Before their pivot, the technicians at Inderly Inc. – a small IT-support firm in Toronto – had difficulties scheduling their time. Each client had a different technical setup, and it was impossible to predict when one would have problems or how long it would take to solve them.
“It was a lot of chasing things and fixing them,” Inderly founder Colin Pearce says. “It was a very reactive approach.”
Tired of putting out fires, the company launched a drastic overhaul after one year in operation. It began offering IT as a service, which it calls Cloud Office, instead of doing more customized work. Clients pay a subscription fee per user, and Mr. Pearce’s team looks after the equipment, systems, security and data storage, freeing Inderly to replicate its ideal technical setup in each client’s business.
“I looked at the data and said, ‘Who’s calling us the most?… Whose stuff is working the best?’ We took the best pieces [and] packaged it up,” Mr. Pearce says. “We built a platform that will service 80 per cent of the market and didn’t worry about the other 20 per cent.”
The change has relieved stress on the team, allowed it to take on more clients per technician and provides clients with a proven system that takes less time to fix.
“It’s better for us and better for our clients,” Mr. Pearce says, noting some potential customers still balk at the subscription model. “A lot of consulting companies will take on all business, and with this shift, we really don’t do that ... To me, as a business owner, that’s been the hardest part.”
Inderly’s realization that things weren’t quite right with its business model – and making a hard pivot – is a common story among early-stage startups. Still, experts say it’s important for businesses at every stage to stay connected with their industry and consumers to avoid realizing the need for a pivot when it might be too late.
“You either have developed a new business model in the last decade or you need to,” says Rikia Saddy, who runs her own Vancouver-based business strategy and advisory firm.
Recognizing the need for a pivot and identifying a new direction can come from clear internal and external communication, Ms. Saddy says.
“Your best path is obvious if you listen,” Ms. Saddy says. “There are people in any organization that know what’s going on, and they’re dying to tell someone the challenges they see. Most organizations aren’t set up to hear those people.”
Lorraine Moore, a business adviser and president at Calgary-based Accelerate Success Group Inc., can usually tell when a company needs to make a change. Examples include if the business is part of an industry facing disruption, if a significant percentage of its revenue comes from a single customer or if its revenues have been consistently flat for about five years or more.
Ms. Moore recommends companies be as transparent with employees as possible about a potential change in direction. Also, she says the language that management uses to ask workers for help making a change is crucial.
“You can’t just say, ‘So, what do you think?’” Ms. Moore says. “Companies can ask [employees] ‘What are some new markets we can enter? ... What else do the employees see the [customers] need? What are their biggest challenges, and do we have the capability to support some of those challenges?”
Consulting customers can also help direct the pivot, Ms. Saddy says. Companies can use their ongoing relationship with certain customers to help identify the aspects of a business they particularly love or areas where they have unmet needs.
Clients who give feedback, and then see it acted upon, are more likely to develop a sense of trust in the brand, which in turn can help with loyalty during a shift, Ms. Saddy says. “Customers will support what they helped to create,” she says.
Those loyal customers are the ideal test group for a new offering, says Ms. Moore, who suggests sweetening the deal by offering the new product or service at a discount. “They will be more understanding if you make some mistakes,” Ms. Moore says.
A common pivot misstep, Ms. Moore says, is misjudging customers’ loyalty to the companies already in the new market.
“Be prepared to fail fast,” Ms. Moore says. “Don’t invest everything and jump in. For a small company, $5,000 can be a big investment. Think about beta-testing first.”
After identifying a new direction, clear and continuous communication with employees at all levels can improve the transition. If workers understand the reasons why they have to change – for example, to help the company stay profitable – they’re less likely to feel resentful, Ms. Saddy says.
“You don’t want a misalignment where vision and strategy is set at the top, then middle managers do their best to translate what they think it means, and employees have to follow boring and stupid rules that [they feel] don’t allow them to meet the needs of your customers,” Ms. Saddy says.
In 2014, law firm Borden Ladner Gervais LLP (BLG) took note of the collapses of other firms in Canada and abroad, and decided to make drastic changes to modernize the company. What began as an effort to simplify processes and reduce waste resulted in the company making an overhaul of its operations, reducing its carbon footprint and putting it on the leading edge of technology. In addition to a myriad of process changes and new teams focused on transformation, BLG now uses artificial intelligence to sift through legal documents and is going paperless, employing electronic-signature technology and investing in iPads for all lawyers.
With its new expertise in this area, the company – which has 2,000 employees in Vancouver, Calgary, Montreal, Toronto and Ottawa – is offering consulting services to other legal teams looking to go digital, chief operating officer Rob Morris says.
“We want to be seen as the most technologically-savvy modern law firm in Canada,” Mr. Morris says, noting that vision drives decisions at every level of the company.
“There are always some people who just hate change, but they are the minority: 80 to 90 per cent are okay with change, but want a high-quality implementation. What we don’t want to do is roll out products that haven’t been thought through and don’t meet the business requirements.”