“Failures” to be celebrated: an analysis of major pivots of software startups

Abstract

In the context of software startups, project failure is embraced actively and considered crucial to obtain validated learning that can lead to pivots. A pivot is the strategic change of a business concept, product or the different elements of a business model. A better understanding is needed on different types of pivots and different factors that lead to failures and trigger pivots, for software entrepreneurial teams to make better decisions under chaotic and unpredictable environment. Due to the nascent nature of the topic, the existing research and knowledge on the pivots of software startups are very limited. In this study, we aimed at identifying the major types of pivots that software startups make during their startup processes, and highlighting the factors that fail software projects and trigger pivots. To achieve this, we conducted a case survey study based on the secondary data of the major pivots happened in 49 software startups. 10 pivot types and 14 triggering factors were identified. The findings show that customer need pivot is the most common among all pivot types. Together with customer segment pivot, they are common market related pivots. The major product related pivots are zoom-in and technology pivots. Several new pivot types were identified, including market zoom-in, complete and side project pivots.Our study also demonstrates that negative customer reaction and flawed business model are the most common factors that trigger pivots in software startups. Our study extends the research knowledge on software startup pivot types and pivot triggering factors. Meanwhile it provides practical knowledge to software startups, which they can utilize to guide their effective decisions on pivoting.pivots that software startups make when failures happen. To this end, the research questions that guided the study are phrased as following: RQ1: What are the factors that trigger software startups to pivot? RQ2: What are the types of pivots software startups undertake?To answer the research questions, we employed a systematic research process. We collected online materials as secondary data and analysed the major pivots in 49 software startups reported in these materials, including the well-known companies such as YouTube, Flickr, Pinterest and Twitter. The online materials allowed us to quickly obtain useful data on as many significant pivots in software startups as possible. Based on the analysis of the pivots in these 49 software startups, we extracted a list of factors that triggered them to pivot, and identified a set of major types of pivots they conducted. To better structure the triggering factors and pivot types, we categorized them into different groups respectively.The rest of this paper is organized as follows: in Section 2, the background literature and related work are reviewed. Section 3 describes the research approach employed in the study. The research findings are presented in detail in Section 4, and further discussed in Section 5. The paper is summarized in Section 6, which also outlines th...

From MVPs to Pivots: A Hypothesis-Driven Journey of Two Software Startups

“…Lean startup, a common methodology among entrepreneur, emphasizes the role of validating business ideas via building MVPs. It is also common that a pivot occurs after a series of MVPs are created [3,4]. Such a startup journey is also an artefact-creating process, given that major milestones for startups (namely: pitching events, first paid customer and fund-raising) tight to certain artefacts.…”

Sustainable business model innovation and acceptance of its practices among Spanish entrepreneurs

“…& Brem, 2017;, and its implementation is cyclical and adaptive, with continuous pivots, iterations, and development of ephemeral support business models: (Bajwa, Wang, Nguyen Duc, and Abrahamsson, 2017;McGrath, 2010) as the new business model integrates the needs and support of valueholders, which seldomly is a linear, straight process. Due to space limitations, we were not able to present here these relationships in a model that fits those elements into a sound SBMI practice acceptance theoretical model.…”

“…The scales for the constructs derived from UTAUT2 (i.e., Hedonic Motivation, Costs, and Habit) were adapted from Venkatesh et al (2012). The Speed scale was drawn from Steve Blank and Dorf (2012), the scale for Funding was derived from Picken (2017) Brem, 2017;Sarasvathy, 2001), and its implementation is cyclical and adaptive, with continuous pivots, iterations, and development of ephemeral support business models: (Bajwa, Wang, Nguyen Duc, and Abrahamsson, 2017;McGrath, 2010) as the new business model integrates the needs and support of valueholders, which seldomly is a linear, straight process.…”

Full Steam Ahead or Abandon Ship? An Empirical Investigation of Complete Pivot Decisions

“…These BDT conceptualizations are useful in developing a theory of complete pivot decisions because they suggest that the choice to stay the course or move to a totally new offering is cognitively underpinned by the alignment between a decision- Established radio station iterates from country music to adult contemporary in response to competitive dynamics (Greve 1998b) Storably introduces application to facilitate storage renting in unused basement, garage, or closet space. In response to negative customer feedback, the early stage firm drops the offering and introduces Curalate, a digital image-analytics service for web content providers (Ongchoco 2015) Exemplar sources Greve (1998b, 2002) Bajwa, et al (2017 maker's aspiration level and realized outcomes, as signaled by attributes of the decision environment. Hence, we explore how this unfolds via specific attributes of decision environments.…”

“…However, these perspectives do not address the phenomenon of dropping the offering and replacing it with something completely new. Given the many instances where this has happened (e.g., Nextdoor- Bajwa et al 2017), it is time for more rigorous investigation, and our detailed conceptualization of the complete pivot opens fertile ground for research on the topic. A second contribution stems from our application of behavioral decision theory.…”