Let say your product was once top of the line, but then market shifted. Although the product still is very good at different things it’s now unclear if your product is the /best/ at anything. Should you hire better sales people? Should you hire better engineers? Should you allocate more resources to pure research? Would you do a “Sony” and fire 20 000 people? Would you ride the long tail of faithful customers in a slow but steady decline?
In an ideal situation, it will not come as a surprise that your product is past its prime time. As CEO, you need to be keenly aware of how the markets are evolving and shifting. This will allow the organization to develop new products or new versions as needed. Hiring better sales people is something you should continually do; but it is not a fix to a problem.
So if what you describe truly happens, it is a sign of an on-going failure of your product strategy. Of course those failures happen in many companies, so let’s look at how to deal with them.
The first question to ask is how significant the change is. If it is a major shift and your product has no target market any longer, then you should cut down sales and marketing expenses immediately and focus on building something new. The public humiliation of withdrawing from the market for a time is smaller than the cost of stubbornly continuing.
If the market is (perhaps temporarily) bifurcating into new customers and old ones, my recommendation would be to target most sales and marketing activities to the current customers who are still happy. Take good care of them so that you don’t lose your revenue stream. At the same time, pick a small team that is tasked with developing something for the customers who prefer the new type of product. Give that team full freedom to abandon past product designs and priorities.