At every company I have been at with some history (more than a decade or two), I have found there to be at least one product that is long beyond the “Milk it” stage. Orders have dropped off, and customers have moved to either a different technology, or into a replacement product. Of course, you still get the occasional batch of orders for it, thus the hesitancy to discontinue it formally.
The development of a product should follow a lifecycle from investigation, definition, to alpha, then beta and production. You will note that I didn’t say “and finally, production”, that is because there is one more phase that is difficult to actually achieve, obsolescence or discontinuance.Often, your development pipeline is packed with replacement products. Perhaps the technology changes, or the needs of the customer’s roadmap drive you to replace the current products with every better and more refined versions. Additionally, technology marches on, and the availability of components that you originally designed and built into your product are no longer mainstream.
When I first started in product management, I was fortunate to work for an organization that had a robust PLC (product lifecycle process) that guided our efforts, and assigned responsibilities to the various phases of development. Invariably, there was a whole section on the proper way to go obsolete.
But for whatever reason, it can be devilishly difficult to make the transition into the sunset. I have experienced many reasons and objections to keep products on life support.
Executive friction – There is something in the psyche of a senior executive that makes it hard to let go of a product. Perhaps they cut their teeth on the original product and hate to let it go, or it was once a volume seller, and generator of profits. But, years in the semiconductor capital equipment industry has taught me that once the design rules goes beyond your technology, it is high time to exit, and exit gracefully.
Sales pushback – A wise executive told me once that a good sales person can sell 2 +/- 1 products in their portfolio. Yes, he meant that some people could sell only one product. Yet, even when leads go to 0, a product is replaced with something better, sales often resists removing the obsolete product from their bag. I will talk more about this below.
Operations (production) – This seems counter intuitive, but I have found that the factory often hems and haws about going obsolete on a product, or product family. I would expect them to cheer the thought of not having to build the old technology, and worry about the constant engineering effort to replace chips/boards/computers/operating systems that are required to build products that were developed 8 – 10 – 12 years before. Yet, they do fight the obsolescence. They worry about keeping the factory busy, and keeping the production queue filled to keep their team working hard (and to often justify not closing/moving production).
All these reasons are not sufficient to keep the product alive. I will illustrate with a concrete example.
We had a product that was a huge success. The upfront design, and requirements were spot on, and it won handily with a key customer. Orders rolled in, the factory filled up, and all was great, for a long time.
Then the technology node changed, and we were no longer capable. Overnight, our order volume went to 0. Where we were accustomed to building 12 – 15 units per quarter, the forecast went to 0. This was circa 2003.
Seems like a natural decision to go obsolete, and move our efforts into an enterprise where we could excel. Unfortunately, every operations review that happened (quarterly) I would make the case for obsolescence. There was no forecast. (But we would get 3 – 4 units a year from the legacy customers, replacements, or for down market applications) The $1.5 – $2M in revenue was an addictive hit. Even though we were building products that required ISA bus computers, Windows NT4.0, and Office 97 to function, we continued to build them.
Until 2008. By the end, we were buying used computers, buying recycled licenses for the software, and struggling to get the systems built.
In the end, there was a nifty switch of the market, and some nascent display companies were interested. The original product was finally obsoleted, and was replaced with a better, bigger, more capable system. The 12 – 15 units per quarter never re-materialized, but I understand that product was modestly successful.
I mentioned that I would comment further on the sales objections. Even if they have no leads, and no prospects (thus no funnel and no forecast), sales will cling to every item in their bag. They hate to give up options, and alternatives to bring up in a case, even if there is no market remaining for a product. This chaos often confuses their efforts to pull together a crisp solution for a customer’s needs, and counterintuitively, lengthens the sales cycle.
One other sales myth is the desire to keep old products around as a fall back, lower cost offering in competitive cases is a smoke screen. You will spend more money building smaller volumes of your obsolete products than you will get by discounting your mainline products.
You will note that I didn’t mention engineering/R&D. They rarely are an impediment. Once they hand a product into production, they are off on the next challenge. As such, they are good allies in the fight.
Products don’t go to the “goodnight” without a fight. You will have to argue over and over again the merits and reasons for shutting an obsolete product down, but it is the right thing for the business. Don’t despair, press the case. Of course, there is a similar phenomenon with software only products, but the pressures and resistances are different. I will explore that in a future post.