Wednesday, March 28, 2007

Clean out those old products from the cupboard

This month's PDMA Visions magazine, in an article by Leland Shaeffer, Rafael Lopes and Eric Rose, takes up a little-known part of the product manager's job: that of retiring old products.

It's a job that people avoid. As a result, the article states, many companies suffer because they don't truly understand the downside of carrying too many obsolete products.

In many cases, companies mistake revenue for profit. Products that still have a customer base are assumed to be profitable, especially since any development cost was long-ago amortized.

In fact, write the authors, because they've lost scale and scope, old products can easily lose money on a direct-cost basis. Add to this the opportunity cost due to the time and energy these products take up throughout the organization, and hanging onto too many old dogs can significantly affect company profitability.

Getting rid of obsolete products is difficult. There are customers to migrate or fire, distributors to negotiate with, and generally a lack of standards around product retirement.

One interesting suggestion from the authors: plan for product obsolescence in the initial product plan (akin to including terms for ending a partnership in the initial partnership agreement).

Another: set aside "retirement funds" to allow product managers to cover shutdown costs for obsolete products--and thereby remove another reason for old products to persist: plain old inertia.

(Photo from zdeso via stock.xchng)