“Hey Rob, what is this thing called Sunsetting?” It is a question that I hear at least two times every time I run a Business simulation workshop. I will admit, each time someone asks me the question, I pause for a moment and think how could someone not know what “Sunsetting” is and then I remind myself that many of the participants running the simulated company in a foundational Business Acumen program do not have a business background and they are in the program to learn it!
What is “Sunsetting?
The concept of Sunsetting in business is the strategic and intentional phasing out or retiring something—a product, service, brand, partnership, agreement, policy, hardware, or software. Products and services are sunset when they are no longer profitable or when a company decides to change its strategy or focus. A recent example of sunsetting that impacted many people was Adobe’s decision to sunset their Flash Player. Other examples are various versions of Microsoft Windows and Apple’s iPhones. Apple typically sunsets a version 2-3 years after a new version comes out.
Sunsetting as a Business Acumen Skill
When I explain the concept of Sunsetting, I typically talk about it in Phases and Actions. The following is a detailed explanation and learning document of Sunsetting:
Phase One – Deciding When to Sunset a Product / Service
When and how do you decide to sunset a product? There are four teach points:
- Assess how the product / service is performing. Are revenues decreasing at an accelerating rate? How about profits? If you conclude from your assessment that performance is significantly declining, it may be time to sunset.
- What are the resources being used to keep the product going? Resources being people, salaries, marketing, customer service, and other continued investments that aren’t going to have a strong return.
- Calculate the value those resources could unlock if you re-deployed them to other products. In our core business simulations, it’s an interesting tradeoff between older, mature products, and newer growing products that may be more profitable.
If you decide to Sunset a product, you should develop an “end-of-life” roadmap that contains all the details needed to make it as easy as possible on your customers and employees to make a smooth transition.
Phase Two – The People Side of Sunsetting: Getting Stakeholder Buy-In
Successful companies like Apple and Microsoft don’t wake up one day and Sunset a product.
Careful people planning is required:
- Plan and discuss with your key stakeholders.
- Reward and celebrate the people who made the product successful, don’t make them feel like they are being thrown out or Sunset themselves.
Sunsetting a product or service can be very emotional for organizations. Business units, teams, and people become attached to products and many times identities are tied into those products forever. It takes great care to support and keep people motivated through a change like a product Sunsetting.
Phase Three – Communication Plans
Successful companies that Sunset products have a detailed and intense Sunset communications plans. These plans could include:
- Developing Marketing campaigns and deliver them early and often.
- Working with your Sales team to develop the right approach.
- Create a flawless plan to inform customers and keep them as customers.
- Re-Deploy resources including key people as soon as possible to they don’t leave or become demotivated.
In summary, like many other important things in business, communications are critical. This is even more true when Sunsetting a product / service. In my opinion, you can’t communicate enough and your messages should be open, transparent, and positive.