4 Vital Traits for Pivoting a Company
Sponsored Content Provided by Lexaria Corp.
As markets and consumers change, pivoting can become a necessary survival strategy for a business. Even for thriving businesses, a well-timed pivot can lead to further success.
Nintendo, the world’s largest video game company, was founded in 1889 as a playing card company. By changing its focus from cards to electronic toys, Nintendo was able to become an international brand and household name, and it is not the only company to find success after a pivot. However, pivoting isn’t always easy; if handled poorly, it can turn a struggling business into a failure.
With the spread of legalization, the legal marijuana industry will likely see many companies pivoting from other sectors to join the burgeoning marijuana market. Lexaria Corp. (OTCQB: LXRP), a food sciences company focused on food products derived from legal full spectrum bio-availability enhanced hemp oil, knows what it takes to pivot, as it has pivoted to the hemp industry from the oil and gas industry.
Regardless of the sector, a successful pivot requires four vital traits: the ability to recognize trends, a strong infrastructure, good management and the ability to utilize existing branding.
Before pivoting, a business should be able to recognize sustainable trends. Fads come and go, and many market trends don’t have staying power. Successful pivoting isn’t about jumping on the hottest new market; companies that pivot successfully are those that can recognize a market with the potential for long-term, sustainable growth.
For example, the legal medical and recreational cannabis markets are growing because of recent legalization measures. As more states legalize medical and recreational use, these markets will expand, generating new consumers and new demand for cannabis and other legal hemp products. The positive response to these products in Colorado and Washington demonstrates the potential for this new and expanding market.
“One thing every successful corporate pivot needs is, well, a need,” said Chris Bunka, CEO of Lexaria Corp., a company that has successfully pivoted from oil and natural gas to food products derived from hemp oil. “There has to be demand for a good or service that is unmet, or is poorly served by existing participants.”
Once a company has decided to pivot to a new market, a strong infrastructure makes the transition smooth and effective. Pivoting means redirecting a business’s product, strategy, and vision, not establishing a completely new company. A company’s existing infrastructure largely determines how well a pivot will go.
Well-organized companies can more easily transition from existing markets to new ones. Companies without a strong infrastructure may experience delays and confusion. Weak infrastructure may also be a sign that a company has bigger problems than its current sector. A poor start doesn’t guarantee failure, but it can cost companies time and money.
That said, a pivot may still involve some growing pains. Just as some companies may initially struggle to find their feet, pivoting companies can face similar difficulties. Solid infrastructure must be paired with good management. Good management doesn’t just announce the upcoming changes for the business; to effectively and efficiently pivot, good managers and directors are involved in the entire process. As Bunka explained, “Pivots, performed well, retain creative energies within a tight-knit group of executives who work well together, and refocus their talent and team spirit into new, more exciting and rewarding business sectors.” Without this kind of teamwork, a company may not be able to make the leap into a new market.
Utilize Existing Branding
Good management also knows how to utilize the company’s existing assets, just as it knows how to most effectively use the business’s existing infrastructure. Brands are one of a company’s greatest assets; to pivot effectively, rather than creating entirely new branding, a business needs to be able to utilize its existing branding. For example, Lexaria Energy was relaunched in 2015 as a line of nutritional supplements, joining Lexaria’s ViPova brand of Cannabidiol-infused teas in the company’s pivot from oil and gas to food science. This pivot works because Lexaria was able to pair its existing, recognizable branding with its newly created brands. This type of combination allows companies to use the assets they have while still entering new sectors and developing additional brands and products.
Pivoting can be difficult, but it can also be rewarding for a company and its customers. Of Lexaria’s pivot, Bunka said, “I’ve never been more proud of anything I’ve done in my professional life. I cannot tell you how gratifying it is when I get phone calls and emails from customers relaying their personal stories to me, related to our products. Business is classically about profits, but this business is about people first. We listen to our customers instead of talking to them. And when they tell us they want something, we try to deliver it to them.”