Introduction

Product Managers come from various backgrounds and each bring different value to the product in their own way. While this diversity has an impact on its growth, this also introduces the issue of selective perception of the parts and missing the whole; analogous to the story of six blind men and elephants. While the backgrounds of Engineering, Sales, Support, Operations help us understand the Product from that background but when we look at the Product as a whole, it has its own uniqueness and characteristics which cannot be understood alone from looking at our past background.

Lot of times, as PM we investigate Product from department angle such as engineering might perceive it as set of code and executables, Sales may look at product from various product lines and product bundles, Support may look at from ease of use with users and complaints raised, Finance may look from product revenue vs product development cost etc. While all of these add value to Product, how do we as a PM look at Product from just a product perspective?

"We have to remember that what we observe is not nature in itself, but nature exposed to our method of questioning." - Werner Heisenberg

The current blog aims to address just that by looking at Product as an entity which has its own lifecycle, and which goes through different phases and as a PM what does it mean for us. If we must compare it to humans, then just as humans go from infancy to children to teenage to adulthood to old age and finally death, so do products. Lot of times, when we are starting our career as an APM working on a software feature, it is important to look at a product in its lifecycle and its impact on the feature we are building, or any other decision related to the product we are taking. We will use examples below to convey the same during the later part of discussion. So let's jump into looking at Product as a "whole" from its lifecycle perspective

The Product LifeCycle

The Product goes through following phases as an entity

a) Pre-Introduction

b) Introduction

c) Growth

d) Maturity

e) Decline

Let’s look at each phase now

a) Pre-Introduction

The Pre-Introduction phase focuses on developing or addressing the market need by developing the first iteration of your product. It is not to be confused as POC or MVP but a product which can be called Minimum Usable Product (MUP). At this stage business has identified the need for the product in the market and you as a product manager are trying to ensure you address that need with your product. Here the Product Market Fit is based on assumptions and hypotheses and yet to be validated.

Time and money is spent in building the product with the understanding that once a product is accepted, sales will cover the cost of development and one would break even. Here the focus for PM is on key use cases that need to be delivered and not the spectrum of features that can be delivered.

b) Introduction

This is the phase where you introduce your product in the market. Here the Product Market Fit is validated and metrics for tracking the same needs to be kept on an eye on. One must decide on how the market is reacting. There are 2 scenarios that need to be considered -

1)First mover in the blue ocean market - Here awareness and product market fit establishment is key to gain traction and market share. PMs need to be ready to pivot as market needs and establish themselves

2) Introducing a product with existing products in the market- Here PMs need to be very clear on how they differentiate from peers. It could be in terms of segments, demographics, features, delivery model etc but one needs to provide reasons to get new users to adapt their product or provide reason for customers of existing products to migrate

Today lot of web apps and mobile apps are introduced to market via platforms like Product Hunt

c) Growth

This is the phase where product has got it fits right and market is reacting to the adoption of product with peers realizing need for the product or its competitors in terms of value for them. Here companies prioritize market share over profitability as customers understand growth would follow if companies are delivering the promised value. Marketing budgets increase and per unit profit margins increase. Product Marketing Manager and Growth Hackers become essential for a company's growth. Companies mostly breakeven before or in the growth phase depending on pricing strategy. As PMs, delivering the essential features plus a slew of differentiating features that establish themselves is critical for gaining market share. Pricing is a very critical aspect in this phase. Expansion can sometimes also mean identifying newer geography or segments not catered to before

A good example here would be self-investing discount brokerage apps like Zerodha/Upstox which have seen heavy growth in previously under penetrated Indian investor market which stayed away from stock market investing

d) Maturity

This phase is when markets and products both mature.  Customers have a set of value expectations which drive decisions. Aim is to ensure feature parity and retention of users. As markets mature, growth of new customers declines, and only existing players keep fighting for keeping their market share

The personal email market in the US would largely qualify in such a range with the market maturing with players like Gmail, Yahoo Mail, Outlook cornering most of it. The Lion’s market share remains with such players and has good large penetration.

e) Decline

This is where products see negative growth and products are either no longer needed or substituted. Companies need to build either alternate products or enter new markets as businesses would sooner reach end of life. No active budgets are seen in product development and as PMs focus is to keep the lights on for customer support till the licenses expires or customers migrate to newer platforms.

Following infographic by ProductPlan capture the role of PM in different phase of Product and is a good perspective on same

Some sunsetting products examples would be Mainframe PCs, languages like Nero CD Authoring software, Fortran language, Windows 7, Pac Man. Some of them died out as a fad and some were replaced with substitutes and some reached end of support from parent company

Pro Tip: Some people also relate BCG 2x2 matrix as a representation of Product Lifecycle and vice versa. While some may disagree on it as not a perfect interpretation, but it does have striking similarity if you look it from sales growth in each product lifecycle phase

Focus OKRs and Metrics for PMs

It becomes more critical for having a broad level perspective of the phase your product is in and that will shape your features that you would introduce in your products. You will find a lot of people starting their career in either of the 4 phases of the Product LifeCycle, and very rarely on decline or sunsetting products. Let's look at how as a PM your focus for each feature adapts to the product phase and what are the metrics that take higher priority.

Pre-Introduction - Product Market Fit is most important for PM. Product is in MVP state, lot of uncertainty even among customers on what they need. For existing competition if already, feature parity for limited use cases becomes the guiding principle for MVP. These companies operate in what is called stealth mode

Introduction - There are 2 major types of products introduced here

1. Blue Ocean Products – market needs to learn a lot and see the value of what you are introducing, Market Fit is determined, and PMs need to learn to pivot as needed
2. New products in the market with existing players. The aim here is to capture market which is under penetrated by being yet another player or catering to niche segments

Metrics Focus is Primary - Awareness, Acquisition. Secondary - Activation

Eg:- Cryptocurrency in India (would consider crypto as more mature in other countries)

Growth - Focus is on capturing maximum market share via catering products to larger segments and having differentiating feature

Metrics Focus is Primary - Acquisition, Engagement, Retention

Eg: Stock Broking Apps (Groww, Upstox, Zerodha)

Maturity - Market matures enough with product focusing on feature parity with competitors or just enough to retain customers. Aim is rarely to introduce differentiation or new features but preserve market share

Metrics Focus is Primary- Retention, Secondary - Engagement

Eg:- ERP, CRM, HRMS

Decline - Product is marked for sunset with replacement or substitute and focus is just to support existing customers or contracts till sunset

Gaming industry sees lot of their game decline after

Metrics Focus is Retention (Alternatives shift)

Eg:- Nero Burning ROM (Disc authoring Software)

Exercise: Think of the product you manage or regularly use, try to map it to the Product LifeCycle. Try to review what features you would want to launch and if it makes sense based on the table above

Product Lifecycle and its relation to Software Development Lifecycle (SDLC)

Whole lot of us from engineering background or those who took computers as minors are taught software development and different models like Waterfall, Scrum, Extreme programming etc but product lifecycle is focused more on looking at a product from its market maturity and product market fit. Product Lifecycle is applicable for even non software products as well. Product lifecycle looks at life of a product from it being released to market and how it fares over time. Software Development LifeCycle on the other hand is more of a process and methodology of frameworks to build, maintain and support the product itself. Software development lifecycle would not be concerned about things like competition, user behavior, government regulation, market trends.

To give an example - if we look at product lifecycle of Disc Authoring Software like Nero, CDBurn - they were introduced in mid 1980s and grew extensively in 1990s and market remained matured till-2000s and once internet-based content streaming became mainstream changing behavior to stream online instead of store, their market started declining rapidly by 2015. The SDLC applicable for Compact Disc Authoring software, it would be more like agile/waterfall process used to release such software

Exercise: Think what you would have done if you were a PM at Nero AG (parent company of Nero Software) in 1) 1990s 2) 2000s and 3) 2019.

Product Finance and Product Lifecycle

As PMs, we are introduced to Product Finance a little late especially with senior roles expected to do Product Financing as it involves understanding the Product Lifecycle and its various facets deeply. Following is the demonstration of how various finance KPIs move with Product Lifecycle by Heizer and Render

It is important to understand products have a negative cash flow of their high development cost during pre-introduction phase and post breakeven only profits increase rapidly with sales. In our previous post we touched upon the aspect of infinite leverage that the product business offers. The above graph explains how the revenue and profits move.

As a PM, it is critical to keep the product financials and product phase in mind while making product feature decisions and how it impacts both topline and bottom line. With cloud-based development becoming mainstream, the major changes that one would see in this graph would be pre-introduction cost becoming lower and post introduction cost higher due to the fact the capex costs which used to be higher in predevelopment are now op-ex costs especially on the infrastructure side

Is this the only way to look at Product Lifecycle?

While the above-mentioned Product Lifecycle approach is one way, not all products would go through such phases. Some may die down before they reach product market fit. Some may face taxes because of business priorities or regulatory issues. The above approach was just one way of quantifying. While products are launched and sunset, it is important to keep the customer needs and market movement always in mind which will help you adapt yourself. The Survival of the fittest is not just for living beings but products as well.

References

• https://theprint.in/features/brandma/how-godrej-typewriters-scripted-modern-indian-history/173673/]
• https://www.productplan.com/learn/product-management-role-product-lifecycle/
• https://www.business-to-you.com/product-life-cycle/

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