Why a business pivot can become its greatest strength

28 July 2021|Agile, Leadership, organizational resilience, Resilience

Gaming and electronics giant, Nintendo, celebrates 132 years of business this year. Today, the company is synonymous with Mario Bros, Wii, and countless other gaming characters and electronic devices. But was that how its always been?

In 1889, in a small alley of Kyoto, Japan, Fusajiro Yamauchi hung a sign on the door of his shop ‘Nintendo Koppai’. The Japanese government had lifted their ban on the sale of Hanafuda (Japanese playing cards, made from paper and cardboard – also known as “flower cards”), and Fusajiro seized this opportunity to kickstart and increase the sales of his handmade “flower cards”. Business boomed, and by 1929, Nintendo Koppai was the largest card game company in Japan.

The company had hundreds of workers in 1950 when Fusajiro’s great-grandson took over. By this time, Japanese adults were turning to other forms of entertainment – bowling and pachinko (a Japanese form of pinball), in particular, were stealing profits from Nintendo’s Hanafuda.

Despite a contract with Disney to manufacture Hanafuda with Disney characters on them, the company’s stock price took a nosedive in 1964. The CEO, Hiroshi Yamauchi, was faced with a decision – to pivot the business or close its doors permanently. A range of other ventures – instant rice and noodles, a fleet of taxis, and rent-by-the-hour ‘love’ hotels – were tried. All of them were ineffectual.

Not one to give up, Yamauchi expanded the research and development department, taking on a young electronic graduate, Gunpei Yokoi. Production of electronic children’s toys began shortly thereafter and the business’ fortunes were turned around. The rest, as they say, is history.

Dig-in or diversify?

Often, when we are faced with challenges, we’re tempted to dig in and work even harder to reach the goals we’ve set. But when circumstances have changed, this can be the worst response. When market demands shift, new opportunities present themselves, or the products we’ve launched are not received as we’ve intended, it’s time to re-evaluate our path and direction.

This was the case for Nintendo and countless other successful businesses too. From YouTube to Play-Doh, if these leaders had not pivoted from their initial plan, they wouldn’t be in business, let alone become the household names they are today.

Great leaders are able to acknowledge and accept the conditions of their business environment and understand when they indicate a need for change. Not only do they understand the need to change, but they are also brave enough to create a plan B and pivot the business towards future success.

Looking for new opportunities and viewing your company with new eyes takes creativity and courage. Not all plan B’s will be a success – just as Nintendo’s initial attempts to change gear and try new markets also fell flat. But with each failure, we learn more. These lessons can be applied to other opportunities.

Business pivots and the courage to fail fast are closely related. Failing fast isn’t so much about failing as it is about finding a solution fast through trial and error, and as little monetary implications as possible. If you’re going to pivot successfully, you’ll need to be prepared to take measured risks.

The winding path to success

We all face unexpected challenges and changes in the markets that we operate in. Understanding the signs indicating it’s time to pivot is just as important as knowing when to work through challenges that will make you stronger.

Changing direction and choosing to pivot a product or the entire business can be a strength. Businesses that change direction successfully, listen to their customers and choose new goals that align with their new vision. Above all, effective pivots provide opportunities for growth.

Many pivots don’t require all previous work to be scrapped. Instead, it’s adapted for use in the new direction. In Nintendo’s case, the distribution lines that were already in place for their cards were put to good use for the distribution of new electronic toys and games.

Pivoting a business or product can improve a company’s resilience by allowing for innovation and growth in new areas. The challenges faced – and overcome – then stand us in good stead to make headway and achieve goals in new markets and opportunities that we spot. Giving our business longevity, strength, and resilience to thrive, whichever way we turn.

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