Pivots, not business plans, key to success

The art of pivoting – changing direction quickly to avoid a defender, while holding your pivot foot still – is one of the early skills taught in basketball, my favorite sport. The same skill also is one of the most important to achieving business success.

It’s certainly better than having a shiny business plan, with fancy PowerPoint slides – the culminating project in many entrepreneurship courses, and the ticket that all entrepreneurs must punch if they want outside funding.

Though such plans are great for organizing one’s thinking, that’s about it. As in war, once the bullets begin flying, the best of plans quickly become irrelevant.

That’s the message Tom Smith, a Wichita native, graduate of East High School and the University of Kansas, and the founder of Alltite, delivered to a packed house at 1 Million Cups on May 18. Building on the experience he gained from selling hydraulic wrenches in his father’s business, Smith formed Alltite in 2003 to sell similar devices to a wide variety of customers needing a simple service: the bolting together of flanged connections.

Alltite fell into a particular niche, selling to oil and gas drilling firms, which needed the wrenches to bolt pipes together. As oil and gas prices soared and fracking boomed, so did Alltite’s business.

But in late November 2014 everything changed. That’s when OPEC oil-producing countries decided against cutting production to maintain prices, triggering a collapse from more than $100 per barrel to a bottom around $30, before returning to about $50. In the meantime, fracking also fell off dramatically, taking most of Alltite’s business with it.

With his back against the wall, Smith figured out how to pivot his business from power bolting to providing calibration services to the aircraft and transportation industries, inventing and gaining recognition for standards along the way. Alltite also developed software for this purpose, accessed through the cloud.

Along the way, Alltite rebuilt its business, sales returned, and sources of revenue today are much more diversified. The company’s head count, which had fallen from a peak of about 75 to fewer than than 40, is back up to 50. Smith says he survived because he and his team have been “scrappy.”

Can companies anticipate and prepare for bad times without having to wait for a crisis? In his book “Only the Paranoid Survive,” the late Andy Grove, one of the geniuses behind Intel’s success, said it is a must.

Successful companies with entrepreneur-founders still at the helm – Amazon, Google and Tesla Motors – have taken that lesson to heart. Smith, too, has his mind on the long term. He knows he can’t “plan” which new products and services customers will want. But he is working hard to figure it out. Scrappy.

This story was originally published June 3, 2016 at 12:02 AM with the headline "Pivots, not business plans, key to success."