The 1 Skill All Entrepreneurs Have (That Every CEO Needs)

We all know that most startups fail.They fail for many reasons including the product is not quite right, the marketing is not fully effective, the delivery is spotty, and by far, the most common reason — they simply run out of money.

In contrast and far fewer in number, are the successful ones who despite all types of adversity, make it and grow into significant companies. In many cases, their secret ingredient is that their leaders recognized the critical importance of the need to pivot.

Pivots represent major change, in many cases to the business model itself. Pivots are bold statements that the business as usual model is not working and that the need for change is essential.Pivots are the result of a belief that the business is facing existential threats, and that without a dramatic change in course, there will be no tomorrow.

There are many examples of companies who fail to pivot. Look at Blockbuster, who was unwilling to change, and then decided not to buy the new kid on the block named Netflix. Netflix is the classic pivoter who migrated its business model from renting DVDs to streaming — a move at the time that was questioned by everyone including its employees and investors.

Netflix then pioneered the practice of producing its own shows (like “House of Cards”). Interestingly, others have since followed Netflix, including big names such as Amazon and Apple.

All big companies start as small companies. As they become larger and more successful, they often get blinded by their own success. They wrongly assume that their success will continue, despite dramatic changes around them. They also incorrectly assume and underestimate that startups attacking them will remain small and insignificant.

A great example of this is now happening in the shaving business. Gillette, the company that received a patent for double edge razor blades in 1904 still dominates the shaving industry. Proctor and Gamble, the giant consumer packaged goods company, acquired Gillette in 2005 for $54 billion and subsequently replaced the existing management team with Proctor and Gamble leaders.

A startup called Dollar Shave Club launched in 2012 to solve the dual problem of the high cost of for a package of blades ($40-45) and the need to wait in a convenience store for the employee to unlock the cabinet where they were stored (in part because they were expensive). Last year, Unilever acquired Dollar Shave club for $1 billion (the startup had raised $160 million in venture financing). In response, Gillette recently launched its own club (that, in my opinion, isn’t as compelling as the upstart).

So, how can you determine whether the competitive threats you face require pivoting? Here are five strategies:

1. Look at your business with fresh eyes instead of assuming that the status quo will enable you to continue to succeed. Don’t just look, you need to really see what is out there, and importantly what is missing.
2. Get out of your office. Meet with employees, customers, suppliers and anyone else involved in your business. Ask lots of questions.
3. Listen carefully, both to what is said as well as what is unsaid. These folks are either going to buy products from you or your from your competitor.
4. Engage your team in this process. It is rejuvenating and rather than worry about what might be happening to you, take the offensive and make decisions together.
5. Develop an implementation plan and execute.

Remember, there’s a huge difference between pivoting and tweaking. Starbuck’s top competitor, Dunkin’ Donuts, is changing its name to “Dunkin.” I’m not sure what their plans are, but will they stop serving donuts?

We all need to constantly assess our competitive situations and take decisive actions to ensure that we’ll remain successful going forward–from big companies to startups everywhere.