Dogs, Cows and Kids
I have never seen a technology product company that didn’t have more ideas they wanted to pursue, than capacity for pursuing them. So constrained resources is a reality of our world. Sadly, this keeps many companies from pursuing some truly promising products.
Product portfolio planning in all about deciding where to invest, but it’s not a very fun exercise when you don’t have much funding to work with.
One way of increasing capacity is to spend more – hire more engineers, designers and product managers. But another way of increasing capacity is to free up current resources.
I try to get companies to free up capacity by reviewing their entire product portfolio and making some difficult but essential choices as to the appropriate level of investment.
There are essentially three important cases:
- Sunset. Especially in larger companies that have been around for a while, there are often product efforts that continue mainly due to inertia. But if the product isn’t generating sufficient return, it probably makes sense to shut it down. These are your dogs. This doesn’t necessarily mean pulling the plug on the servers, it usually involves contacting any remaining customers and informing them of your plans to phase this product out, and incenting them to move to other products or find other alternatives. Even when some customers resist, you can usually find ways to do the right thing for the customer and still shut the service down. Note that often management underestimates the true cost of continuing to support these products, but it is the job of the product team – including the product manager, engineers, QA, release management, product marketing, and support – to make these full costs transparent.
- Sustaining. Many products in your portfolio should probably be at the “sustaining” level. At this level of investment, you are simply attempting to keep this product operating at the level that continues to hold the KPI (Key Performance Indicator’s) steady and deliver its level of return. These are your cash cows. This typically means that if a big bug is discovered that hinders operation or directly impacts customers, you’ll fix it, but mainly you’re leaving this alone and just trying to keep things running. You’re generally not adding any new features, except to accommodate things like changes in laws or compliance. You typically don’t have a dedicated product manager, designer or engineers on these efforts. A product at this level is not a sign of failure – in fact, a set of products at the sustaining level ensures that you have a stream of revenue coming in with very low operational costs, which lets you fund your future earners.
- Investment. These products are where your product organization should focus as they are your future. They’re your kids. You might be doing major new additions, usability redesign, or features to optimize conversion, but the key is that you’re investing to try to improve the KPI’s of this product. Products at this level should have dedicated product management, user experience and engineering resources, proportional to the level of investment. Since this is where you are spending your product funds, this is where management’s attention should be.
Most products go through this basic lifecycle of starting with an initial investment, followed by further investments, but then eventually getting to the point of diminishing returns where the product should be at the sustaining level, and eventually phased down.
This might sound simple and obvious, but many, if not most, organizations don’t seem to deal with this reality. They think they need to invest in every product they have. So they automatically assign a product manager and some engineers. And of course most product managers will quickly come up with ideas for trying to improve the performance of the product, usually with a long list of features.
This is why it is so important to have KPI’s for each product. If you’re investing and the KPI’s are not improving, either your product manager is making poor decisions on what to build, and/or the product may have reached the point of diminishing returns.
You’ll often find built in resistance to designating products as sustaining level only, but it’s critically important if you want to free up resources for the investment efforts.
So lose your dogs and milk your cows, and you should have significantly more resources with which to feed your kids.