. Yeah, and just being in that culture, you know, having people around you that are thinking like that makes a big difference rather than just being on your own.
– Yeah. I think isolation, but you know, there’s one other thing I think is really interesting is that when you see somebody else successfully pivot, I think it gives you the belief that you can do it. So like when you see somebody going on like, we just changed this and this and we’re doing really great. And you go, well, if they did it well, I can do it. That’s a belief reinforcer.
– But, and I think that’s for me, that’s really a powerful piece as well. It’s like, you’re not just going, I’m the only one battling with this stuff.
– Yeah. One of the things that has come out a lot in the research and is becoming quite a theme is this idea of what they call self-efficacy. There’s belief that I can solve this problem. I don’t know the answers. I don’t know how to solve it, but I have a belief that I can conquer it. I can learn enough and I can move through it.
– And I think that’s very much what you’re saying
– Well certainty, isn’t it? You’re talking about certainty. You know, we talked yesterday about the kind of things that lead to actions and results. And the first one is certainty. If you don’t have certainty right, then you’re not gonna move forward. And if you can’t see the potential and the possibility and then the opportunity, It’s like certainty, opportunity, action, result. It’s like, you’ve gotta have the certainty that you can fix it. You’ve gotta actually be aware of where the opportunity really is. Then you’ll take action and then you’ll get a result. And it’s like, but there’s those four steps. If I don’t have any certainty that I can fix this, I’m not even gonna look for the potential. We’re not even gonna go out and see where that might look. And that’s something I learned. I learned that model from Tony Robbins, you know, in terms of the, the idea that look, you’ve gotta have a level of certainty in who you are and your ability to fix this before you’re ever gonna see the potential now out there because you won’t even look for it. If you don’t believe you can do it.
– Yeah. Yeah. It’s like that self belief, that self efficacy is hugely important and it’s coming out more and more and more in the research. Okay. Final question then. So you’ve experienced–
– You are grilling me man.
– I know. You’ve experienced them, you’ve seen them. So what are the leading kind of factors that bring about failure in a pivot?
– I mean, I think, again, we’ve probably touched on a lot of these, but I think for me, it’s really operating in isolation. If you get isolated and you think I’m gonna try and figure this out all on my own. That’s certainly when I had a massive failure, I think the thing is it’s not even a failure in pivot sometimes I think we’ve already touched on it. Number one is it’s going on your gut reaction, not doing small data testing, that’s definite. Number two is trying to fix it all on your own to think that you’ve gotta fix all the answers on your own, rather than sitting down as a team and thinking, how do we as a team solve this? And actually listening to them and understand for me, it’s about not understanding the contribution that other people on the team can make to solving that problem. So you assume that you have all the answers. That’s a massive, massive one for me in terms of–
– Or you’ve got to solve the problem.
– Yeah. It’s like, look, we as a team, it’s the me versus we thinking, if you get stuck in the me thinking, rather than the way we approach you’re like we’ve got to solve this. Who on the team knows about this? Who on this can we reach out to not asking for help and support. Definitely for me, it’s like, you know, listen, everybody needs help and support. Right? There’s something we could all learn from somebody else and not being open to that consistent learning, I think. And finally it’s, for me, it was like, it’s losing sight of who your customer is. And actually how are you trying to serve them and making it about how do we survive rather than how do we serve? How do we serve and our value to customers and then the money follows and then thinking I’m gonna go out and just try and I need to sell and make money. It’s like, when you have that mindset, pivots don’t work because you’re not coming at it from the right integrity and intention.
– That’d be probably five, is that five? I think it was five.
– Yeah. Something like that. Yeah, cool oh nice list. Okay let me give you my list from the research.
– Oh okay, great. Hang on a second. Is this a test?
– No, no, no, no, no. So what we found is the number one is exactly what you were talking about before. Just a lack of creativity. The second is having a mixed mindset and this is things like avoiding challenges, giving up too easily, reacting negatively or defensively to feedback, avoiding negative feedback, self aggrandisement. And, that just that sense of feeling threatened by others.
– Isn’t it denial I think. Isn’t it denial? You could pretty much–
– Denial definitely yeah. That’s part of that, which is definitely comes under the fixed mindset. A victim disposition, which is showing up very strongly for failures, which kind links to people who don’t wanna take responsibility or they’ve got a blame culture. So they blame everything else. You know, it’s the world, it’s the government it’s everybody else rather than taking kind of responsibility and saying, okay, regardless of what this is, it goes back to that whole self-efficacy self belief thing. I’m gonna fix this. I’m gonna sort it out. A feeling of dependency so that, you know, you can’t make the decisions. You’ve got to depend on others and then liking and this was an odd one, but it was a really interesting couple of studies about wanting to identify as a martyr.
– Some people get off on that. Don’t they? Big time why always me I’m being persecuted again. It’s like, it’s so unfair. Oh God, I hate that. That drives me crazy. ‘ Cause it’s, it’s just–
– I know.
– It’s like, which we’ve, I mean, you’ve heard me talk about this before. It’s what we call below the line thinking the whole kind of blow the line. I’m gonna blame everybody else why always me, the world’s picking on me. You see life is tough. I’m sorry it’s tough. It’s brutal. It’s not personal. And if you take it personally, it will destroy you. Right? It’s not listen, if we’re all gonna face, difficulty and tragedy. And if you’re in the… this is something I’d share just before we wrap up, is that you’re gonna play the game of business long enough. You are gonna have failures, right? ‘Cause you have to do the whole cycle of business. It is a cycle. And one of the best questions I ever got asked was somebody said to me, how many times have you been around the wheel? And I’m like, what? And they said, How many times have you been around the cycle? Because cycle is, start up scale up and then fail, right? Like how many times have you failed, this? Like, because if you haven’t done the whole cycle, you’ve never experienced the entire journey of running a business. Just like you have to get away from it’s personal. You are not the business. The business is just what you’re building right now. You are not the business. And sometimes you’re gonna get it right. And sometimes you’re gonna get it horribly wrong. And if you take it personally, if you really take it as it’s, you, it’s not, this is who I am. No, it’s not this is just what you’re doing right now. You are running this business. That’s not who you are. You gotta be able to separate the identity between what you do and who you are. Otherwise you’re never gonna successfully adapt and evolve as a business. You’re just not.
– Yeah. Just because of business fails doesn’t mean you failed.
– No, and what is failure anyway, it’s like, look, even I’ve had some, you know, we both experienced failures, right? But every time you get a failure, it depends whether you were makes you better and stronger or whether you decide to run from it, you can either go, listen, I’m gonna learn from that. And I’m gonna get better from that. And I’m gonna come back stronger. Great, it’s a test. It’s a test. Right?
– Yep. Yep. Okay. Yes, it is. Without a doubt. So the last three, so a lack of proactivity, not actually doing something and then the last two are interesting. Having a sense that your business is locked into a particular product service or business model.
– Seen that a lot actually.
– Yeah. And it’s that kind of cognitive tunnelling and the decision making tunnelling. And then last is just being too emotionally attached to your ideas and all of those six were found to be the most frequent factors in failure for pivots.
– I think they’d be the most frequent factors in failure for just about business period. Right?
– Let alone all you know–
– Life probably.
– Yeah life. I mean, if you get, I think that’s it, if you get attached to any of this, you have to be able to stay nimble and go, does it, you know, my favourite thing I say to class all the time is it doesn’t matter what you think it matters, what your customers are paying for. Nobody cares whether you think this is a good product, nobody cares. It’s like the market is gonna tell you whether it’s a good product and it’s actually solves a problem. And you’ve gotta get your ego out of the way. Otherwise you’re in for a very disappointing journey.
– Yes, definitely, definitely. Brilliant. Great. Anything else
– Great conversation, loved it really interesting.
– I know it’s been interesting. This is really interesting. And any other final points you want to make?
– Just yeah, I suppose where can my audience find out more about your research.
– That’s what I was gonna ask, where can we find you Paul? Well, I mean, I fairly easy to find luckily I have a really unusual surname, so you can find me on LinkedIn under Paul Avins. You can go to paulavins.com where you’ll find resources, there’s free videos on there. There’s free eBooks, guides, there’s stuff on there about the team profiling that we do. You can find a free report on their an 18 page leadership report on there about successful team building, which is useful given what we talked about. So just going to paulavins.com and you can find out more just about everything that I do and how I support entrepreneurs to successfully pivot. So yeah, go there or connect with me on LinkedIn. It’s always good to connect. So I post daily with tips and wisdom and advice and things like that. So I’d just love to hear what people got out of this and what they found valuable actually, it’d be great to get some feedback.
– Yeah. Yes it would. And I’ll put the links into connecting with Paul in the show notes.
– And also that’d be brilliant. I’d say, well, if that’s alright, can I give your listeners a gift? And as a gift, would that be all right? I kind of like —
– Yes of course.
– We talked a bit about the profiling and proactivity and the right kind of thing. So we actually we’ll put together a page just for your audience, where if they go to contributioncompass.co.uk/specialoffer, and you can put the link in the show notes, but if you just go to contributioncompass.co.uk/specialoffer, then you can save. I think it’s 20% off the price of a profile. If you wanna find out more about on there. So you can just go there and actually take one, save 20%.
– Okay. Brilliant. Thank you very much. Yeah send me over the link and I’ll stick it in the show notes.
– Awesome Dave.
– That’s been fantastic. Thank you very much, Paul. I really appreciate it.
– Privileged man. Seriously Dave I love our conversations. Every time I talk to you, I always go away inspired and then with a whole load of notes to go and do more about so.
– Yeah, well likewise. Yeah, yeah I really–
– Great, thanks for having me on the show man.
– Cheers. Thank you. Bye.
– Okay, bye.
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