The document discusses how companies should evaluate their product portfolios and prioritize products for divestment or termination by considering factors like customer needs, competition, disruptions, and scalability. It provides tips for companies on how to package non-core assets for divestment through means like spin-offs or IPOs. The document emphasizes that internal politics can obstruct progress in evaluating and divesting non-core products so CEOs should take the lead in managing conflicts.

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Preparing your Business for Whatever is Ahead™
Product Portfolio Divestments

2. Crescendus™
Dynamics of Company Product Portfolios: Mix of Good & Bad!!
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High Growth
Near Term Competitive
Advantage
Pricing Power Innovative Disruptor
Steady Growth
Emerging Competitor
Pressures
Pricing Pressure
Incremental
Innovation
Declining Sales
Intense
Competition
Price Wars
Strong Emerging
Disruptors
Stable / Low Growth
but Non-Core
Highly
Competitive
Pricing Pressure Commoditization
etc.

3. Crescendus™
Prioritizing Product Porfolios: Focus on Frontline Indicators
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• Customers
• Are our products vital to them ?
• Are our services making our customers profitable?
• Do they give them a competitive advantage?
• Are they willing to invest in our product roadmaps?
• Do we understand their evolving needs?
• How embedded are our products within customer's workflow (stickability)?
• Competition
• Competitive moves in markets & their impact on existing product portfolios
• M&A activities and potential to disrupt current markets
• Adjacencies
• Ease of entry into adjacent markets- line extensions etc.
• Meeting new needs of existing customers
• Disruption
• Entry of new disruptors
• Cost & Quality curve shrinkage within the industry
• Disruption capabilities of existing teams
• Product Scalability
• Ease in product scalability across applications & geographies
• Ecosystem integrationexpansion with third parties to meet customer
workflow needs
Answers to the above questions & issues will
help you decide what is your evolving core
business & what needs to be divested.
Focus more on frontline issues since Revenue,
Margins etc. are all lagging indicators.
Customer Insights-
• Rely less on your own assessments & more
on third party confirmation of customer
opinions
• Go beyond the usual 5-10 customers that
currently give you good testimonials (since,
in most cases, they get nice concessions for
your testimonials)

4. Crescendus™
DivestmentTips
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• Exits
• As part of the frontline indicators review, constantly monitor what products are core/non-core, and package
them into entities for divestiture. If the horizon looks bleak, divest even the moderate growth products.
• Break down your non-core assets into entities of manageable size (<$20-50 Million), which will be easier to
justify, acquire & integrate by the acquirer (e.g Bolt-On Acquisitions).
• Do not wait till the business deteriorates too much since your exit valuation options will be limited.
• Do not prolong your misery by engaging in joint ventures since you will add governance challenges.
• Retain non-exclusive IP rights to the products you divest.
• If the non-core entity is capable of surviving on its own and has sizable IP and product assets , explore an IPO
(provided you can afford the offering risks & costs)
• Sunset
• Clearly list the rationale for the products that you plan to end development work (within your company & to
your customers)
• Set clear phase-out timelines for products marked for termination and transition plan (to new products)
• If possible, out-license those technologies to third parties
Remember-
Your internal politics & powerplay will be a major obstacle to achieving progress (& in our opinion, more harmful that your
competition). CEOs should take the lead in managing internal conflicts and Executive/Manager issues.

5. Crescendus™
Contact Information
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Preparing your Business for Whatever is Ahead™
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Contact@crescendus.com
www.crescendus.com
Knoxville, TN, USA