Pivot or Persevere: The Decision That Shapes Your Startup

The concept of "pivot or persevere" is at the core of the lean startup methodology. It's the critical decision that all founders must make based on evidence gathered through innovation accounting. Without a structured, data-driven decision process, all the MVPs, experiments, and the Build-Measure-Learn cycles mean very little.

What Is a "Pivot or Persevere" Decision?

In a lean startup, a "pivot or persevere" decision comes when there is enough data available to determine whether the current business model is worth continuing. This is not limited to startups alone—even a nonprofit or a government project must make informed decisions on how to allocate resources most effectively. If your current path won't achieve the intended goals, it's time to either pivot or stop entirely.

While the phrase suggests only two options, the decision is actually more nuanced, with four possible outcomes:

1. Scale — Move from experimenting to scaling the business.
2. Kill — Stop the project entirely.
3. Pivot — Change one key aspect of the business model.
4. Persevere — Continue on the current path without scaling, gathering more data to make a decision later.

The Role of Bias in Decision-Making

Founders often face cognitive biases like sunk-cost fallacy, confirmation bias, and selection bias. These biases can cloud judgment, making it hard to make objective decisions. To counter this, it's crucial to set clear success and fail criteria before starting an experiment. By defining what success or failure looks like, the data itself can guide you through this crucial decision.

Success and Failure Metrics

Successful startups need defined metrics that combine specific goals, deadlines, and a measurable probability of success. For example:

• "There is a >60% probability that we will reach $1 million in revenue within 2 years."
• "We will reduce our carbon footprint by 50% within 3 years with a 70% probability of success."

Without setting these success benchmarks, it's challenging to know when it's time to scale. And without clear fail conditions, founders often fall into the trap of spending more time and resources on projects that should have been stopped.

Scale, Pivot, Kill, or Persevere?

1. Scale: If you've found Product/Market Fit—something more than just a 40% response rate on a survey that says people would be disappointed if your product disappeared—then it's time to scale. This involves proving Business Model Viability: showing that every dollar invested leads to growth or, in the case of nonprofits, positive impact.
2. Kill: Killing a project doesn't mean you've failed. It simply means you're stopping a project that no longer serves its purpose, freeing up resources for other opportunities. As a startup founder, your ultimate goal is not avoiding failure but using your time and energy effectively.
3. Pivot: Pivoting is about adjusting a specific component of your business model when something isn't working. Whether it's your customer segment, value proposition, or revenue model, a successful pivot requires both an idea and the resources (time, money, people) to execute it.
4. Persevere: When you don't have enough data for a conclusive decision but the current model is not failing, it's time to persevere. This is often a temporary state, meant to gather more information and reduce uncertainty.

Practical Advice for Founders

1. Define Milestones: Set clear, data-driven milestones for growth, customer acquisition, or impact.
2. Schedule Regular Reviews: Set a "pivot or persevere" meeting every quarter to review the data and assess your progress.
3. Stay Objective: Create a framework for decision-making before data starts rolling in. This reduces emotional bias and helps in staying objective.
4. Fail Fast: It's better to shut down a weak project early than let it drain your energy and resources. Killing a project doesn't mean giving up it means making room for better opportunities.

Conclusion

The "pivot or persevere" decision is one of the most critical points in a startup's journey. With the right framework, founders can make these decisions confidently and effectively, ensuring that every experiment leads the way to better outcomes. Remember, the key to success isn't avoiding failure it's understanding when to persevere, when to pivot, and when to let go.