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

Estimated reading time: 5 mins

This is a continuation of this previous article, which looks at the implications of the Product Life-Cycle. In the previous article, I discussed the phases Development, Introduction and Growth.

Now onto Maturity. Maturity is the phase where the product is well established in the market in terms of market share and is turning a healthy profit for the company. Products at this stage are often called Cash Cows. So called because they’re like cows – you keep milking them and they keep producing. Products at this stage can be considered as flagship products. Think of Apple and the iPod.

Mature products tend to have mature organizations that support them. I.e. the common product defects are known; the precise marketing message and brand is established; the market is well defined; the cost of production is low by previous comparison; supply chains are well established; demand continues.

Organizations who have a Cash Cow in their portfolio will tend to look like this:

  • The organization will be stable. There won’t be lots of change at the top.
  • The organization will be structured as a standalone division. The product-line will tend to have a division head or CEO, demonstrating the company’s commitment to the product and giving the organization head authority and discretion
  • Support processes are clearly defined and well honed. By now most of the bugs and issues will be known and the organization’s response well practised. At this stage, technical support staff will be large in number and of less calibre than before (mostly because they need to work off a decision-support tree and pre-defined process). Support may even be outsourced
  • Personal style, in general, will be rooted out. The corporate ‘immune system’ will resist any difference against the organizational standard
  • The culture of the organization may be becoming less exciting and bureaucratic as preserving the status-quo becomes more important to managers. The organization has obviously hit a winning formula, so maintaining it is key to sustained success
  • Technical professionals are more likely to be engaged in governance functions
  • I should add, though, that the organization won’t be arrogant about its position in the market, unless they’re really dumb. The preservation of the status-quo won’t mean that they are ignorant to external market forces, competitors, regulation, law, culture and other factors that mean the product’s market position is threatened

The maturity stage is the ultimate goal for a product. However, in the long-run, time changes everything. Market forces will eventually turn a product towards Decline.

The Decline stage is when the product is no longer tenable for the long-term. The factors I gave above will eventually cause this. For example, the tobacco industry in the western world is in Decline. Governmental and cultural forces have changed the demand for the product.

I want to make an important observation here. Contrary to what you might expect, an organization who has a product in decline can be an exciting place to work. The reason why I have that view is that declining products and industries still have a market (i.e. they’re not dead so an organization has to serve the market and turn a profit) and the organization will continually find new ways of producing the product at lower cost at the same standard. Therefore, declining products can be very innovative.

One of the big problems for an organization (with a lot of physical assets) with a declining product is overcapacity. That is, their manufacturing or production capability has more capacity than is needed for the current demand. This could cause the organization to downsize it’s plant at great cost. It could also mean that the organization seeks new products to manufacture using it’s current capability. For example a business who used to sell CRT televisions may begin to make energy efficient light-bulbs.

An organization with a product in decline will look like this:

  • There are likely to be continuous leadership changes, particularly towards accountant-led
  • Technical professionals will be engaged in rationalization of product lines and manufacturing methods
  • Technical professionals will also be engaged with product development to seek new products to use spare capacity
  • Leaner methods will be sought, so process experts will be on site regularly
  • The organization will become more ‘idiosyncratic’ – in other words optimize itself against its specific product-line. Industry standards maybe challenged and disposed of
  • Personal style will be encouraged more. You’ll see more mavericks and oddballs around

So what are the implications of this? Knowing where your organization is in it’s Product Life-Cycle is key to understanding the value you can add to it and how much you’ll enjoy working there. If you’re a go-getter that likes to work on instinct and using your own style then an organization who offers mature or declining products won’t be for you. You’ll find the red-tape, lack of change and bureaucracy frustrating, feel bored and that you can’t add value. Conversely if you like patterns, structure and security then a growing or mature business is for you. Who likes working in an organization whose market is declining? Strange types and accountants. People who like to make the most out of very little.

You might also find that two organization’s pay very different salaries for the same job if they are on different stages of the Life-Cycle. As will other things like work patterns and the number of hours you’re expected to work. Environmental factors like the decor of the office and the quality of coffee in the machine are also influenced by it.

The stage of the Product Life-Cycle should really indicate whether to take that new job on offer or not. There’s little point in thinking you can revolutionize a company who grows carrots unless you’re a unique visionary. It could also be the writing on the wall to split from your current job.

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