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Pivoting Midflight

An Experience Report

Agile India 2013

Owen Rogers / @exortech

https://github.com/exortech/presentations

Who am I?

Owen Rogers / @exortech

Product Lead @ Pulse Energy

Practicing Agile/XP since 2000

Formerly an agile coach with ThoughtWorks

Conference organizer for original Agile India conference

What do we do?

Energy Management Software

Energy Utilities

Commercial buildings

Smart meter data

Archive and aggregate

Analyze

Measure and verify savings

Identify anomalies

Educate occupants and the public

Make the world a better place

Not just electricity...

Walk the talk

Personal story

1.5 years ago (Mid 2011)

Things were going well

(More than) Doubling every year

There is no question that Pulse Energy’s people and technology have led to the early success of this program.

- Bev Van Ruyven, Deputy CEO of BC Hydro

Happy customers

(Extremely low churn)

Solid team

Shipping new features to customers every week

Storm clouds on the horizon

Approaching market saturation

Struggling to break into new markets

Supported by a false economy

Not leading to a sustainable business model

Deliver energy efficiency to 1,000,000 commercial buildings

Failing to reach company vision

Revelations

1. Our customers were not who we thought they were

Started 2011 focused on large commercial customers

6 months later the strategy was regarded as a failure

Acquiring new clients was too expensive

No strong perceived need

Those with need already had solutions

No allocated budget

Energy utilities had a need

Limited experience selling to them directly

2. Utilities had different needs

Already had solutions for large commercial customers

Looking for way to address SME market

We had limited experience with SMEs

3. Commitments to existing customers

Team was already stretched

No budget for hiring new staff

We had limited experience with SME

Needed recurring revenue

Reputation with existing customers was key to winning deals

We needed to pivot

A pivot is a structured change designed to test a new fundamental hypothesis about the product, business model and engine of growth

Original Strategy:

Assist large commercial customers in managing their energy use and tracking their energy savings

New Strategy:

Deliver energy efficiency programs to a utility's full commercial customer base

New customer:

Large commercial accounts → Energy utilities

New end user:

Energy managers → Small and large business operators

New product:

Tool for Energy managers → Utility pilots and programs

IOW: A big change

"Bet-the-company initiative"

A pivot requires that we keep one foot rooted in what we've learned so far, while making a fundamental change in strategy to seek even greater validated learning

Roots

  • established domain expertise
  • product as platform
  • brand and reputation

Approach

Assemble cross-functional Tiger Team

Objectives

  1. Reorient sales team to sell to utilities
  2. Refocus marketing team to research North American utility market
  3. Repurpose product to present to utility prospects

Successes

  1. Sales team shifted quickly to start adding utility prospects to the pipeline
  2. Marketing built knowledge base of North American market
  3. Rebuilt web site to target utilities

Problems

  1. Not dedicated team
  2. New hire to lead the team
  3. Team was too large
  4. Other significant product initiatives underway
  5. Tremendous pressure to deliver quickly
  6. 3 months of churn
  7. Attrition

Right approach

Not the best execution

Rebuild or Repurpose?

Rest of the company couldn't understand why this was a big deal

Crushed by the support burden

Assumption that SMEs needed a reduced-feature version of existing product

(Patently false, but we all hoped it was true)

Analysis paralysis

3 months trying to bolt on to existing product

A pivot is a new strategic hypothesis that will require a new MVP to test

Got traction once we decided to build a new product (Nov 2011)

Implications

1. Long sales cycle

Extend the runway

Cut headcount by 40%

3 rounds of layoffs

Some roles were no longer necessary

Attrition in senior positions

2. Split between market research and user research

Build user research into product management

Layoffs created enough room to hire some new roles

Trying to hire and train at same time as changing direction is hard

3. New product, new opportunities

Formed dedicated product team

Wanted to do things differently, but how?

Defer commitment on technology decisions

Iterate on MVP

Pivot: Frequently used by early stage startups

Ranked 2nd most overused startup word of 2012

What about existing customers?

Painful process

Now a banned word at my company

Results

First RFP Response (Dec 2011)

First significant opportunity (Feb 2012)

10 demos to prospect customers (Apr 2012)

Rolled out first pilot (Aug 2012)

Closed first major deal (Dec 2012)

50,000 SMEs - multi-million $ deal

Pivot: In Retrospect

Was it the right thing to do?

Yes, absolutely

Success was not inevitable

No one said it would be easy

No one said it would be this painful either

(Incidentally) We did another pivot in November 2012

We didn't call it a pivot

Channel pivot

We are no longer building a web application. We're building paper energy reports

(we didn't know anything about print)

Team immediately switched

Sold to first customer in end-December 2012

Sending energy reports to 15,000 SMB customers in May 2013

Lessons learned

  • Assemble dedicated team
  • Start with a new MVP (treat existing product as a platform)
  • Top-down and bottom-up
  • Don't under-estimate time it takes to change direction
  • Easier the second time
  • Limit the scope if possible
  • Pivot earlier rather than later

Thanks!

owen@exortech.com | @exortech