How Planning for Obsolescence Drives Product Innovation and Lifecycle Management
By J Schneider, VP, Strategy
Until recently, manufacturing companies could get away with a certain level of complacency in terms of their product portfolios. They could sell the same products for years and years without changing a thing. With fewer overall options, buyers tended to be steadfastly loyal once they found the brands they liked.
Today, though, product innovation is much higher. Buyers have a plethora of information and options at their fingertips, and they are much less likely to be brand loyalists. When it’s time to buy a new wrench, they’re liable to research different models and assess their options — even if they were perfectly happy with the one they already had. Your manufacturing company must innovate rapidly in order to stay relevant. But innovation isn’t just about coming up with entirely new products or technologies. You must also manage the lifecycle of your existing products so they don’t grow stale.
Too many manufacturing companies haven’t yet adjusted to this new reality. For these companies, product lifecycle management is purely reactive. Their products remain unchanged (and untended) until a market event (such as slowing sales or bad reviews) forces their hand. Companies with this posture find themselves swimming upstream as they are forced to quickly react and make up lost time. Perhaps more frequently, manufacturing companies actively manage their top-performing products and leave all the rest to languish until market conditions make them obsolete. Either way, companies with this approach leave money on the table — and endanger their share of the market, too.
Product lifecycle management may not sound very sexy, but it’s what lays the foundation for innovation.
What is Product Lifecycle Management?
Simply put, product lifecycle management is the process of actively managing the creation, sale, and obsolescence of a product, service or business model over a set period of time.
What this means is that you should be forecasting a product’s obsolescence even as you work to bring it to market. That doesn’t mean picking an arbitrary date to phase out your new product, regardless of market conditions. But it does mean making an educated guess about the timing for a product’s possible obsolescence and proactively assessing the product in advance so that your company has ample time to plan for an updated version or replacement product before it’s too late.
Product lifecycle management begins with an understanding that every product has an end (with the possible exception of the rare few like Coca-Cola). You must start by looking at each product your company makes and ask yourself how long each one ought to be in production in its current form. Hint: Forever is the wrong answer. That’s true even for industrial products, which may have a longer-than-average lifecycle. It doesn’t matter what you make. At some point, someone will make a better version. And your goal is for that someone to be you.
By preparing for the end of a product’s lifecycle, you force your company to think about creating something new.
A Quick Guide to Product Lifecycle Management
So, how do you estimate how long you’ll make a product in its current form? For one thing, you want to make sure you capture a return on your investment in the product within its overall lifecycle. Beyond that, you should have a sense of how long the market usually cycles through new versions of the products you make. For manufacturers, seven to twelve years is the typical range. That wrench we talked about earlier might have a lifecycle of 20 years, while a table saw might be more like 10 years. Go with what you know about your particular products and use those average cycle lengths as a starting point. Consider this a target date and not a hard-and-fast expiration date.
Now it’s time to set some company goals based on the overall timeline you identified for your product. Think about how long it typically takes to develop a brand new version of your product (or products like it). That’s how far in advance of your product’s target end-date you’ll want to start assessing your product. For example, if you anticipate a 10-year lifecycle for your table saw, and it takes you three years to take a table saw to market, then you’ll want to plan for a major assessment of your existing table saw at year seven. Doing this prevents your company from getting backed into a corner and having to play catch-up.
Of course, if the market shifts significantly before that time, you can do your product assessment sooner than planned. And if you get to the planned assessment date and find that your product is performing better than expected (and still seems to be the industry leader), then you may decide not to change a thing. Just set a new target end-date based on your current knowledge and go from there.
Innovation Begins with Obsolescence
What drives new products? New ideas, or the need to eliminate something that doesn’t provide enough value to the end-user? More often than not, it’s the latter. That’s because innovation almost always begins with obsolescence. Throughout history, nearly every product has been born as a solution to a problem. Often, it’s the solution to a problem that has been insufficiently solved by other, similar products that came before it.
Product lifecycle management is a much surer way to drive new product development than waiting patiently for new product ideas to materialize out of thin air. The reality is that product lifecycle management is the nuts-and-bolts, operational precursor to innovation. It’s almost impossible to consistently have one without the other.
The manufacturing firms that are considered market leaders are already doing this well. The single unifying trait among the most successful companies is that they start their product development process with the product or service they are replacing. This is true when it comes to developing new products. And it’s also true when it comes to updating their existing portfolios. Innovation and product enhancements should always begin with removing the old.
Use product lifecycle management to create a culture of innovation born from obsolescence, and your manufacturing company will be far more likely to develop products and services that are better, stronger, of greater value to the user — and longer-lived, too.