Breaking Up Is Hard To Do: The Practice of Product Discontinuation

I recently remodeled my kitchen in my 15-year-old house.   As I began planning the project, friends and family would joke with me (or some, perhaps more) about my reason for wanting to do this.  Everything worked fine and it didn’t look that bad.  From their standpoint, all was well and I was probably wasting my money, which could have been better spent on a more comfortable sofa or a bigger screen TV.

The User’s Point Of View

The one thing they didn’t understand was that the kitchen wasn’t fit for my purpose. I had a four burner stove, which could only handle 3 big pots when I’d be cooking for a lot of people around holiday time. Or, they could not comprehend why I would complain about the sink, which was very small, and it made it difficult to clean the pots and tons of dishes for my guests. Or an oven that was too small to handle one turkey and the potatoes at the same time. And, why I didn’t like the finish of the cabinets or the cheap paper that was used to line the shelves.  No one could see things from my point of view; the user. To me, the value proposition for that kitchen was outdated.

I’m sure you can imagine this situation, but what if you have a product that you or your peers think is functionally sufficient and good enough for the market.   Now, think about what every automobile maker does; each model is replaced every four to seven years. These new models utilize new technologies and designs that move along with customer preferences and competitive requirements.  What this also means is that the former product needs to be discontinued.  Yes, discontinued… killed off… put out to pasture… or whatever term you choose.

The Practice of Product Discontinuation

Unfortunately, the practice of product discontinuation isn’t done as frequently as needed or included as part of a robust product portfolio strategy.  In a recent survey, two-thirds of 209 senior executives indicated that their organizations do not have any type of product discontinuation strategy.  This statistic is consistent with other research I’ve done over the years.  There are reasons, some of which include:

• Fear that discontinuation would result in lost revenue and a damaged reputation.
• “Product addiction.”  They can’t envision a world without their product.
• Lack of vision for replacements or new products.
• Competitive blindness, a condition that exists when no one can envision a competitor coming up with something better.
• No institutional know-how to effect a proper discontinuation.

If you’d like to start thinking more strategically about product portfolio management, then discontinuation should be on your radar screen.   Every organization should have a process in place to examine the contribution of their products to the results of the business.  That’s a given. However, products should also be evaluated in terms of design, technology, style, and any other area that puts it more deeply into the hearts and minds of customers.   As automakers and clothing companies do, so should all other businesses.

To start you on your way, I offer a simple solution.  Re-do the Business Case for the product!  This will allow you to assess the market environment and the business contributions of the product. It will also serve as a strategic check-in to see whether the product’s business is consistent with the current vision for the firm.  Lastly, an examination of the financials is in order.  Examine average prices paid, unit volumes, costs, and profit.  Evaluate net promoter scores or basic measures of customer satisfaction.  If you do, you may find that the product is no longer fit for purpose, and needs to be removed from the portfolio and/or replaced.

In a nutshell, businesses must keep moving forward in order to earn greater profits and recognition from customers for being inventive and creative.  Incorporating this perspective will invariably contribute to a broader recognition of what’s needed in the business to bring about greater levels of success. Think of your discontinuation strategy as a way to lead in the market and not a drag on resources or other unwarranted feeling

By the way, when people came to my house after the big kitchen remodeling job, they could see and feel the benefits of a larger six-burner stove, larger oven, bigger sink, and more thoughtfully organized cabinets.   Their paradigms were changed only after they saw the end product.