All entrepreneurs must, at one point or another, decide whether to pivot their business plan. How should they react?

There’s a fallacy in the world of entrepreneurship that all it takes is conviction, hard work, and long hours to turn an idea into a multimillion-dollar company. Too bad that’s not the full picture.

“Just the fact that you’re working with ambitious, hungry, experienced, innovative, smart, and intelligent people every day, it’s just phenomenal. I love it,” said Sanjay Puri, cofounder and partner of startup incubator 9Mile Labs.

Puri knows it takes more than ambition and smarts to launch a successful company. Part of what startup founders experience at 9Mile Labs is development and refinement of big ideas into operational, and hopefully successful, businesses.

The process can be grueling when there are no customers to be found, or if the company isn’t growing as fast as projected. At some point, every entrepreneur faces a daunting question: Should we pivot? It can be necessary to make a few changes to the product or business model to better fit in the market. But it’s quite the ego check to change the product you once were — and perhaps still are — so passionate about.

If you’re forced to ask the question, the answer often is “yes,” but choosing to pivot isn’t a decision that should be made on intuition alone.

“Gut feel is very, very important, and everything you do, whether it is about the team, idea, passion, or conviction, there’s a lot of subjectivity and gut-feel involved. But pivots have to be the result of hard data,” Puri said.

The type of data used is critical. In the world of startups, customer feedback is almost as good as cash. Puri coaches founders to talk to customers, existing or potential, every day. This conversation should not be about selling your proposed product, or even proposing a product. This conversation should be about what potential customers’ pain points are, and what they feel would be an effective solution.

“Sometimes you’re going to pivot because you don’t know who your customer is, you’re not targeting the right customer, the (market) size is not big enough, you’re not growing big enough, or you’re in a declining market,” Puri said. “But it has to start with customers. Always.”

Puri said the most valuable conversations happen when founders position customers as the subject-matter expert. This approach validates the customers’ pain points, and they feel respected for what they do. This approach, combined with open-ended questions, enables the conversation to be rich and free-flowing.

But watch out for perceived shortcuts. Face-to-face conversations cannot be substituted for market research. Surveys imply founders already know what there is to know about customers’ pain points and a proposed solution. Swapping that type of quantitative data for more qualitative conversations can sink a startup before it begins to float.

“If you think that you can begin a startup by sending out surveys, you’re dead wrong,” Puri said. “Interview customers face-to-face and try to really understand their problems. This assumes that you don’t necessarily know what the problem is, and those conversations will take you in different directions.”

Puri said a proposed solution should be akin to a pain pill instead of a vitamin. You can’t afford for the solution you build to be an optional supplement; it must solve a real pain. If your solution does not remove the pain, you must pivot, and continue to pivot until that moment when you propose your solution to a customer and his excitement is palpable.

“As soon as you have an early version of this product, they’re willing to try that out. … Don’t worry about it being perfect; it can be crude. As soon as I can get my hands on it, I’m ready to try it out. And here’s money from my pocket to yours. Just take this money because this problem is so huge,” Puri said.

Let’s be clear — pivoting is not the same as failing. “You have to balance the strong passion and conviction of the idea with always talking to customers and being self-aware enough to act upon the information (you’re) hearing,” Puri said. “It’s a constant push and pull.”

Every entrepreneur will have to decide at some point whether to pivot or persevere, and startup founders won’t be led astray by customer feedback. Even investors can’t argue with customer validation.

“Investors don’t know (anything),” Puri said. “The mentors don’t know enough about your business. The only two people that know anything about your business are you and your customers. Ultimately, it’s about customer traction. It’s the only thing that matters. Funding is a proxy for whether your business is successful or not. If customers are taking money out of their pockets and shoving it into your pocket saying, ‘This is the idea that I love and I’m willing to jump on your bandwagon because you have such a great way of solving my problem,’ that is proof in the pudding.”

Should you pivot?

Eric Ries, Silicon Valley entrepreneur and author of The Lean Startup, outlines 10 reasons for initiating a pivot, all focused on making minor course corrections, otherwise known as pivots, to get closer to market fit and a successful business.

1. Zoom-in pivot. What previously was a single feature in a product becomes the whole product.
2. Zoom-out pivot. What was considered the whole product becomes a single feature of a much larger product.
3. Customer-segment pivot. Your product may attract customers and solve a problem, but needs to be positioned and optimized for a more appreciative, larger group of customers.
4. Customer-need pivot. Early customer feedback indicates that the problem solved is not very important, or money isn’t available to buy. This requires repositioning, or a completely new product, to find a problem worth solving.
5. Platform pivot. This refers to a change from an application to a platform, or vice versa. Many founders envision their solution as a platform for future products, but don’t have a single killer application just yet. Most customers buy solutions, not platforms.
6. Business-architecture pivot. Business models have either high margin with low volume, or low margin with high volume. You can’t do both at the same time.
7. Value-capture pivot. Changes to the way the company captures money, or value, can have far-reaching consequences for business, product, and marketing strategies. The “free” model doesn’t capture much value.
8. Engine-of-growth pivot. Most startups use one of three primary growth engines: the viral, sticky, or paid-growth models. Selecting the proper model can greatly affect the speed and profitability of growth.
9. Channel pivot. Channel pivots usually require unique pricing, feature, and competitive positioning adjustments.
10. Technology pivot. Sometimes there’s a new way to reach the same solution by using a different technology, especially if the new tech provides better performance or a better price.

This article originally appeared in the April 2016 issue of 425 Business.

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