How To Pivot When Your Company Needs A Change Of Direction

There are many reasons that a company might need to change direction. Shifting consumer tastes, disruptive technologies and new regulations can all feel like meteors coming at you. If it is time for changes in your fundamental strategy, you will undoubtedly think through the potential impact on the company, its employees and your customers. Just as important, you will need to rethink your investor strategy.

Explaining a pivot—for example, a shift from fossil fuels to renewables, or film to digital—to investors can make for a difficult conversation. If you’ve been deliberate about developing a long-term roadmap and communicating your strategy to your most important investors, that discussion will be a lot easier. A well-established dialogue with the investment community provides a strong basis for explaining the need to realign strategy and lends credibility to the need for new capital allocations to support the pivot.

The following are pro tips for companies changing direction.

Acknowledge the Issue or Problem with Your Prior Strategy

“When the facts change, I change my mind. What do you do, Sir?” are words often attributed to John Maynard Keynes, one of the most prominent economists of the 20th century. (Keynes himself was an astute investor: He managed the endowment fund for King’s College, Cambridge, over difficult decades, with impressive results.)

CEOs are often loath to say they’ve changed their minds. On the other hand, faced with new information, investors have no trouble at all changing their minds, their forecasts, their ratings and their holdings. This flexibility is key to the investor’s mindset: They’re receptive to a well-reasoned argument for changing direction, especially if it shows that you’re getting ahead of problems.

Listen to the Investors –But Not Too Carefully

Investors analyze securities and make buy and sell decisions (which they can often reverse), but most of them have never led a large group of people or had to meet a payroll. They’re not confronted with what you deal with every day: the kinds of decisions that have major implications for your customers, employees, suppliers and communities—and are often hard to reverse.

Most investment decisions are two-way decisions. If they buy a stock, investors can turn around and sell it as needed, even if they lose some money. Most major company decisions are one-way decisions. If you take your investors’ advice and sell off a division, for example, you’re unlikely to be able to buy it back. Investors invest; they do not run companies. So listen to their advice and then make your own decisions.

Share Your Outlook But Stay on Message

Communicate your new strategy with confidence and keep the storyline straightforward. Investors are trying to fill in their models; they don’t need to understand the nuances of your challenges or decision-making process. While you will get a lot of feedback from your customers, employers, suppliers or communities, investors don’t worry too much about the implications for your other stakeholders. They care about the numbers, and the likelihood of meeting those numbers.

Key Planets on This Journey

If your company is getting hit by a meteor shower and needs to change course, the key planets in the investment universe will be different than for the company taking off in clear skies. You’ll need to focus on:

• The financial press. The media can sway investor opinion. Quietly executing a long-term strategy is not of much interest to the media—but a controversial pivot is. In this situation, you are interesting. Use that to your advantage with a carefully crafted PR strategy.
  
  
• The activists. If they see a weakness, these “investors with a megaphone” will take advantage of it, and not quietly. Before you start a pivot in strategy, do your own outside-in activist-like analysis. Pretend you are an activist looking at your own company. What would you do if you had their incentives? Do your best to anticipate what they’re going to say and do before they do it. You may not choose to follow an activist-type strategy as it may not be the best in the long term, but getting an idea of where the activists are likely to challenge you will give you an enormous advantage if they do set their sights on your company.
  
  
• Active managers and index managers. In this scenario, you’ll need some big, long-term friends in your corner: what we call anchor shareholders. These may be active managers, index managers or even the large asset owners if they hold your stock directly. Activists depend on the support of large investors for their influence, meaning that it is well within the power of these anchor shareholders to combat or empower the activists’ ambitions. Strong support for your change in strategy from a few large, well-respected investors gives other investors the confidence to ride along with you.

Your company needs enough time and capital to make a strategic change in direction. Focus on the people who can provide that time and capital—and influence others to do so.

Excerpted with permission from the publisher, Wiley, from The CEO’s Guide to the Investment Galaxy: Navigating Markets to Build Great Companies by Sarah Keohane Williamson. Copyright © 2025 by Sarak K. Williamson. All rights reserved. This book is available wherever books and eBooks are sold.