Models for improving business practices have been around since Frederick Winslow Taylor published “The Principles of Scientific Management” in 1911. In the 1960s, E. Jerome McCarthy brought us the 4Ps of marketing—Product, Price, Place and Promotion. These tried and true tenets defined the components of a successful go-to-market strategy.
As is true for anything that hasn’t changed in decades, it’s time for an update. In this case, we’re proposing that we add a fifth P to the formula: Pivot.
A Brief Look at the Past
The 4Ps were founded on the realization that a company must strive to produce the best quality product that fits a customer need at a market-competitive price. The model provided for appropriate marketing, messaging and distribution to bring an idea to life.
The 4Ps are a method for making a service or product visible, intelligible and attractive to a customer base. Today, there are many useful assessments in the market to help you measure and evaluate your own 4Ps.
The Here and Now: Pivot or Get Disrupted
Even with all of the changes in the business landscape over the decades, the 4Ps are still essential elements of building a competitive brand and product offering. But as useful as the 4Ps still are, the time has come to modernize the approach. The fifth P—Pivot—injects the crucial ability to sense and respond to market changes after an organization has put a strategy in place.
That’s why we’ve made the ability to Pivot—to be more agile—the sole focus of our Built to Adapt Matrix. Being able to pivot makes an organization stable enough to weather any disruption that comes its way.
You may already recognize the importance of taking agile and lean practices beyond delivery into the business to fend off digital disruptor competitors, an extension of agile that is vital for competing in today’s marketplace.
Applying agile ways of working to the business, your company will better understand its customers and be able to quickly pivot on its product go-to-market strategy to serve their fast-changing needs. A fully agile business senses market changes and quickly responds with competitive product offerings.
But don’t just take my word for it. A study by Innosight, “Corporate Longevity: Turbulence Ahead for Large Organizations,” illustrates how Fortune 500 companies are being disrupted by smaller, more agile businesses. The findings warn business executives that about half of the S&P 500 will be replaced by 2026.
In fact, companies that were once massive market leaders have already disappeared from the S&P 500 over the last six years: Kodak, Sprint, Abercrombie & Fitch, JCPenney, RadioShack, Dell, Avon, The New York Times, Safeway, and Blockbuster all ignored more agile disruptors and fell victim to them. They had the chance to pivot and respond to change, but they chose to stay the course and either struggled or outright failed.
The Fortune 500 is littered with companies that need to rethink how they compete against emerging digital competitors. Companies such as American Express, Visa, and MasterCard now have to worry about Apple Pay and Google Wallet in addition to competing with one another.
Insurance companies like Cigna, Aetna, and UnitedHealth Group understand the rules of the game when it comes to competing with one another. The new challenge they need to solve is how to manage the onslaught of apps and FinTech disruptors that seek not just to level the playing field, but to change it entirely.
And let’s not forget about the additional disruption from COVID-19. Every day you read about more and more companies closing up shop – and the pace continues to accelerate. These companies were not able to withstand the shock of the overnight disruption – and never regained their footing.
Given the increasing number of disruptors and disruptions, a company’s ability to sense market opportunities and threats and respond to them quickly with products that customers value is the answer to this existential problem.
Despite my confidence in that assertion, while the ability to sense and respond was and still is a big selling point for delivery to adopt agile ways of working, it has not yet lived up to its potential.
So far, most companies that adopt agile ways of working are not sensing and responding and delivering customer value faster than the competition.
There’s a very good reason for that—and the good news is that there is a solution.
First, the reason: Agile is still trapped inside delivery. Agile helps delivery deploy products fast, but many (most?) companies don’t have an agile go-to-market plan to support them.
That’s where the fifth P—Pivot—enters the picture, injecting the crucial ability to sense and respond to market changes after an organization has put a strategy in place.
How can you become that organization? With our Build to Adapt Matrix.
The How-tos of the Fifth P
The ability to Pivot isn’t easily achieved; in fact, many well-known organizations throw billions of dollars at this pursuit, only to fail. Here’s why:
- Sensing and responding are often not quantified (making them an invisible problem).
- An accelerating pace of change creates increasing susceptibility to disruption, yet often it, too, isn’t quantified (making it another invisible problem).
- You can make those invisible problems visible by quantifying your capability to sense, respond, and pace susceptibility to disruption, thus enabling the application of risk reduction and value acceleration.
Only when you merge the missions of IT, and the business does an organization become adaptive, ready to Pivot and meet disruptions head-on. Being able to sense and respond is not enough: You need to act, and Pivot, if needed, to keep up with the ever-quickening pace of change.
The Digital Advisory and Consulting Services (DACS) team at Enterprise Studio by HCL Technologies is the global leader in collaborating, consulting and coaching with enterprise-level companies to connect them to the promise of business agility—the ability to sense and respond to opportunities and challenges and protect themselves from the volatility of doing business in the digital economy.