After the innovation phase, assuming that your digital product was able to pass through the abyss, it has grown. Only there will come a time when your product will enter the stage of maturity – remember the product lifecycle?. This is inevitable, just review the technology adoption S curve in several practical cases:
Why does it happen?
There are three reasons for a product to reach the maturity stage of its life cycle:
This is the case of TV in the previous image. The TV market matured some 30 years after television was invented, that is, 100% of the addressable market, which could buy a TV, already had one. What solution did their manufacturers find to get out of maturity? In fact, they did not come out of maturity and eventually entered the last phase: the end of life. The solution they found was to create new TV products that could go through the entire life cycle again.
Today, television technology life cycles are much faster, and the next technology is already beginning its growth phase even before the previous technology came out of that phase. Today, TV makers no longer expect market exhaustion to create a new TV. They already use innovation as a way to force the current product to mature and to enjoy the growth phase of the new product.
It is an innovation that helps create a new market and a new perception of value, and that eventually completely changes an existing market and its perception of value (over a few decades, years or even months), making old technology obsolete[^wikipedia-innovation]. This is the basis of the book The Innovator’s Dilemma, a must-read for all people who work with technology, by Prof. Clayton Christensen, Harvard professor, and innovation consultant.
Disruptive innovation is what happened to film cameras, with the arrival of the digital camera; or with mobile phones that only made voice calls, with the arrival of smartphones; with traditional encyclopedias, with the creation of Wikipedia; and with CDs and DVDs with the launch of audio and video download and streaming services. Sometimes disruptive innovation can be created by the same industry as a strategy to defend against market maturation. This is the case with the TV industry launching SmartTVs, and the mobile phone industry with the launch of smartphones.
There is also a situation where the owner of the digital product, instead of waiting for maturity to happen, actively manages it. This is the case of TV manufacturers that barely launched plasma TVs, then launched LCD and then LED, not allowing the market to saturate and anticipate maturity with the new version. This also happens in software products, especially installed software such as Windows, MySQL, Nginx, Asterisk, and many others.
Anticipating the obsolescence of your product, its product manager is already planning the release of the new versions and the end-of-life process of the previous versions. This process is often quite slow and in some cases can be traumatic. This was the case with Windows Server 2003, which was released in April 2003. It went into a programmed state of maturity as soon as the next version of Windows Server, Windows Server 2008, was released in 2008. As of 2008, it lived in the phase. of maturity; in 2010, it was no longer sold; July 14th of 2015 was the date set by Microsoft to no longer support the product, meaning the product’s end of life. Windows 2003 was installed in many servers at Locaweb and we had to do the migration to newer versions of Windows server, but that migration was not easy to do and Microsoft took a long time to provide tools to help in this migration.
For online software products, the programmed maturity does not make much sense as the product is updated frequently and the user does not usually suffer from updates. Of course, there are exceptions even for online products. There are instances when the product development team chooses to rewrite the product for some reason and decides to release a new version. In this case, it is important to understand that you will be putting the current product into a programmed state of maturity and managing it as such. That is, you should plan the full maturity and end-of-life cycle of current release, including thinking about what to do with existing customers of the current release that is scheduled to mature and how to migrate them to the newer version of your product. This is something that should be discussed as one of the factors that can influence the product development team’s decision whether or not to develop a new version of their software product.
When does it happen?
It is not very difficult to see when one is reaching maturity. If it is a scheduled maturity, you will define when it will happen. If not programmed, just look at the growth of your product and notice that it is growing slower. Another point that happens is that growth; when there is, it will always be organic, meaning there is no use investing in advertising and marketing that you will not have new sales.
It is a little disturbing to enter the product maturity phase, especially if it is not a programmed maturity. In the maturity phase, it is not unusual to hear nostalgic phrases like “I remember that in the good times…” begin, but the important thing is not to get discouraged. First and foremost, you need to make sure that your product has really reached maturity, or if there is any other reason for slowing growth. To make sure your product has reached maturity, you should ask yourself a few questions:
Are we still focusing on the problem?
As we saw in the Innovation: Focus on the problem chapter, every product exists to solve a problem, and it is critical that the product manager never loses sight of it. When a product enters the growth phase, it is common for the focus to shift from the problem to be solved to how to accelerate that growth. When this happens, the main tool that can help accelerate growth, which is the focus on the problem, is lost. When the product manager and the product development team lose focus, the chances of product growth starting to slow are very strong, giving the impression that it has reached maturity.
For years, we have experienced strong growth in Locaweb’s Website Hosting product. As I told you in the previous chapter, in 2012 we brought in a pricing consulting firm that, after much research and analysis, suggested changes to our hosting plans to optimize and increase our revenue and profit. The changes were in the limits of the plans and the types of services included in each plan. Their suggestion was to reduce the number of sites per plan (there were already rare cases of customers hosting more than one site per plan) and, to compensate, to provide included services such as WebChat for chat service.
As I said, these changes did not affect revenue and profit at all, and we ended up wasting a lot of time and money on analysis to make these changes innocuous. But that was not the worst. With the changes made, our Website Hosting product has gone further to address our customers’ issue. They came to consider that the product had less of the core functionality and that we put in the additional services that made the product more expensive. Our customers have found better solutions in the market. This affected our product, which slowed considerably in 2013.
As a result, we have decided, more empirically, to do what we call Site Hosting product repackaging, changing the limits again based not only on data, but also on our knowledge about our customers and their issues, and our 15 years of web hosting product experience. With the change we made, which cost us much less time and money in its planning phase, it has grown back to its former pace. It is therefore important that the product manager and his development team never lose focus on the problem the digital product solves, and ensure that it is solving the problem as best as it can.
This example illustrates well what I mentioned in the previous chapter when I said that in addition to metrics, you need to use other information, such as experience, intuition, judgment, and qualitative information, to make product-related decisions. The consultancy made us look exclusively at data, making us disregard all our empirical knowledge with the product.
Is the whole market slowing down?
This is a second very important point to consider when looking at a slowdown in growth. How are your competitors, are they also slowing down? Is the market as a whole is slowing down? Are there any issues in the country’s economy that may be impacting your market? All of these issues should be evaluated as you begin to notice a slowdown in your product growth.
As you can see from .br domain registration curve, as of mid-2013, there seems to be a slowdown in the number of .br domains registered per year. In 2017 it was clear to see the deceleration of .br domain name registration. Now it seems clear that .br domain registration is in the maturity phase. Website hosting is also on the same path. In 2015/16 it was difficult to understand if the market was only pausing for a while, or if it was entering the maturity phase. Now it is quite clear. However, even as you evaluate the market and find that it is slowing down, you and the product development team can never lose focus on the problem it solves and ensure it is solving it as best it can. Even with a slowing market, it is possible to grow if your product is an excellent solution to the problem of a set of people.
Care must be taken not to confuse circumstantial deceleration with deceleration due to maturity. As you can see from the S-curve image in real life, some technologies such as the telephone, the automobile, and electricity experienced circumstantial decelerations before they reached maturity. Scenarios of economic crisis may impose a circumstantial slowdown.
Is there a disruptive substitute?
This is the third point to consider when a product begins to show signs of slowing growth. Is there a different product category on the market that replaces yours? In the case of the slowdown in Locaweb Website Hosting growth, there was also a product category with strong potential to replace ours; site builder apps like Weebly and Wix.
From the earliest website building services, we have always been aware of this potential, so we launched our website builder product to compete directly with Website Hosting as a solution to the problem of people who wanted a website, but didn’t have the required technical knowledge. There is also another problem that Website Hosting solves, which is the need to host and run database web applications. To address this, application hosting solutions such as Heroku and Google App Engine exists today. With that in mind, we also launched our application hosting solution called Jelastic Cloud.
Note that disruption does not exist only in the technology used by the product. A business model is also a form of disruption. Locaweb launched its first version of Cloud in 2008. We chose to maintain the same Business Model as Hosting Business with pricing based on disk space and transfer pricing and charging a monthly fee for the product. In 2009, AWS (Amazon Web Services) began to become well known for its Cloud Computing services, which were very similar to the technology Locaweb offered. The great innovation came in the form of the business model. Amazon has chosen to charge services per hour and to charge disk space and transfer separately. Although it was a more complex way to charge, it had the appeal of charging only for what was used. When we launched Locaweb’s Jelastic Cloud in 2013, we also opted for this business model.
Before accepting that your product has really reached maturity, it is very important to make sure of it. In my example of Locaweb, it is clear there was still room for growth if we focused on the customer problem.
Assuming it is not a scheduled maturity, that you have done the analysis describe above, and that even if you deepen the focus of the product manager and development team to the problem your product solves, you have not been able to resume growth: this is the time to accept the situation, and start decreasing your product development and marketing investment.
You may also decide to move your development and marketing efforts to another product in your portfolio. We’ll see more about product portfolio management and how to allocate investments in different portfolio products in future articles.
Another important point is the need to lower operating costs. You cannot have a mature software product that costs a lot to operate. Operating costs usually come in the form of human labor, ie cost to fix problems and customer service costs. Ideally, since the growth phase, your product has a very small operating costs, with low problem rates and service costs.
To make such a product, the product development team must take care of the quality of the product being put into production, both from the standpoint of technical quality and concern of the engineering team as well as from the point of view of ease of use and concern. from the UX team.
Once you make these divestments in development and marketing, probably by allocating them to another product in your portfolio and lowering operating costs, your product can still have a long life to maturity. It all depends on whether the software product still pays back to its owner while continuing to solve existing customer problems and / or addressing user needs.
This situation can be sustained for months or years. Even if there is no more investment in development, you need to keep a minimum on maintenance, which should make sense within the return analysis of your product. This minimum maintenance investment should be coordinated by the product manager. She should assess his situation and decide to invest effort only when bug fixes and updates are required.
Keep in mind that by keeping product maintenance this way, you will periodically shift focus from the development team, which is now focusing on another product. Therefore, this maintenance should be kept to a minimum. Maintenance needs are likely to increase over time due to the aging of the code that makes up the software, and over time this may cause the cost of maintaining this product to be greater than the return.
Digital Product Management Book
Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.