The Stage-Gate

1
The Stage-Gate process

• ????
• ???????????
• ???????

2
The Goals of an Overhauled New Product Process

• Goal 1 Exemplary Quality of Execution... Second
  to None
• A quality-of-execution crisis exists, however, in
  the product innovation process.
• There exists the need for a more systematic and
  quality approach to the way firms conceive,
  develop, and launch new products.
• The way to deal with the quality problem is to
  visualize product innovation as a process, and to
  apply process management and quality management
  techniques to this process.
• Note that any process in business can be managed,
  and managed with a view to quality.
• Get the details of your processes right, and the
  result will be a high-quality output.

3
Goal 2 Sharper Focus, Better Project
Prioritization

• A new product funnel builds in tough Go/Kill
  decision points the poor projects are weeded
  out scarce resources are directed toward the
  truly meritorious projects and more focus is the
  result.
• One funneling method is to build the new product
  process around a set of gates or Go/Kill decision
  points.
• These gates are the bail-out points where we ask,
  Are we still in the game?
• They are the quality-control checkpoints in the
  new product process, and check the quality,
  merit, and progress of the project.

4
Goal 3 A Strong Market Orientation

• If positive new product performance is the goal,
  then a market orientationexecuting the key
  marketing activities in a quality fashion must
  be built into the new product process as a matter
  of routine rather than by exception.
• Marketing inputs must play a decisive role from
  beginning to end of the project.

5
nine marketing actions

• Preliminary market assessment
• Market research to determine user needs and wants
• Competitive analysis
• Value-in-use analysis
• Concept testing
• Customer reaction and feedback during Development
• User tests and field trials
• Test market or trial sell
• Market Launch based on a solid marketing plan

6
Goal 4 Better Up-Front Homework and Sharp,
Early and Stable Product Definition

• New product success or failure is largely decided
  in the first few plays of the gamein those
  crucial steps and tasks that precede the actual
  Development of the product.
• The up-front homework defines the product and
  builds the business case for Development.
• The ideal new product process ensures that these
  early stages are carried out and that the product
  is fully defined before the project is allowed to
  become a full-fledged Development project.

7
Goal 5 Fast-Paced Parallel Processing

• In marked contrast to the relay or sequential
  approach, with parallel processing many
  activities are undertaken concurrently rather
  than in series. The appropriate analogy is that
  of a rugby match rather than a relay race.
• A team (not a single runner) appears on the
  field.
• A scrum or huddle ensues, after which the ball
  emerges.
• Players run down the field in parallel with much
  interaction, constantly passing the ball
  laterally After 25 meters or so, the players
  converge for another scrum, huddle, or gate
  review, followed by another stage of activities.

8
Goal 6 A True Cross-Functional Team Approach

• The new product process is cross-functional it
  requires the input and active participation of
  players from many different functions in the
  organization.
• The multifunctional nature of innovation coupled
  with the desire for parallel processing means
  that a cross-functional team approach is
  mandatory.

9
Goal 7 Products with Competitive Advantage

• Ensure that at least some of the criteria at
  every gate focus on product superiority.
• Require that certain key actions designed to
  deliver product superiority be included in each
  stage of the process.
• Demand that project teams deliver evidence of
  product superiority to project Go/Kill reviews
  make product superiority an important deliverable
  and issue at such meetings

10
Goal 8 A Fast-Paced and Flexible Process

• The new product process must be built for speed.
  This means eliminating all the time wasters and
  work that adds no value in your current new
  product process.
• It also means designing a flexible process, one
  that accommodates the risks and nature of
  different projects.

11
Stage-GateTM Process

• The Stage-GateTM new product approach is a
  conceptual and operational model for moving a
  new product project from idea to Launch.
• It is a blueprint for managing the new product
  process to improve effectiveness and efficiency.
• Stage-GateTM methods break the innovation process
  into a predetermined set of stages, each stage
  consisting of a set of prescribed,
  cross-functional, and parallel activities.
• The entrance to each stage is a gate these gates
  control the process and serve as the
  quality-control and Go/Kill checkpoints.
• This stage-and-gate format leads to the name
  Stage- Gate process.

12
The Stage-Gate process
13
The Stages

• The Stage-GateTM process breaks the new product
  project into discrete and identifiable stages,
  typically four, five, or six in number (Figure
  4.1)
• Each stage consists of a set of parallel
  activities undertaken by people from different
  functional areas within the firm. In most firms
  Stage-GateTM methods, stages lay out a list of
  prescribed or highly recommended actions and best
  practices.
• Each stage is designed to gather information
  needed to advance the project to the next gate or
  decision point.
• Each stage is cross-functional, and no stage is
  owned by a functional area or department there
  is no RD stage or marketing stage!

14
The Gates

• Preceding each stage is a gate or a Go/Kill
  decision point.
• The gates are the scrums or huddles on the rugby
  or football field.
• They are the points during the game where the
  team converges and where all new information is
  brought together.
• Gates serve as quality-control checkpoints, as
  Go/Kill and prioritization decision points, and
  as points where the path forward for the next
  play or stage of the process is decided.

15
Idea Generation (or Ideation)

• Ideas are the feedstock or trigger to the
  process, and they make or break the process.
• Dont expect a superb new product process to
  overcome a deficiency in good new product ideas.
  
• The need for great ideas coupled with high
  attrition rate of ideas means that the idea
  generation stage is pivotal
• you need great ideas and lots of them.

16
Gate 1 Initial Screen

•  Initial screening is the first decision to
  commit resources to the project the project is
  born at this point.
• If the decision is Go, the project moves into the
  preliminary investigation stage.
• Thus, Gate 1 signals a preliminary but tentative
  commitment to the project a flickering green
  light.

17
Gate 1

• Gate 1 is a gentle screen and amounts to
  subjecting the project to a handful of key
  must-meet and should-meet criteria.
• These criteria often deal with strategic
  alignment, project feasibility, magnitude of
  opportunity and market attractiveness,
  competitive advantage, synergy with the
  businesss resources, and fit with company
  policies.
• Financial criteria are typically not part of this
  first screen.
• A checklist for the must-meet criteria and a
  scoring model (weighted rating scales) for the
  should-meet criteria can be used to help focus
  the discussion and rank projects in this early
  screen.

18
The Stage-Gate process
19
Stage I Preliminary Investigation

•  This first and inexpensive stage has the
  objective of determining the projects technical
  and marketplace merits.
• Key activities in Stage 1 include
• Preliminary market assessment
• Preliminary technical assessment
• Preliminary business assessment

20
Gate 2 Second Screen

• This gate is essentially a repeat of Gate 1 the
  project is reevaluated in the light of the new
  information obtained in Stage 1.
• If the decision is Go at this point, the project
  moves into a heavier spending stage.
• At Gate 2, the project is again subjected to the
  original set of must-meet and should-meet
  criteria used at Gate 1.

21
Gate 2 Second Screen

• Here additional criteria may be considered,
  dealing with sales force and customer response to
  the proposed product, potential legal, technical,
  and regulatory killer variablesall the result
  of new data gathered during Stage 1.
• Again, a checklist and scoring model facilitate
  this gate decision.
• The financial return is assessed at Gate 2, but
  only via a quick and simple financial
  calculation.

22
Stage 2 Detailed Investigation (Build the
Business Case)

• The business case opens the door to product
  development.
• Stage 2 is where the business case is
  constructed this stage is a detailed
  investigation stage that clearly defines the
  product and verifies the attractiveness of the
  project prior to heavy spending.
• It is also the critical homework stagethe one
  found to be so often weakly handled.

23
key actions of Stage 2

• User needs-and-wants studies
• Value-in-use studies
• Competitive analysis
• Concept testing
• Detailed technical assessment
• A manufacturing (or operations) appraisal
• Finally, a detailed financial analysis

24
three crucial elements of Stage 2

• 1. What is the product and who will it be sold
  to?
• The product definition is developed and agreed
  to.
• 2. Why invest in this project?
• A thorough project justification is developed.
• 3. How will it be undertaken, when, by whom, and
  how much will it cost?
• A project plan is developed.

25
The Stage-Gate process
26
Gate 3 Decision on the Business Case

• Gate 3 is often called the money gate.
• This is the final gate prior to the Development
  stage, the last point at which the project can be
  killed before entering heavy spending.
• Once past Gate 3, financial commitments are
  substantial.
• In effect, Gate 3 means go to a heavy spend.
• Gate 3 also yields a sign-off on product
  definition.
• Because of its importance, the Gate 3 gatekeepers
  are usually the leadership team of the business.

27
Gate 3

• The qualitative side of this evaluation involves
  a review of each of the activities in Stage 2.
• It checks that the activities are undertaken, the
  quality of execution is sound, and the results
  are positive.
• Next, Gate 3 subjects the project once again to
  the set of must-meet and should-meet criteria
  used at Gate 2, but they are more rigorously
  applied at Gate 3.
• Finally, because a heavy spending commitment is
  the result of a Go decision at Gate 3, the
  results of the financial analysis are an
  important part of this gate decision

28
Sample Deliverables to Gate 3

• Strategic fit confirmed
• Detailed market assessment
• Detailed technical/manufacturing assessment
• Resource constraints (capital, people)
• Detailed financial assessment
• Detailed legal/regulatory assessment
• Potential killer variables addressed
• Critical success factors are understood and
  feasible to achieve
• Recommendations to proceed, hold, or kill
• Detailed plan for Stage 3 (Development)
• High-level plan for remaining stages

29
Gate 3

• If the decision is Go, Gate 3 sees commitment to
  the product definition and agreement on the
  project plan that charts the path forward the
  Development plan and the preliminary operations
  and marketing plans are reviewed and approved at
  this gate.
• The full project teaman empowered,
  cross-functional team headed by a leader with
  authorityis designated.
• The resourcesboth people and moneyare
  committed. And a list of deliverables for the
  next gate is agreed to.

30
Stage 3 Development

• Stage 3 witnesses the implementation of the
  Development plan and the physical development of
  the product.
• Some in-house or lab testing usually occurs in
  this stage as well.
• The main deliverable at the end of Stage 3 is a
  prototype productone that has been lab- or
  in-housetested, and also has undergone some
  preliminary customer tests (feedback from
  customers has been received).

31
Development plan consists of

• a chronological listing of activities, actions,
  and tasks
• a timeline or time schedule, showing beginning
  and end points of these actions
• resources required for each action or task,
  notably personnel, person-days and money and
• milestones to be achieved throughout the
  Development phase.

32
Stage 3 is on technical work

• The emphasis in Stage 3 is on technical work.
• That is, technical work proceeds to develop rapid
  prototypes and then the final prototype.
• Some lab or engineering and in-house testing
  takes place here as well.
• Marketing and manufacturing activities also
  proceed in parallel.
• For example, market analysis and customer
  feedback work continue concurrently with the
  technical development, with constant customer
  opinion sought on the product as it takes shape
  during Development.
• These activities are back-and-forth or iterative,
  with each development resultfor example, rapid
  prototype, working model, first prototype, and so
  ontaken to the customer for assessment and
  feedback.

33
The Stage-Gate process
34
Gate 4 Post-Development Review

• The post-Development review is a check on the
  progress and the continued attractiveness of the
  product and project.
• Development work is reviewed and checked,
  ensuring that the work has been completed in a
  quality fashion, and that the developed product
  is indeed consistent with the original definition
  specified at Gate 3.
• This gate also revisits the economic issues via a
  revised financial analysis based on new and more
  accurate data.

35
How well is the project unfolding

• By Gate 4, the decision emphasis has shifted from
  the main question at the earlier gates, namely,
  Should you invest in this project? to How well
  is the project unfoldingis it on track?
• Certainly, the Gate 3 criteria that deal with
  strategic fit and financial performance are
  revisited, but now most of the gate questions
  focus on the successful completion of tasks, and
  the fact that positive results are being
  achievedthat the deliverables are in place and
  positive.

36
Stage 4 Testing and Validation

• This stage tests and validates the entire
  commercial viability of the project
• the product itself,
• the production process,
• customer acceptance, and
• the economics of the project.

37
activities are undertaken at Stage 4

1. In-house product tests extended lab tests to
   check on product quality and product performance
   under controlled or lab conditions.
2. User tests or field trials of the product to
   verify that the product functions under actual
   use conditions, and also to gauge
   potentialcustomers responses to the productto
   confirm purchase intent and market acceptance.
3. Trial, limited, or pilot production to test,
   debug, and prove the production process, and to
   determine more precise production costs and
   throughputs.
4. Pretest market, test market, or trial sell a
   mini launch of the product in a limited
   geographic area or single sales territory. This
   is a test of all elements of the marketing mix,
   including the product itself, and gauges customer
   response, measures the effectiveness of the
   Launch plan, and determines expected market share
   and revenues.
5. Revised financial analysis to check on the
   continued economic viability of the project,
   based on new and more accurate revenue and cost
   data.

38
Gate 5 Precommercialization Business Analysis

• This gate opens the door to full
  commercialization market Launch and full
  production or operations starts up.
• It is the final point at which the project can
  still be killed.
• Although some managements consider this gate
  largely a formality, note that this gate is
  important because it signifies that the
  leadership team of the business is 100 percent
  aligned and in support of the commercial Launch
  of the product.

39
The Stage-Gate process
40
Gate 5

• This gate scrutinizes the quality of the
  activities at the testing and validation stage
  and their results.
• Criteria for passing the gate focus largely on
  expected financial return and appropriateness of
  the launch and operations start-up plans.
• The operations and marketing plans are reviewed
  and approved for implementation in Stage 5.

41
Stage 5 Full Production and Market Launch

• This final stage involves implementation of both
  the marketing Launch plan and the production or
  operations plan.
• Other supporting plans, such as the
  distribution/logistics plan and the quality
  assurance plans, are also executed.
• The post-Launch monitoring plan kicks in early in
  the Launch stage, where the projects performance
  on key metrics takes place, and the project team
  responds with necessary action.
• Finally, some elements of the longer term Life
  Cycle Plan begin to be implementedfor example,
  needed improvements and new variants of the
  product.

42
Post Implementation Review

• At some point following commercialization (often
  six to 18 months after), the new product project
  must be terminated.
• The project team is disbanded, and the product
  becomes a regular product in the firms product
  line.
• This is also the point where the project and
  products performance is reviewed.

43
the end of the project

• The latest data on revenues, costs, expenditures,
  profits, and timing are compared to projections
  to gauge performance.
• Gaps or variances between actual performance and
  projected performance are identified, and
  reasons for these gaps are explored.
• Finally a postaudit is carried out a critical
  assessment of the projects strengths and
  weaknesses, what you can learn from this project,
  and how your business can do the next one better.
  
• This review marks the end of the project.

44
The Stage-Gate process
45

• The End