A pivot usually occurs when a company make a fundamental change to their business after determining (usually through market research) that their product isn't meeting the needs of their intended market.

As defined by a book called "The Lean Startup" a pivot is "A structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth."

Companies tend to undergo more pivots in the early stages, as they are still getting to know their target market and it's needs. Companies will continue to pivot as these needs change or the company discovers new opportunities for the business.

Groupon's early days are a great example of pivoting done right:

when the company first started, it was an online activism platform called The Point. After receiving almost no traction, the founders opened a WordPress blog and launched their first coupon promotion for a pizzeria located in their building lobby. Although they only received 20 redemptions, the founders realized that their idea was significant, and had successfully empowered people to coordinate group action. Three years later, Groupon would grow into a billion dollar business.