The Implications of the Product Life-Cycle (Part One)

product life cycle

product life cycle

Estimated reading time: 7 mins

Did you know that organizational shape and behavior tends to reflect it’s company’s products? I suspected this but it was recently confirmed in this HBS Working Knowledge paper. So when this subject was suggested by Katy Ling I thought it might be interesting to reflect on this phenomenon, and what it means to Technical Professionals. The HBS Working Knowledge paper suggests that an organization (be it department, division or whole company) will be structured and behave according to the delivery of it’s product. A product goes through various stages during its lifetime – the Product Life-Cycle. If you understand this model and what it means, it might explain why an organization acts in the way it does, sometimes going against what you would expect. In technical areas, the Product Life-Cycle can totally shape your work.

More simply put, products (such as consumer technology) that are at the leading-edge of it’s market will be reflected in a progressive, fast-moving organization led by entrepreneurs and risk-takers. The lack of product experience in the market will also be reflected in the stability of the product provider’s operation. Products that are well established (think paper clips or vegetables) and have a large number of equivalent competitors will be reflected in a very stable, efficient operation that changes very infrequently.

The Product Life-Cycle is a model which suggests that products go through typical phases in their life. The model as developed by Fox, Wasson, Anderson, Zeithaml, Hill and Jones takes a product from Introduction to Growth to Maturity to Decline. I’ll also add a prefix stage of Development. Companies who develop, manufacturer and distribute products who fit this model tend to be organized and behave in predictable ways. Each stage requires a different approach to management and leadership.

This post covers the stages Development, Introduction and Growth. The next post will cover Maturity and Decline.

Products in a Development stage are new and untested. They are inherently risky as nobody has bought one yet so companies don’t know if they will be accepted by the market. The stakes are high, but so is the competition. They are also risky as significant amount of money is invested into the development of the product. It’s also true that the Development phase is strictly timebound and up against a clock. What this means then is that the whole Development phase and the environment is risky. The organization at this stage will employ techies who are used to working in an uncertain, unstructured environment, which will look like this:

Of course these behaviors won’t always be evident, particularly in highly regulated industries such as Financial Services or those that involve medicine. People who are very structured or risk averse will probably struggle in these environments. Just because someone is highly skilled in a technology or product, it doesn’t mean they can fit in to this way of working.

The Introduction stage is when the new product is launched to the market. The product becomes ‘real’ at this stage and is looking for acceptance by the market. Competitors will also be looking at it, pulling it to pieces, and seeing how it was developed. Bastards. This stage also has its own feel to it:

The Growth stage is when a product has been socially accepted and sales revenues are on the increase, but volumes are not at a critical mass to have made the product profitable yet. The stage will look like this:

Next post will cover Maturity and Decline.

This subject was suggested by Katy Ling of Croydon, London (thanks Katy)

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