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Stage-Gate

Definition of Stage-Gate[1]

A Stage-Gate System is a conceptual and operational road map for moving a new-product project from idea to launch. Stage-Gate divides the effort into distinct stages separated by management decision gates (gatekeeping). Cross-functional teams must successfully complete a prescribed set of related cross-functional activities in each stage prior to obtaining management approval to proceed to the next stage of product development.

Stage-Gate is based on the premise that some projects and project teams really understand how to win - they get it! Indeed Stage-Gate was originally developed from research that modeled what these winners do (Cooper, 2004). But too many projects and teams miss the mark - they simply fail to perform. A closer inspection often reveals that these projects are plagued by missing steps and activities, poor organizational design and leadership, inadequate quality of execution, unreliable data, and missed timelines. So they need help - help in the form of a playbook based on what winning teams do. Stage-Gate is simply that playbook.

Stage-Gate, in simplest format, consists of (Figure 1):

  • a series of stages - where the project team undertakes the work, obtains the needed information, and does the subsequent data integration and analysis
  • followed by gates - where Go/Kill decisions are made to continue to invest in the project[2]


Stage-Gate
Figure 1. source: Stage-Gate International


Stages and Gates of the Stage-Gate Process [3]

Stages
The Stage Gate process consists of a number of stages, which are connected to each other by gates. Depending on the size of the project, 2, 3 or all 5 stages are completed. A project that focuses on major product innovation will go through all 5 stages. A project with less risk will suffice with just stage 1 (scoping) and stage 2 (development of the business plan) and developing it to stage 4 (testing and validation). With very small or simple adjustments, only stage 3 (development) and stage 4 (testing and validation) will be implemented. Examples are marketing requests or an application to modify an existing product.

  • Stage 0: Discovery: This initial preparatory stage determines which project a company wants and is able to carry out. Ideas can be generated in brainstorming sessions. Employees are not the only ones involved in this part. Customers and suppliers also provide useful information. An idea is first selected and then proposed. If the idea is not worth the effort, the gate closes here.
  • Stage 1: Scoping: This stage is all about evaluating the product and the associated market. What are the product’s strengths and weaknesses and what can it bring to the user/consumer in terms of added value? This stage takes all the possible threats from competitors into account. Based on the assessed threat, production will or will not continue. The greater the threat, the greater the chance that the gate will close.
  • Stage 2: Business Plan Concept: Now that the product is impervious to competition, a business plan is drawn up. This is the last stage of concept development and is crucial before the starting with development of the actual product. This stage is very labour-intensive and includes sub-stages that need to be completed:
    • Product definition and analysis: The customer value is determined by finding out which benefits the product offers and what conditions and functions it must meet. This information can be retrieved with the help of interviews and surveys. We also look at the environment and the competition.
    • Creating the business plan: In this document the product is described and defined, including the legal health and safety requirements.
    • Creating the project plan: This plan contains a list of all tasks that are planned during the entire development process, and the people who will carry them out. The expected launch date can also be found in this plan.
    • Feasibility review: This includes a feasibility study in which different departments assess the plan’s chances of succeeding. If, after this stage, it appears that the business concept does not have sufficient potential to generate turnover, the gate will close.
  • Stage 3: Development: During this stage, the plans from the previous steps are carried out and simple tests are conducted. For example, at this stage customers can be asked what they think of the product. The development team also creates a timeline with specific milestones that have to be achieved. This timeline can be revised and updated regularly. It also incorporates multi-functional teamwork; different departments provide input with expert advice. This ultimately results in a product prototype, which will be extensively tested during the next stage. The gate will remain closed if the product has not been sufficiently developed.
  • Stage 4: Testing and Validation: This stage covers product testing and validation. They also look at the manufacturing process and how the product is accepted by customers and the market. This also means that a number of sub-stages are completed during this stage:
    • Near testing: The purpose of this test is to identify possible production errors or other issues. It is no longer a prototype; the product is almost ready to be sold. The groups that carry out this test are closely tied to the organisation. They include staff, regular customers and suppliers.
    • Field testing: In this part, the product is tested in the field by various participants who can make a valuable contribution. This is usually done with the help of customers. It is important to find out whether this target group is interested in the product, which characteristics they consider important and in which context the product will be used.
  • Market testing: This test is optional If the product is offered in the market, it has already passed through the previous test stages. This means that sometimes, after a period, the product is assessed to see whether it sufficiently matches the needs and wishes of the consumer. The product is usually pretty much in its final form after testing. However, there also has to be a good marketing plan to launch the product. If not, the gate to the next stage will remain closed.
  • Stage 5: Launch and Implementation: The marketing strategy comes into play during this stage in the Stage Gate process. The product is ready to be launched, which will include a fair amount of hype, by means of for instance an advertising campaign, free publicity (press releases) and interviews. An estimate is made about the quantity that will be sold. Policies regarding production, inventory and distribution must be set up. The sales team is predominantly responsible for ensuring a smooth process.

Gates
The transitions between the different stages are in the Stage Gate Process monitored by gates. These gates have the added function of putting a stop to the development of weak projects in order to prevent unnecessary work. After all, that can cost a lot of time and money. In that sense, the gates are the points that provide an overview of the project so far. It is important that these ports have clear and visible criteria beforehand. In most cases this is done based on components that the project must meet at that specific level in development. If the project fails to meet the criteria, the decision is made to stop developing further. At each gate, a decision is made whether to continue the process or not. This decision is based on the prognosis and information available at that moment and in most cases is made by a manager or steering committee. The quality of an idea is assessed at each of the gates. This concerns the quality of the execution, business motivation to continue financially and the action plan showing what needs to be done in order for the project to have a chance at succeeding. After each gate, one of the following decisions can be made:

  • Go: The project is good enough to move on to the next stage.
  • Kill: The project is not good enough to develop further and is shut down right away.
  • Hold: The project is not good enough to continue to develop it at this moment, but not so bad that it needs to be shut down immediately. It is put on hold to possibly be resumed at a later date.
  • Recycle: The project is good enough to develop further, provided some changes are made.


Stage-Gate Systems [4]

Usually stage-gate systems involve from four to seven stages and gates, depending on the company or division. A typical system is shown in Figure 2.


Stage-Gate System
Figure 2. source: Robert G Cooper

The entrance to each stage is a gate; these gates control the process, much like quality control checkpoints control the production process. Each gate is characterized by a set of deliverables or inputs, a set of exit criteria, and an output. The inputs are the deliverables that the project leader must bring to the gate. The criteria are the items upon which the project will be judged, the hurdles that the project must pass at that gate to have the gate opened to the next stage. The outputs are the decisions at the gate, typically a Go/Kill/Hold/Recycle decision, and the approval of an action plan for the next stage.


Why Stage-Gate®? [5]

With Stage-Gate® you:

  • Get a systematic process from idea to launch to ensure quality throughout the development process
  • Establish a framework for making effective go/kill decisions in time
  • Only use the company’s development resources on the best ideas and projects
  • Maximize opportunities for your new products in the market
  • Reduce development time for new products from concept to launch
  • Create transparency in the company’s portfolio of ideas and development projects.


Using Stage-Gate Process for Organizational Change [6]

A recent research by American Productivity & Quality Center (APQC) has found that only 30% of organizations find their change management programs effective. Their recent best practices study Transformational Change—Making it Last', found that best-practice organizations keep the emphasis on change objectives through structured reviews and targeted measures of progress that help reach long-term goals. One unique approach identified in the study was how organizations can adapt product development’s traditional stage-gate process—including technical readiness ratings—to prioritize and manage transformational change efforts. One of the best-practice organizations in the study uses a scalable, stage-gate process with standardized reviews and scorecards to track the ROI of its projects and enable problem solving (see Figure 3.). Standardization and measurement are vital components of the stage-gate approach. So at each gate, the project team is responsible for producing and updating four deliverables (a business case, a statement of requirement, a project plan and a launch plan) to review the progress and viability of the project.


Scalable Stage-Gate Process
Figure 3. source: Industry Week


Projects are assessed using standardized scores at each review and either approved to move to the next level or sent back to the team for further refinement. The stages for product development and process improvement used by the best-practice partner follow.

  • Define—Develop the business case for the project (process, program, tool, or product). The project’s technology readiness level (TRL) is based on its risk, complexity and importance, which determines the rigor of its management and consequently which stage-gate process it will go through.
    • TRL 9 projects involve a core competency or are the equivalent of incremental innovation products or process improvements.
    • TRL 7-8 projects are the equivalent to adjusting a product for adjacent markets or moderate process improvements.
    • TRL 1-6 projects are the equivalent of disruptive innovations or new-to-the-organization processes or tools.
  • Evaluate—Assess the project through a conceptual design review. During this stage, the review committee assesses the project’s business case using a balanced scorecard with five categories:
    • 1. Financial rewards—What are the financial benefits (e.g., cost-savings or revenue)?
    • 2. Market attractiveness—What is the market growth, market size, or potential market share?
    • 3. Competitive advantage—What unique benefits will the project create?
    • 4. Probability of success—How likely is the project going to be successful? This is an inverse of the project’s risk or complexity.
    • 5. Strategic alignment—Does the project meet or support the product strategy or organization’s goals?
  • Design, verify, and accept—Develop the new project. Once the project is designed, it goes through a detailed design review to determine if it is ready to be accepted for development. The project then is refined until it is ready to launch.
  • Launch—Roll out the project within the business or market. The launch stage includes the development of a formal launch plan, periodic reviews and formal post-launch assessment a year later. The post-launch review is chaired by a centralized governance team with product line and technology gatekeepers to review whether or not the project created the value it was supposed to deliver, such as profitability, cost-savings, reduced cycle time, or reliability.
  • Lifecycle management—Product line management or the process owner is responsible for monitoring the product during its lifecycle (the growth, maturity and decline of the revenue lifecycle). At this point, the project or product is monitored to determine when continuous improvement efforts should be made or the project/product should be retired because it no longer has an acceptable ROI. Standardization and measurement are vital components of the stage-gate approach. For example, at each gate the project team is responsible for producing four deliverables:
  • A business case—outlines the project and includes its background, benefits, scope and risk assessment.
  • A statement of requirement—outlines the necessary resources (time, people and budget).
  • A project development plan—includes the project schedule and risk management plan.
  • A launch plan—details the project rollout to the market or organization. For complex process projects, an organizational change management representative joins the project team to manage the ADKAR (awareness-desire-knowledge-ability-reinforcement) portion of the plan.

The stage-gate process is one way of taking a structured approach to managing transformational change. Stages 1 and 2 ensure the organization is picking the best projects for its strategic goals. Stage 3 ensures execution. Finally stages 4 and 5 build in the ability to identify performance targets and use data to monitor and identify root causes to any problems. This metric-based approach uses deviation or variance and data tagging to support a continuous improvement model and react swiftly to any roadblocks or issues.


Implementing a Stage-Gate® Product Innovation Process [7]

  • Have A Well Designed, Credible Process Design. The first step is to ensure that you have a strong foundation. This means ensuring that it is complete and meets the needs of your organization. While certain aspects of the process are unique to your industry or company there are many proven critical success factors that are built into good processes.
  • Give Visible and Meaningful Leadership Support. What is important to the Leadership Team is important to everyone else. Similar to all other major initiatives if the Leadership team is strongly behind the initiative then the chances of success will improve dramatically. Successful product innovation is critical to the business strategy of your organization.
  • Be Sure You Have Sufficient and Appropriate Resources. Although it may seem obvious you would be surprised by how many organizations that have tried to implement new processes without assigning enough resources to get the job done properly. Be sure you understand the actual resources you will need, including both skills and time requirements. Be sure the people assigned to the project have the time allocated to do the work needed
  • Create Defined Roles and Responsibilities. Implementing a Stage-Gate process is usually a significant cultural adjustment for organizations. It, therefore, requires that many people at many levels contribute to making the change happen. Employees rarely feel comfortable with change. Successful companies ensure their people know in advance the roles and responsibilities they will have within the new process. Providing clarity around the roles and responsibilities makes it much easier for people to see how they can contribute, and makes it more likely that they will be strong supporters of the new way of doing business.
  • Have A Strategic Implementation Approach. Thinking strategically about your process implementation is critical for managing expectations and getting the buy-in you need. There is something to the saying that the first 100 days are critical. During this introduction period you have people’s attention, and goodwill. You can capitalize on the sense of urgency that this creates. This period also permits you to demonstrate to the organization that the new initiative is real and strategically important. Hence the need to demonstrate that the initiative is being embraced at all levels in the organization.
  • Be Effective with Your Communication and Marketing. Project teams implementing large change initiatives such as Stage-Gate usually devote significant time to researching, evaluating and designing their new process. Through this effort, they increase their knowledge and comfort-level in the topic. Often, when the team is ready to implement the initiative to a larger audience or community, they are so comfortable with the concept that they underestimate the need to sell it to others. They simply ‘unveil’ their work, expecting that everyone will be as excited as they are. Convincing others to not only participate in the new initiative but to find their own ways to contribute requires a well-thought-out communication and marketing plan. This plan should not only inform and educate but should generate excitement and maintain momentum throughout the life of the process.
  • Track Your Performance. What gets measured gets done. It really is that simple. During the design phase the team should identify several key process adoption metrics that will measure the adoption rate and success of the new process. Create a starting baseline and select target dates for subsequent measurement. The clearer the metrics the easier it is for people to understand what is important and what the new process is trying to accomplish. This, in turn, makes it easier for them to understand how they can support the initiative.
  • Appoint an Executive Sponsor of the Product Innovation Program. Rarely has an organization been able to declare the successful implementation of Stage-Gate, without noting the significance of the Executive Sponsor. Absolutely critical to success, the Executive Sponsor is the visionary for the Product Innovation Program, both from the short and long term perspective. Preferably a senior executive, the sponsor is able to contribute to business strategy through the development of an ambitious innovation plan for growth through new products. The sponsor relies less on the authority of title and more on capability to inspire an organization to participate and contribute to a grand plan of challenging, yet exciting change.
  • Understanding the Impact on Your Company’s Culture and Systems. Never underestimate the willingness of people to reject change. Understand your company’s culture and what your challenges are going to be. One way to get started is to review some past change management initiatives, asking several key questions: “How successfully have we been in the past and why?” “How or what can we do differently this time to be more successful?” This should lead your team into a good discussion around the various company stakeholders, the impact the change will have on them, and the resources needed.
  • Seek Effective Change Management. Change management done properly can yield extremely impressive results. Essentially, an effective change management program can enable people fulfilling the critical roles in Stage-Gate such as the Gatekeepers, Project Leaders and Team Members to transition through the change process much more quickly and effectively. This means achieving greater direct ontribution in a much shorter period of time and, of course, this means results!


Stage-Gate Principles [8]

When it comes to the process of new product development (NPD), the stakes are high to achieve the target goals and introduce to the market a product that can satisfy both consumers and investors. In the stage-gate process, the decision to move from one stage to another is taken by a manager and steering committee based on the business case, the risk analysis, and other production factors including the cost, human resources, and market competency. While the Stage-Gate process doesn’t guarantee successful innovation, the following NPD principles are shared between the successful companies in new product development process (figure 4).


Stage-Gate Principles
Figure 4. source: Stage-Gate International

  • Customer focused: The new product development is a user-centered design process. The end consumer should be placed at the heart of all the stages through solving consumer problems of providing a value proposition.
  • Heavy front-end homework before development begins: Managers should have a clear and deep understanding of the project at an early stage of the development, including understanding the market, the technology, and the business.
  • Spiral development—loops with users throughout development: The product information may change during the production process. Therefore, the team should be able to listen to feedback and modify the product based on the state-of-the-art information.
  • Holistic—effective cross-functional teams: Product innovation should be a business function that covers the whole process. It builds an understanding of a holistic approach to innovation between the teams
  • Metrics, accountable teams, profit/loss reports for continuous learning: Companies should be able to measure the product’s progress in order to evaluate the production success through the different stages.
  • Focus and portfolio management: While there are many projects running inside a company, there should be a focus on the most effective product. A funnel approach should be adopted in order to eliminate the weak projects and focus only on the projects with high initiation for success.
  • Lean, scalable, and adaptable Stage-Gate process: Companies should improve the new product development process to focus more on productivity and reduce time waste and paperwork.


Stage-Gate Best Practices [9]

Best in Class Stage Gate Practices to consider:

  • Mission-Vision-Values statements are critical – links to Business Challenge(s) and Stage Gate Process execution
  • Internal & External benchmarking is key … keeping a customer focused approach
  • Value Stream Mapping (VSM) Analysis … “As-Is” and “To-Be”
    • Leverage process improvement tools (5S, Standard Work, Operational/Analytical Methods, Visual Management, etc.)
    • Design based on Future State Benchmarking
    • Mission Critical Work Streams Identified with appropriate Functional and Management Group structures
    • VSM Process flow into discrete Stages separated by Gates to make go/no go decisions
  • Challenges to “As-Is” Stage Gate Process … Sub Stages and Gates developed
  • Playbook developed to standardize elements of Future State Stage Gate Process
    • One Integrated Plan/Standard Process
    • Multi-Functional and Cross-Team Collaboration requirements are defined and integrated into Process, Risk Management at lowest level of organization; Leadership - Coaching/Mentoring of Stage Gate Process/People, Risk Escalation/Critical Business Decision Making only
    • Communications - Well developed and fully deployed communication plan across functional teams and senior leadership
    • Empowerment to Functional Team(s) and site(s) for decision making
    • Rapid Decision Making built into Process
    • Risk Management and Escalation defined for Leadership engagement
    • Process Evolution, Robustness, and Standardization of Process developed to include Innovation, portfolio management, Risk Management, and Sustainability


Benefits of Using a Stage-Gate Model for New Product Development [10]

Stage-Gate® is a proprietary innovation management model designed to coordinate the cross-functional creative process and integrate an options-based investment decision framework to accelerate time to market, maximize profitable success and minimize risk. It provides a consistent, proven framework for new product development governance. The benefit of using a Stage-Gate model are:

  • Better in-market success (new product sales and profits)
  • Better in-company project success (project speed, scoping, and budget)
  • Greater portfolio visibility enabling better governance agility
  • Improved in-company cross-functional team collaboration
  • Improved collaboration with external development partners


See Also

IT Governance
Innovation
Innovation Strategy
Project Management
Project Life Cycle
Project Portfolio Management (PPM)
Project Portfolio Rationalization
Organizational Culture
Change Management
Stakeholder
Managing Risk


References

  1. Definition: What does Stage-Gate® Mean? prod-dev
  2. What is Stage-Gate®? stage-gate.net
  3. Stages and Gates of the Stage-Gate Process Tool Hero
  4. What does a Stage-Gate System involve? Robert G Cooper
  5. Why Stage-Gate®? Gemba
  6. How to Use a Stage-Gate Process to Manage Organizational Change? Holly Lyke-Ho-Gland, APQC
  7. How to Successfully Implement a Stage-Gate® Product Innovation Process? Dr. Scott J. Edgett and L. Michelle Jones
  8. The Seven NPD Stage-Gate Principles Designorate
  9. what are the Stage-Gate Best Practices to consider? BPM Institute
  10. Benefits of Using a Stage-Gate Model for New Product Development stage-gate.com


Further Reading