The Pivot

The Pivot. That key moment when a business needs to change its business model, target, product - sometimes all three - dramatically to either survive or thrive. At larger companies, it can be wrenching to acknowledge that it is needed and even more difficult to follow through. The entire enterprise is build around a business model, and the realization that it's not working anymore is akin to (especially if the founder is still in control) to acknowledging their beautiful child has turned into a monster as an adult. Kodak had to transform itself with the rapid demise of film cameras (see http://buswk.co/8EEIae for an overview, http://bit.ly/mVcA63 for the details from a financial standpoint, and http://bit.ly/g5Hpmf for the most recent update). Jeffery Hayzlett is making a nice career writing books and lecturing about Kodak's success. IBM also pivoted, moving from a hardware to a services company. But for every big company success, there are legions of failures, in some cases because the pivot to the new business didn't match the speed at which the old business model was collapsing (GM and Chrysler, which survived only because of US bailouts, are two examples. So is Borders, which didn't get a bailout). To a large extent, that's what is happening in publishing today, particularly to newspapers. Newspapers are a Baby boomer item - people under the age of 35 simply don't read them in there paper form. I wrote a couple of years ago that the New York Times was making a critical mistake not charging a subscription fee (http://lewisgoldman.blogspot.com/2009/01/why-nytimescom-should-charge.html), which they finally corrected more than a year later. Their most recent financial results touted 224,000 online subscribers in the first quarter of launch. They've even started to advertise the digital version seperately from the print subscriptions. With the Ipad version, you'll see an acceleration of digital subscribers and, most importantly, re-engagement with a younger demographic which will pay off in advertising dollars. To complete the Pivot, they need to acknowledge their print version is for Boomers, increase the typeface (Please!), and focus on stories and news that that demo is interested in reading.

While big companies have trouble with the Pivot, start-ups can also struggle with it. The biggest impediment tends to be the passion and focus of start-up CEO's. They had a vision which they sold to investors, employees, the press, customers. Admitting that vision either won't work or is missing a bigger opportunity is an admission of failure, and many start-up founders struggle and delay the Pivot as a result. Having worked in business that wouldn't or couldn't Pivot, both big and small, it's clear to me that acknowledging the need for a pivot and then moving as rapidly as possible towards the new business model is critical for success. Otherwise competitors without the baggage of another business will pass you by.

The ignored digital baby boomer

I'm a digital immigrant, as are all Baby Boomers. We grew up with 5 or 6 channels of TV, black phones with cords, and 8 Track tapes. Defined as people born between 1946 and 1964, Baby Boomers are the largest segment of the US population, have the most wealth (despite the setbacks of the last few years), and should have more available time to spend online given their kids are grown and some are approaching retirement (ok, maybe not so much given the economy). For the first time in history, there are more people over the age of 65 than under 5. But reading about technology and business, it seems that the Baby Boomer generation which got so much attention in the 1980's and 1990's has disappeared. They're not on Foursquare, they don't tweet. They've learned to text, at least those with teenagers, and they like iphones but still don't use the mobile web very often. They watch TV on, well, a TV. And the vast majority of startups don't seem to be targeted to them.

Fact is, Facebook only became big when the baby boomers started going on and using it. Zynga's games, particularly Farmville, took off when 40 and 50 something women became obsessed about getting a tractor. The growth of Flash Sale sites (and to a lesser extent daily deal sites) have been driven by boomers. And LinkedIn's valuation (and value) is a direct result of baby boomers connecting with one another. Baby boomers drive the Internet economy, but there is still a dearth of products and services specifically targeted to support them. For example, a recent report indicated that the most expensive keyword to buy on Google is Insurance. Think Gen X or Gen Y is driving that? Boomers have been distracted for the last decade dealing with paying for kids in college and aging parents, with little help from the Internet. Where is a a one stop resource for elder care? A good financial planning site besides Mint? Advice on funeral preparation to help with dealing with lost parents. When marketers start to figure out products and services for Baby Boomers, you'll see another step function jump in E-Commerce and Internet advertising revenue.