Trying to Jumpstart Your Business Success? Master the Ability to Pivot.
Business plans are like mining for gold. Miners had to start with only an educated guess on an area, canvas a stream, then pan and sift endless piles of dirt. Prospecting is largely gone, but it’s a useful metaphor for how business leaders take a problem, solve it, refine it and continually revisit and adapt — even to the point of tearing down the essential points of their business. This ability is called “intellectual range of motion,” and it’s one of a business leader’s most important tools — especially if you’re selling your expertise.
Peloton, for example, continues to display this intellectual range of motion. While it had a few pain points — lower subscription growth, stock redemption issues and a wave of layoffs — Peloton shows a willingness to explore and change direction.
Today, Peloton has 5 million customers and is worth $3 billion. However, despite significant brand equity, Peloton is substantially changing its business model. The company is muddying the waters of the service-based business vs. product business dynamic and rolling out a “Fitness as a Service” product where people can access Peloton’s training and instructors without the bike itself.
Intellectual range of motion: A powerful tool
The extent to which an idea can be altered based on an entrepreneur’s intuition and imagination falls under their intellectual range of motion. A wide range of motion enables an entrepreneur to turn an idea into a revenue growth opportunity. In contrast, leaders of firms with narrow intellectual ranges cannot recognize an opportunity because of the limits of their imagination.
Intellectual range of motion is more highly valued in a founder of a services business than it is in a product business. This is because services are much more malleable than products. For example, modifying a product to take advantage of an opportunity might require sourcing new raw materials, reconfiguring an assembly line, re-writing software code, developing a new manufacturing process and more. With services, there is none of this, so the time from idea to execution is measured in days and, sometimes, hours.
As a founder myself, I have grown my firm by increasing my intellectual range of motion. For example, the sector I operate in, business mastermind communities, is over 200 years old with a few hundred firms. All of these firms are horizontal providers, meaning they do not serve a specific vertical industry. My firm, on the other hand, serves a single industry — the professional services industry.
This industry specialization has appealed to many and has allowed our firm to grow consistently. The idea for this form of differentiation was found in another business entirely: SaaS. The software category has matured, and many successful SaaS companies now specialize in a vertical industry. My idea was this could (and should) work in the business mastermind community sector — and it has. Recognizing a winning strategy in another industry and successfully porting it into a different one is an example of intellectual range of motion.
Key strategies to improve intellectual range of motion
For entrepreneurs and founders who want to gain better intellectual ranges of motion, there are a few critical actions to take:
1. Ask: What does the world need from me right now?
This question is not asked often enough. The reason this question is neglected is that business owners fall into the routine of delivering what they have always delivered. Due to the benefits of the experience curve, the more often a firm provides a service, the lower the cost and the higher the margin. Business owners are driven by profit and will not discontinue a profitable service line until absolutely necessary. As a result, they stick to their knitting too long and miss opportunities. Over time, this behavior restricts one’s intellectual range of motion.
Blockbuster Video once provided us with a remarkable service: hit movies watched at home for rent. They stuck to VHS tapes but missed mail-order DVDs and video streaming. They went bankrupt as a result, and we now all binge-watch Netflix content. Blockbuster Video no longer fit the market; the market had evolved to services that came to them and, eventually, to fully digital and personalized streaming platforms. This is something founders in professional service firms have to ask themselves consistently to remain competitive in the market, but the lesson remains for large companies like Blockbuster as well.
2. Locate wasted resources in legacy operations
A common reason new ideas that could lead to break-out growth opportunities aren’t pursued is that entrepreneurs incorrectly think they do not have the resources. However, the resources they need are available, they are just consumed with legacy operations.
Legacy service offerings are ripe for optimization. Entrepreneurs should look for ways these services can be delivered with far fewer resources. These newly liberated resources could be allocated to today’s wild idea that could be tomorrow’s golden goose.
3. Produce a roadmap of future offerings
It is best to organize the service-offering roadmap by identifying boundaries. Today’s business and tomorrow’s business are always competing for scarce resources. There is only so much money, time and talent to go around. In the absence of a roadmap organized by time boundaries, today’s business wins the competition for resources. A roadmap makes sure tomorrow’s business gets the resources it needs.
For example, boundary 1 of your roadmap should be defined as offerings in the market for the next year. Boundary 2 should be defined as an offering in the market in two years’ time. And boundary 3 should be defined as offerings in the market in three years’ time. By landscaping out the roadmap in this fashion, an entrepreneur’s intellectual range of motion is increased by stimulating their imagination.
Business leaders looking to jumpstart their success — or simply maintain it — should look to see how they can improve their intellectual range of motion. In the long term, they may just strike gold.
Source: entrepreneur.com
