When Does Your Product Need to Die?
Business people conduct their own "death panels" everyday by asking, "Is this product past its prime? Should this service be diminished? What's in R&D that can re-eenergize our sagging sales?"
But as a recent NYT article written by Harvard Business School professor Mary Tripsas points out, companies may be wise to figure out how to keep older products on life support rather than ushering them to a premature death.
"Companies can proactively manage the innovation endgame. Continuing improvements to extend the life of technology, particularly given the attractive margins on the old, can be a wise business decision -- and not necessarily a reflection of narrow-mindedness."One way to do this, says her HBS colleague Daniel Snow, is to take parts of new technologies under development in R&D and use it to extend the life of something old. The carburetor was given an extended run by incorporating technology from electronic fuel-injection. Read Snow's working paper on the subject, Capturing Benefits from Tomorrow's Technology in Today's Products: The Effect of Absorptive Capacity
Tripsas says customers move at different speeds, "so investments should be focused on market segments that most value the old."
Her examples of old technology made fresh include hybrid cars, which car makers are using to bridge traditional autos and next-gen alternative fuel vehicles.
The pitfall to avoid is hanging in so long with an aging product that a competitor bites you from below with a better but cheaper offering.
Aging Gracefully
Another thought about the old. Some entrepreneurs look for opportunities to acquire brands that have been retired by their owners. In this way investors have been able to purchase and revitalize such once well-known brands as Prell shampoo, Fabergé cosmetics and Comet cleanser. Many people grew up with these names and remember them fondly. The key is making them relevant again to today's consumer.