In today’s globalized world where information flows freer than ever before and the the consumers are more discerning than their fathers and grand fathers were. There are more competitors in any given industry. Companies that fail to innovate, or to innovate at a fast enough pace face the threat of going out of business. However, it is not just enough to be innovative, almost half of the resources that are used for the research, development, and launch of new products go to products that never make it.
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Companies that have emerged as leaders have continuously worked to overhaul their product innovation processes by incorporating the Stage-Gate process for new product development. As I had defined in my first post on this topic:
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 (gate-keeping). 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.
How Does the Stage-Gate Process Work?
The process of product innovation starts with the generation of an idea and ends with the production of the envisioned product. Everything between these two end-points can be seen as a dynamic process, the Stage-Gate product innovation process divides this dynamic process into activity stages and decision points or gates. Hence the name Stage-Gate.
As may be obvious to you, the stages are where the ‘real work’ takes place. The product development team undertakes in the stages the activities that will result in information which will allow for an informed decision to be made at the next decision point/gate by the gatekeepers. It should be noted that each stage is cross-functional, i.e., there is no stage restricted to just research, or just development, or just marketing, rather each stage has a bit of each of these functional areas involved in it. These functions must be integrated to reduce the speed to market as well as to gather crucial information that is needed to reduce the risk present in the product innovation process. This, each subsequent stage is more expensive to complete but also has a lower level of risk – thanks to the work performed in the previous stage and a decision made at the preceding gate to continue with the project.
In addition to the discovery (or idea generation) stage, there are five key stages:
|Stage 0 -||Discovery: Activities designed to discover opportunities and to generate new product ideas.|
|Stage 1 -||Scoping: A quick and inexpensive assessment of the technical merits of the project and its market prospects.|
|Stage 2 -||Build Business Case: This is the critical homework stage – the one that makes or breaks the project. Technical, marketing and business feasibility are accessed resulting in a business case which has three main components: product and project definition; project justification; and project plan.|
|Stage 3 -||Development: Plans are translated into concrete deliverables. The actual design and development of the new product occurs, the manufacturing or operations plan is mapped out, the marketing launch and operating plans are developed, and the test plans for the next stage are defined.|
|Stage 4 -||Testing and Validation: The purpose of this stage is to provide validation of the entire project: the product itself, the production/manufacturing process, customer acceptance, and the economics of the project.|
|Stage 5 -||Launch: Full commercialization of the product – the beginning of full production and commercial launch.|
The structure of each stage is similar. Each has a set of activities that the team must undertake according to the project plan. They all involve an integrated analysis of the results of all the functional activities based on the cross-functional interaction (as discussed above). Finally, each stage has some deliverables. This is the presentation of the results of the analysis carried out by the team and its leader that will be used by the gatekeepers at the next gate or decision point.
A decision point or gate serves as a Go/Kill and prioritization decision point. Gates are where mediocre projects are culled out and resources are allocated to the best projects. Gates deal with three quality issues: quality of execution; business rationale; and the quality of the action plan.
Like stages, the structure of each gate is similar. Each gate begins with the input of deliverables from the team that handled the activities in the preceeding stage’s activities. Next, is the criteria which will be used to judge the project in order to make the go/kill decision or to prioritize as necessary. The criteria are usually organized as a scorecard containing both financial and qualitative criteria. Finally, the gates have outputs. These are the results of the gate review. Each gate must produce a clear decision to go/kill, or to prioritize as needed. It must also provide a path forward and the goals and objective for the next stage.
What are the benefits of using Stage-Gate product innovation process?
According to various research projects, and the Product Development Institute Inc., when implemented properly, Stage-Gate delivers tremendous impact:
- Accelerates speed-to-market
- Increases likelihood of product success
- Introduces discipline into an ordinarily chaotic process
- Reduces re-work and other forms of waste
- Improves focus via gates where poor projects are killed
- Achieves efficient and effective allocation of scarce resources
- Ensures a complete process – no critical steps are omitted
A more effective, efficient, faster process that improves your product innovation results.
Primary Source of Information:
Please also see: Final Paper – The Stage-Gate Process