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

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:

• The organization will tend towards a flat structure, giving technical people quite a lot of freedom and empowerment. There will be few managers and supervisors.
• Entrepreneurship will be a major force, resulting in pragmatism and a strong sense of risk taking. Managers will encourage this. Managers may also say things like ‘we will cross that bridge when we come to it!’ There will be a degree of technical trial-and-error.
• Cost will tend to be a secondary matter at this stage. Progress is top priority. You may observe a lot of ‘wasted’ expenditure that you wouldn’t see in operational areas. You’ll probably see the best kit on desks even if it isn’t needed.
• It’s likely you might also see a degree of corner-cutting and few proscribed processes. Personal style will be encouraged. You may see a few oddballs and mavericks on these teams.
• Marketing folks will have a high profile and be buzzing about the place in this phase. The worst bit is that the requirements can change quickly, as competitors add new features to their products. This can be a pain in the ass but it is better to change the requirements at this stage rather than once the product is ready for production.
• At this stage, internal governance functions will be nowhere to be seen or resisted if they try to get into the action. Some information will be shared upwards, so technicians will be documenting product designs for external use under some duress.

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:

• Marketing is key here, so there’ll be a lot of spin and promise about the product. Management becomes very upbeat whilst the benefits of the product are discussed internally as well as externally. You’ll probably see lots of posters about the product cluttering the walls.
• The majority of technical professionals engaged at this stage of the cycle will be involved in the support of the product, or pre-sales. Product awareness is important in providing these services. Knowledge bases will be light as the product hasn’t yet been tested under market conditions, so technicians will be responsible for extracting learning from the launch. It’s likely that the support functions such as a Customer Support helpdesk will be overstaffed and under skilled, and in truth you’ll see a lot of muppets on the shop floor who are there just to record support tickets. Engineers supporting pre-sales of the new product should have experience in working under pressure and uncertainty as they’ll be winging it.
• This is a make or break period and any bad news could be fatal so information channels maybe closed down or monitored tightly. Technicians who are not politically savvy are probably secured away at this point or given tasks related to the support of the product.
• This stage is still risky for the organization. Therefore the people who are involved will be happier to work in a risky environment. Risk-averse people will still struggle to work here, but it’s important that the organization has them to hand to challenge the emergent issues and to establish more rigor and control. Because customer support information becomes more readily available, governance functions will be much more involved.

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:

• Because of the growth in sales, competitors will be eyeing up the product and developing competitive alternatives in order to gain some of the market share. There is a high potential for technicians to be poached by competitors to do that.
• During the growth phase, development will continue to create slightly different products for a wider market. Think about how the iPod Mini was created as a cheaper and more portable solution when the classic iPod was growing this market.
• Technical development will be focused on reducing the cost of production. Technical Professionals employed in these organizations will attempt to standardize bespoke components and to find cheaper methods of manufacturer, and therefore will be involved in more statistical analysis of product sales, production methods and after-sales support.
  On the road to maturity and maximum profit, the name of the game is forecasting future volumes and profit. The supply-chain is being tightened so reducing issues by increasing quality throughout the process becomes more important. The organization will look more bureaucratic than before whilst things are checked and double-checked.
• The environment has become less risky and more predictable. You’ll see fewer mavericks in the organization now as they gradually move onto the next big thing. The whole organization will appear to stabilize in its processes and structure. There is less space for heroes now but more room for standard bearers. Technicians who are process-oriented and have experience in applying industry standards will grow in numbers.

Next post will cover Maturity and Decline.