The Hockey Stick Principles by Bobby Martin

Author:Bobby Martin
Language: eng
Format: epub, mobi
ISBN: 9781250066381
Publisher: Flatiron Books

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Hockey Stick Principle #49: When pivoting, it’s best to start small.

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Take the case of Boardroom Insiders, which offers profiles of corporate executives and provides hard-to-find information about them and their management histories. Large enterprise sales organizations, such as IBM, Cisco, Citrix, and Microsoft, now pay substantial annual subscription fees to access these executive profiles. But when the founders, Sharon Gillenwater and Lee Demby, launched the service, they sold individual reports on the Internet on a per-report basis (pay-by-the-drink sales model) and soon realized they didn’t have enough executive profiles to satisfy many of their prospective customers. So they invested time and more money into building up their profile base. After two years, though, they were still toiling along earning a paltry living, so they decided to start changing their model. The first move was away from their pay-by-drink sales model. They dedicated more energy to selling unlimited-use annual subscriptions. They also decided to offer the option of prepaying for a set number of “custom” executive profiles, prepared specifically in response to a customer’s request. These new offerings helped to build some sales traction, but it turned out that the writing of the custom profiles was not cost effective, and on top of that, many companies didn’t like having to determine how much they should be willing to pay up front before they knew exactly what profiles they wanted. What if it turned out they wanted to order more profiles than they had paid for, because their search for someone to hire was more difficult than expected? They’d have to ask for more money than was budgeted, which is never looked on well by corporations. With this model in place, Boardroom Insiders continued to limp along.

Then Lee and Sharon decided to take on some price risk in exchange for much higher licensing fees and started to offer custom reports to subscribers only but at no additional cost. They thought they might be able to meet that demand at a reasonable expense. When they started telling prospective customers, “If we don’t have a report you need, let us know who you want, and we’ll make it happen,” the business suddenly took off.

You might be thinking that those are really just tweaks to their model. What’s the dividing line between a tweak and a pivot? That’s more a matter of judgment than of hard definition. The important point about the distinction is that it’s probably best to start with tweaks—and only after these fail to do the trick should you try to make a bigger pivot. What does such a pivot look like? Two were mentioned earlier, but consider three more cases of substantial pivots that we’ve covered in prior chapters: The choice made by Red Hat to market to mainstream customers of commercial software rather than just to Linux users; the decision by Packrite to switch its emphasis from making deals with the manufacturers of goods for their specialty boxes to making deals with their prime competitors, the

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