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

💡 Analysis

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

📄 Content

This is the author’s version of the work. The definite version was published in: Bajwa, S.S., Wang, X., Nguyen Duc, A. et al. Empir Software Eng (2017) 22: 2373.https://doi.org/10.1007/s10664-016-9458-0 Title of the article: Failures to be celebrated: an analysis of major pivots of software startups Authors: Sohaib Shahid Bajwa, Xiaofeng Wang, Anh Nguyen Duc and Pekka Abrahamsson Notes:

• This is the author’s version of the work.
• The definite version was published in: Bajwa, S.S., Wang, X., Nguyen Duc, A. et al. Empir Software Eng (2017) 22: 2373.
• Copyright owner’s version can be accessed at https://link.springer.com/article/10.1007/s10664-016-9458-0 Interested in academic Software Startup Research? Get in touch with the Software Startup Research Network, SSRN for more information, https://softwarestartups.org/ This is the author’s version of the work. The definite version was published in: Bajwa, S.S., Wang, X., Nguyen Duc, A. et al. Empir Software Eng (2017) 22: 2373.https://doi.org/10.1007/s10664-016-9458-0 Failures to be celebrated: an analysis of major pivots of software startups Sohaib Shahid Bajwa, Free University of Bozen Bolzano Xiaofeng Wang, Free University of Bozen Bolzano Anh Nguyen Duc, Norwegian University of Science and Technology Pekka Abrahamsson, Norwegian University of Science and Technology 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 secondarydata 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. Keywords Pivot . Software startups . Lean startup . Validated learning . Pivoting factor. Side project This is the author’s version of the work. The definite version was published in: Bajwa, S.S., Wang, X., Nguyen Duc, A. et al. Empir Software Eng (2017) 22: 2373.https://doi.org/10.1007/s10664-016-9458-0 1 Introduction Startups are human institutions that create innovative products or services and search for sustainable business models under extreme uncertainty (Blank 2005; Ries 2011). Software startups are startups that build software-intensive products/services. Similar to established software companies in which software development projects have a reputation for failure (Savolainen et al. 2011), projects in software startups do fail as well. The consequence of project failure for a software startup can be even more severe than that for an established software company. This is because a majority of software startups are focused on one single project at a time. One project failure could put a software startup out of business (Giardino et al. 2016). However, interestingly, failure is treated with positive attitude in software startups, to the extent that a few companies have the practice of celebrating each failed project, such as Supercell, according to some anecdotal evidence (Kelly 2013). Why do software startups embrace and even celebrate failures? Since the environments of software startups are extreme- ly unpredictable and even chaotic, failures are considered a crucial way (sometimes the only way) for them to obtain important learning to validate key assumptions they make about their software products and business (Eisenmann et al. 2012). In fact, the ultimate goal of these intermediate failures along the way is to avoid the final fatal failures that put startups out of business. These intermediate failures are what we focused on in our study. The validated learning obtained th

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