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Abstract
New products or services often misalign with customer preferences, and sometimes these initial offerings must be abandoned and replaced. Factors influencing these “complete pivot” decisions are poorly understood. We use behavioral decision theory to develop a theoretical model of pivot decisions that tests our predictions via a conjoint analysis experiment. We find that magnitude of the miss (revenues compared to plan), length of the runway (cash available/burn rate), and attribution for the miss (reason for customer misreads) significantly influence complete pivot decisions, and we simultaneously consider interactions. Individual grit and impulsiveness also shape the effects of some attributes.
Notes
1. We thank an anonymous review for this insight.
2. We thank an anonymous reviewer for this excellent insight.
3. Individual difference variables either lean one toward or away from change. Because grit and impulsiveness represent variables from each of these categories, it is doubtful that more variables would provide additional insight. Further, including more variables is practically intractable because as we add individual difference scales the experiment becomes exponentially longer, impinging upon response and completion rates.
Additional information
Notes on contributors
Matthew S. Wood
Matthew S. Wood is Associate Professor in the Department of Entrepreneurship, Hankamer School of Business, Baylor University.
Leslie E. Palich
Leslie E. Palich is Professor in the Department of Entrepreneurship, Hankamer School of Business, Baylor University.
Russell E. Browder
Russell E. Browder is Doctoral Candidate in the Department of Entrepreneurship, Hankamer School of Business, Baylor University.