Written by “Zombie Products” is a metaphor for products that, despite underperforming and consuming significant resources, continue to exist within a company’s portfolio. This article aims to provide product managers, product leaders, and C-level executives with an understanding of Zombie Products, their potential impact, and strategies to deal with them effectively.
Recognising Zombie Products: The Warning Signs
Zombie Products often linger in larger corporations, particularly those that house multiple products under the same umbrella or have recently undergone mergers or acquisitions. These products are typically characterized by:
- Poor Financial Performance: Zombie Products consistently fail to meet revenue or profitability expectations.
- Low Usage: These products often see significantly lower usage compared to other offerings in the portfolio.
- Negative Customer Feedback: Zombie Products can consistently receive poor reviews, leading to a negative impact on the brand.
- High Support Costs: If a product requires a disproportionate amount of support or maintenance, it could be draining resources without delivering sufficient value.
- High technical debit: products which large amounts of defects running on legacy tech that have not been maintained.
The Impact of Zombie Products on Your Portfolio and Brand
Zombie Products can have a significant impact on your brand and portfolio. They not only consume resources that could be better utilized elsewhere but can also confuse customers and dilute your brand’s value. Furthermore, in the context of Private Equity (PE) where businesses often bring multiple products together under one umbrella, Zombie Products can create unnecessary complexity and hinder the transition to a unified product platform.
Dealing with Zombie Products: Effective Strategies
Once you’ve identified a Zombie Product, there are several strategies you can employ:
- End of Life (EOL): Sometimes, the most cost-effective decision is to discontinue the product, freeing up resources to focus on more promising offerings.
- Shift to a Product P&L Approach: Alternatively, you might decide to invest in the product, moving it from a project-based approach to a product-based one. This means investing in ongoing development, tracking its Profit & Loss (P&L), and holding a dedicated team accountable for its performance.
A bubble chart can be an effective tool for portfolio management, particularly when making decisions about product end-of-life. This type of visualization allows you to represent three dimensions of data, which can be extremely valuable in assessing the performance and future potential of different products in your portfolio. For instance, the X and Y axes could represent two key performance indicators such as revenue and profitability, while the size of the bubble could represent another important metric such as market share or customer base size.
By plotting your products in this way, you can quickly identify which products are high performers (high revenue, high profitability) and which ones are underperforming. This visual comparison can help you to make informed decisions about where to invest and where to consider product end-of-life. Products that are underperforming on multiple metrics and have a small market share may be prime candidates for discontinuation, freeing up resources that can be better utilized elsewhere in your portfolio.
Portfolio Rationalization for the Benefit of Customers and Shareholders
In the case of businesses undergoing mergers or acquisitions or those with an extensive product portfolio, a key part of dealing with Zombie Products involves portfolio rationalization. This process involves evaluating each product in the portfolio and deciding whether to invest in it, maintain it, or retire it. The goal is to create a streamlined, focused product portfolio that delivers value to customers and shareholders.
Identifying and effectively managing Zombie Products is a crucial. It helps ensure that your product portfolio remains vibrant, healthy, and valuable, and that your resources are focused on creating products that customers love and that drive profitable growth. Understanding the warning signs of a Zombie Product, the potential impact on your brand and portfolio, and the strategies to deal with them can help you navigate the complex landscape of product management effectively. In our next article, we’ll continue our exploration of product management challenges, so stay tuned for more insights.