The Stages of a Products Lifecycle
I debated long and hard about whether I should use the word ‘scale’ in the subtitle of The Salt Test, ‘How to take an innovative product from idea to scale’.
Early feedback showed that not everyone understood the term. However, in the end I decided to keep it. The main reason is that Scale is one of the four stages of the product lifecycle and understanding the lifecycle of a product is fundamental in understanding the core principles in The Salt Test.
The other three stages of the product lifecycle are Discovery, Plateau and Decline.
The first is the Discovery stage, when the early innovation takes place. The aim of Discovery is to prove that you have a product that satisfies the need of your target market, you have built it, and you can sell it. The Discovery stage is the main focus of The Salt Test.
The next stage is Scale. The aim here is to increase revenue while also improving your efficiency. In other words, you add revenue at a faster rate than taking on new costs. For example, if you are making $2 for every $1 spent, your goal is to make that $3 for every $1 spent. You can achieve this in multiple ways, including implementing more efficient processes, expanding into new markets, or making iterative product enhancements.
The next stage is Plateau. This can be the most profitable stage because you start to reach economies of scale and therefore you spend less money expanding into new markets or making product improvements. It is, however, the point at which your product ceases to grow, no matter how much you invest in it. This could be because you have saturated all the potential markets or because there are no more features you can add to your product to attract new customers.
Following Plateau comes Decline. At this stage, revenues decrease because your product starts to lose market share. This is likely due to customers moving to competitive alternatives. This phase is well beyond the scope of the book, but it is important to say that this is why continuous innovation is important. You will need to find new products to replace those that will eventually hit decline.
