As a product matures, the main focus shifts over time. This is sometimes called product lifecycle.
This is one way of describing it:
It is not as linear as it looks in this picture. I have been working with products that were in the Decline stage several times where we managed to find new ways of extending or changing the product so it could experience new growth. There is no clear cut line between the different stages either, but I find it helpful to think about the maturity of your product in these stages.
Problem / Solution Fit
At an early stage the main focus should be to make sure you have found a problem worth solving and that your solution is a good way of solving the problem.
This is done by “getting out of the building” and talking to potential end-users and empathizing with them. If you don’t thoroughly understand you users and how they will perceive your solution, chances are high that you will not build a successful product. Most of the time interviews and discussions are roughly divided in two parts. First, you really try to understand what the users are trying to achieve in areas related to your product. Second, you will elicit feedback on your proposed solution.
It often takes a number of iterations before you can be reasonable confident that your product solves an interesting enough problem and a satisfactory way. Sometimes you need to implement a full scale solution to make sure it will fly, but sometimes it can be enough with prototypes to move on to the next stage.
It is unfortunately quite common that companies try to scale products that doesn’t solve a problem that users care that much about and this can burn a lot of money.
Product / Market Fit
When you are sure your product solves an interesting problem in a satisfactory way you can move on to focus more on the Product / Market Fit.
In this stage you will validate that your product can be successful in the marketplace. You will validate things like customer acquisition costs, customer life time value and making sure your sales channels are working the way you expect. During this stage the main focus is on finding out if it will be possible to scale the product in the marketplace in a profitably way. Sometimes companies go to the Growth stage without having proven that they can scale profitably. That can be fine, as long as there are strong reasons to believe that profitability will come with scale. As a minimum you should have compelling and believable arguments that it will.
At this stage you have clearly shown that there is a lot of interest for your product and as a minimum you can clearly see a path to profitability. Now it is time to find ways to scale and grow the product.
At this stage the product revenues are flattening or declining. This might be because the whole market is declining or the market for your particular solution is declining. There are two primary strategies when you found yourself in this situation.
- Milk the cash cow
- Find ways to enter Growth again
Milk the cash cow
It is quite often possible to make a lot of profit by scaling down investments in a mature product that has a solid base of customers. If you operate the product with a skeleton crew, the margins can be excellent. This can be a good option if you don’t find any good way to get back to Growth with the current product and you might see interesting new options that you need cash for exploring.
Find ways to enter Growth again
It is often possible to get a product back to Growth again. This can be done in numerous different ways, for example finding a new problem / solution that can extend the product or finding a new sales channel. In general getting back to growth will usually mean circling back to earlier stages to find Problem / Solution Fit or Product / Market Fit before a new period of growth is entered.