Stage-Gate Project Management Model

Developed by Carla Canovas Iglesias

Facing increased competition at the pace of technological change makes launching new products key for differentiation in current companies. Even so, products continue to fail in the development phase, a fact that highlights the flaws in project management and the problems that companies address when adopting innovation. Therefore, it is crystal clear that using a well-established management methodology is a must for the success of a project. Dr. Robert G. Cooper recognized that product innovation is a process and by observing bold new products being driven to market, he developed the Stage-Gate model in 1986 and documented it in his book "Winning at New Products" . The Stage-Gate model applies traditional methodologies, such as The Waterfall method or The Spiral Model to the innovation process in order to successfully conceive, develop and launch a new product. It consists in dividing the project into different phases separated by gates. Each stage represents a phase in the project's development, while the gates are points at which the project is evaluated to determine whether it should proceed to the next stage or not and allow the team to evaluate the current situation and align the expectations . This new approach helps companies to have a visual roadmap of all the developing tasks and provides a structured approach to project management, allowing organizations to identify and address potential problems early on, while also ensuring that resources are used efficiently. This article will cover what is the Stage-Gate methodology about, how to apply it in practice, what benefits it adds to the product development process, the limitations that are needed to be aware of, and finally, how to take a more efficient approach by taking the model to next stage combining it with other current systems.

The innovation need

Nowadays the intensely competitive environment makes innovation no longer an optional path but the only possibility of differentiation. With product life cycles getting shorter, the competition getting tougher and users becoming more demanding, companies that do not innovate are losing pace in the market and slowly deteriorating. As said, innovation is a key driver for achieving long-term success and profitability. However, it must be kept in mind that gaining a competitive advantage by offering a new product/service is not easy - in fact, it is estimated that about 46% of the funds, which the company invests in the development and launch of new products/services is related to unsuccessful projects .

Plenty of research on this topic reveals that the main problem does not lie in the invention part or the generation of innovative ideas, but more in the successful management of the innovation process from an idea to a successful product in the market . The stage-gate model is a widely recognized framework for managing the innovation and new product development process that takes into account all the success drivers to establish the foundations of the model minimizing the innovation risk and ensuring that new products are developed efficiently and effectively. It involves breaking down the development process into a series of stages, each of which is followed by a gate that acts as a decision point for project continuation. This way the model ensures that resources are allocated only to the most promising ideas, promoting cross-functional collaboration, risk management, and continuous improvement, which are essential for successful innovation.

How to achieve innovation? The Stage-Gate model approach

Stage-Gate applies project management tools to the innovation process and englobes from the conception of the idea to the successful launch of the product to the market. It is characterized by a structure that engages users at all levels and functions, and consequently allows making good and effective decisions regarding further project extension, and impacts on quality and speed of innovation project execution .

The main characteristics of the model can be summarized in what is called the six Fs :

• Flexibility: The stage-gate model is designed to be flexible and adaptable to the needs of the organization and the product being developed.

• Fuzzy Gates: Fuzzy gates are checkpoints that allow ideas to be evaluated and refined before they enter the more structured and rigorous stages of the process. This helps to reduce risk and uncertainty in the later stages by ensuring that only the most promising ideas are developed further.

• Fluidity: The model allows for a degree of fluidity and iteration, which is essential for successful product development in a rapidly changing market.

• Focus: The model emphasizes the importance of maintaining focus throughout the product development process. This includes maintaining a clear understanding of customer needs and preferences, as well as ensuring that the product development team is aligned around a common vision and set of goals.

• Facilitation: The methodology relies on effective facilitation to ensure that the process runs smoothly and efficiently. This includes providing the necessary resources and support to the product development team, as well as ensuring that communication channels are open and that decisions are made in a timely and effective manner.

• Forever green: The model is intended to be a living process that is regularly reviewed and updated to reflect changes in the market, new technologies and evolving customer needs.

Basic Elements

The Stage-Gate model breaks down the often complex and chaotic process of taking an idea from inception to launch into smaller stages. As you can see from the diagram, it is a linear process, with each stage building upon the previous one. The gates serve as checkpoints where the project team evaluates the progress and determines whether to move forward to the next stage, modify the project, or terminate it altogether .

Stage-Gate model process

The management team

In order to make the Stage-Gate Model process work properly, it is critical that the company selects properly the group of gatekeepers who will be responsible for the quality control and the decisions regarding the advance of the project. The members of the group are usually key stakeholders from different departments such as R&D, marketing, production, business and engineering as different skills and competencies are needed . When choosing the gatekeepers, Cooper gives the following advice :

When defining gatekeepers, keep the number small - only the key resource owners - and try to keep "gatecrashers " out of the decision meeting. Since senior people's time is limited, consider beginning with mid-management at Gate 1, and for major projects, ending up with the leadership team of the business at Gates 3, 4 and 5. Consider, also, changing the gatekeepers depending on the risk associated with the decision.

Also, to ensure the efficient use of the resources, firms should implement best practices on how to perform key tasks in each of the different stages. It is very important that this process is solid in order to collect the data with the least time and effort. The practices will ensure that the data is consistent and that it follows the same research methodology in all projects .

Stages

Stage definition

The purpose of the stages is to break the innovation process into smaller pieces. Each stage represents a phase of the product development process, and has a specific structure that includes :

• Activities: Tasks that the project team must complete during the stage to move the project forward. The specific activities will depend on the nature of the project and the goals of the stage.

• Analysis: Evaluation and assessment of the project's progress and performance during the stage. The purpose of the analysis is to identify any issues or challenges that may arise during the stage, and to determine the best course of action to address them.

• Deliverables: Items that the project team must produce during the stage. They serve as a guide for the project team to ensure that they are meeting the goals and objectives of the stage.

Overall, the structure of a stage provides a framework for the project team to plan and execute the necessary tasks, evaluate their progress and performance, and produce the required deliverables. This helps to ensure that the project stays on track, meets its objectives, and ultimately results in a successful product launch.

Gates

Gate definition

The purpose of the gates is to evaluate the deliverables of the stages and serve as quality–control checkpoints and go/kill decisions where the gatekeepers have the opportunity to shut down projects, following fail fast philosophy. All the gates are structured in the same way, consisting of three main elements :

• Deliverables: Items that the project team must produce to meet the gate's requirements.

• Criteria: Specific standards that the deliverables must meet to pass through the gate. These criteria are established based on the project's objectives, the customer's needs, and the company's strategic goals.

• Outputs: Results of the gate review, which include a decision on whether the project can proceed to the next stage (Go/Kill/Hold/Recycle), along with an approved action plan for the next stage and recommendations for further development or changes to the project, and any additional resources or funding needed to support the project.

Overall, the gate structure in the stage-gate model ensures that the project team and stakeholders have a clear understanding of the project's goals and progress, and that decisions are based on objective criteria and data. This helps to minimize risk, increase efficiency, and improve the likelihood of project success.

In conclusion, the Stage-Gate model is a linear process that breaks down the innovation process into stages, with gates serving as checkpoints for quality control and go/kill decisions. The management team, composed of key stakeholders from different departments, is responsible for making decisions at each gate. Each stage has specific activities, analysis, and deliverables that help ensure the project stays on track and meets its objectives. The gates evaluate the deliverables based on specific criteria, and the outputs determine whether the project can proceed to the next stage, modify the project, or terminate it altogether. The gate structure helps minimize risk, increase efficiency, and improve the likelihood of project success .

Benefits of the model

The Stage-Gate model takes the project management beyond to avoid the maximum innovation risk possible. Therefore, its implementation can offer several benefits to minimizing new product failures, increasing organizational discipline, accelerating speed-to-market and improving the allocation of resources .

• Sharper Focus, Better Prioritization: The model requires that each stage is completed before moving on to the next. This ensures that the team has a sharper focus on the project and better prioritization of tasks. The gate reviews provide a clear understanding of the project's progress and enable the team to make informed decisions about the next steps. All, in all it provides a clear structure and process for developing new products, better resource allocation and early risk identification and mitigation.

• Fast-Paced Parallel Processing with Spirals: The stage-gate model allows for fast-paced parallel processing with spirals, where multiple stages are worked on simultaneously. This approach speeds up the product development process and ensures that the team is not working in a linear fashion, which can slow down progress.

• A True Cross-Functional Team Approach: The model requires that representatives from different functional areas work together on the project. Therefore, it promotes collaboration and communication among the various teams and stakeholders involved in the development process. This helps to ensure that everyone is aligned and working towards a common goal, ensuring that all aspects of the product development process are considered, and potential issues are addressed early on in the process.

• A Strong Market Focus with Voice-of-the-Customer (VoC) Built In: The team gathers feedback from customers at each stage of the process, which ensures that the product is meeting customer needs and expectations.

• Better Front-End Homework: The team conducts thorough research and analysis before starting the development process. This approach ensures that the project is well-defined, and potential issues are identified early on, which can save time and money in the long run.

• Products with Competitive Advantage—Bold Innovations: The model promotes the development of products with a competitive advantage and encourages bold innovations. By evaluating each stage of the project before moving forward, the team can identify areas where they can differentiate their product from competitors and create a unique selling proposition.

All in all, the Stage-Gate model helps minimize innovation risk and increase success rates of new product development. It requires completion of each stage before moving on to the next, providing sharper focus and better prioritization. The model also promotes cross-functional collaboration and a strong market focus, incorporating customer feedback at each stage. Thorough research and analysis is conducted before development to identify potential issues early on. The model encourages the development of products with competitive advantages and bold innovations.

Application

This section illustrates the application of the Stage-Gate process by describing the activities and goals of the different stages and gates. Apart from innovation management is a general project execution model, therefore, depending on the product, the process can deviate .

Stage 1 - Discovery

This pre-work is designed to discover and uncover business opportunities. During this stage, the organization conducts research to understand the market, customer needs, and potential competition to identify a feasible idea that can be developed into a new product or service. This is a critical stage as it helps to ensure that the project aligns with the organization's objectives. The activities in this stage may include brainstorming sessions, market research, and customer feedback to generate new ideas.

Gate 1: Idea screening

The team evaluates the potential of each idea and decides which ideas are worth pursuing. They assess the ideas against specific criteria, such as alignment with company strategy, market potential, technical feasibility, and resource requirements.

Stage 2 – Preliminary assessment and scope

The Scoping stage is focused on defining the project scope and evaluating its feasibility. The organization conducts a preliminary analysis of the technical and financial viability of the project. At the end of this stage, the organization should have a clear understanding of the project's goals, objectives, and constraints. To help determine whether the concept is feasible, a SWOT Analysis is carried out in order to investigate the strengths and weaknesses of the project.

Gate 2 - Preliminary business assessment

The team evaluates the business case for the idea. They assess the market potential, technical feasibility, financial viability, and alignment with company strategy. A preliminary business plan may be developed.

Stage 3 – Build the business case ‎

The organization develops a detailed business case for the project. This includes a comprehensive analysis of the project's costs, benefits, risks, and potential returns on investment. At the end of this stage, the organization should have a clear understanding of the financial viability of the project. This stage includes activities such as conducting market research and establishing an operations plan, developing a marketing plan, creating financial projections, identifying the required resources, risk management plan and creating an investment plan by conceptualizing the Net Present Value (NPV).

Gate 3 - Decision on the business case

Last Gate before the project goes into product development. Therefore, the business strategy should be set and the product's characteristics clear.

Stage 4 – Develop

The development Stage is focused on creating a prototype or a minimum viable product (MVP) that can be tested with customers. During this stage, the organization designs, builds and tests the product, as well as develops a plan for manufacturing and distribution. The testing is incremental and the feedback act as an iterative process, going back and forth in-between the development stage.

Gate 4 - Post-Development review

The activities of Stage 4 are evaluated critically, confirming that the product is still appealing and progressing in the right direction. The financial analysis and the marketing and operation plans are reviewed.

Stage 5 – Testing and validation ‎

The testing and validation stage is focused on testing the product with customers to validate its features, benefits, and value proposition. This stage includes market testing, user testing, and technical testing to ensure that the product meets customer needs and expectations. Activities involving this stage may be user trials, pilot production, simulated market test and quality testing. All the business plans need to be rearranged according to the results of the testing.

Gate 5 - Pre-Commercialization business analysis

Verify the previous activities and decide whether to launch the product. The team assesses the product's performance against specific criteria, such as customer satisfaction, quality, and cost-effectiveness. They also review the launch plan and decide whether to proceed to the final stage.

Stage 6 – Launch ‎

In this stage, the project team focuses on introducing the product to the market and executing the marketing plan. This includes product positioning, pricing, and promotion, as well as the establishment of distribution channels and customer support.

Gate 6: Post-Launching review

The team reviews the product's performance and identifies areas for improvement. They evaluate the success of the launch and the product's performance against specific criteria, such as customer satisfaction, market share, and profitability. They may also conduct a post-launch audit to identify lessons learned and improve the development process for future products.

Implementation key factors

The implementation of the Stage-Gate model requires careful consideration of various factors to ensure success .

• Instilling the process. Creating a culture that supports innovation and securing commitment and dedication to the use of the model. This includes executive commitment, customization of the process to meet the specific needs of the organization, and establishing a Governance Structure to oversee the implementation of the Stage-Gate process.

• Preparing the process. Addressing key organizational issues that may impact its success such as cultural resistance or inadequate resources, and crafting a realistic path forward outlining the activities, timelines, and resources required for the implementation of the Stage-Gate process.

• Diffusing the process. Embedding the process into the organization's culture and processes. This includes communication and training, continuous improvement, and recognition and reward for successful innovation projects.

Project example: Xbox gaming console

One example of a successful product development project that used the stage-gate model is the development of the Xbox gaming console by Microsoft .

In the early 2000s, Microsoft identified an opportunity to enter the gaming console market, which was dominated by competitors such as Sony and Nintendo. To develop their console, Microsoft implemented the stage-gate model, which helped them to minimize risks and increase the chances of success.

Microsoft's use of the stage-gate model also allowed for cross-functional collaboration and ensured that all aspects of the development process were considered. Representatives from different functional areas worked together on the project, including hardware and software engineering, marketing, and finance, promoting communication and alignment towards a common goal.

Moreover, Microsoft's implementation of the stage-gate model was flexible enough to allow for changes and adjustments along the way. For example, during the development stage, Microsoft made changes to the hardware design of the console in response to feedback from their testing and validation. This flexibility helped Microsoft to create a product that met customer needs and had a competitive advantage over existing gaming consoles in the market.

Additionally, Microsoft continued to use the stage-gate model for future iterations of the Xbox console, refining and improving their development process. This allowed them to continue to innovate and stay competitive in the gaming console market .

Here is a brief overview of how Microsoft applied the stage-gate model to their processes:

• Stage 1: Idea Generation - Microsoft identified an opportunity to enter the gaming console market and conducted research to understand the market trends and customer needs.

• Stage 2: Concept Development - Based on their research, Microsoft developed several concepts for their console and conducted market research to determine which concept had the most potential.

• Stage 3: Feasibility - Microsoft then conducted a feasibility study to determine whether the chosen concept was technically feasible and financially viable.

• Gate 1: Go/Kill Decision - Based on the results of the feasibility study, Microsoft made a decision to either continue with the project or kill it.

• Stage 4: Development - Microsoft then began the development process, which included designing and building the hardware and software for the console.

• Stage 5: Testing and Validation - Microsoft conducted extensive testing and validation of the console to ensure that it met customer needs and worked as intended.

• Gate 2: Go/Kill Decision - Based on the results of the testing and validation stage, Microsoft made a decision to either move forward with the launch or kill the project.

• Stage 6: Launch - Microsoft launched the Xbox console, which was well-received by customers and helped them to establish a foothold in the gaming console market.

Overall, Microsoft's use of the stage-gate model helped them to minimize risks, ensure that the console met customer needs, and increase the chances of success in a highly competitive market.

Limitations of the model

The stage-gate model has been widely adopted by many organizations for its benefits in minimizing innovation risks, increasing organizational discipline, accelerating speed-to-market, and improving resource allocation. However, it is important to recognize that the model has some limitations that need to be addressed to fit the unique needs and challenges of each project.

One of the limitations is the heavy emphasis on gatekeeping . This approach can sometimes result in missed opportunities or delayed decision-making, which can have negative consequences for a project. Additionally, the model's prediction of activities in stages can be inaccurate and lead to underestimating time resources .

The model assumes a linear and sequential process , where each stage must be completed before moving on to the next. This rigidity can make it difficult to account for unexpected events or changes in the market, which can negatively impact the project's success.

Another limitation is its overemphasis on upfront planning and screening , which can limit flexibility and agility in responding to changing market conditions and customer needs. Additionally, the model tends to pay insufficient attention to the execution and launch phases , which are critical for successfully bringing a product to market.

Additionally, the model may encourage a risk-averse culture , where the emphasis is on minimizing risk rather than maximizing potential value. This can lead to missed opportunities for bold innovations. The model also has limited stakeholder input, as it does not provide a structured mechanism for incorporating stakeholder feedback throughout the development process. This can potentially lead to a lack of customer satisfaction or stakeholder buy-in .

Lastly, the stage-gate model is designed to provide control over the product development process . However, this can result in a rigid approach that stifles creativity and limits the potential for bold innovations. To overcome these limitations, organizations need to adapt the process to fit the unique needs and challenges of each project, ensuring that stakeholder input is incorporated throughout the development process and creativity is encouraged.

Therefore, it is crucial to adapt the stage-gate model to fit the unique needs and challenges of each project by addressing these limitations. Organizations should focus on balancing control with creativity and innovation, incorporating stakeholder feedback throughout the development process, and providing sufficient attention to execution and launch phases. This will help organizations to better achieve their objectives and maximize the potential value of their product development efforts.

What´s next?

To try to overcome the limitations of the traditional model several adaptations were conceived.

Open Stage-Gate model

The open stage-gate model is a revised version of the traditional stage-gate model for new product development, which incorporates open innovation practices. It suggests that firms can leverage external sources of knowledge, such as customers, suppliers, and partners, at various stages of the product development process to enhance creativity, reduce risks, and accelerate time-to-market. At each stage, the firm can use open innovation methods such as crowdsourcing, lead user innovation, and collaboration with external partners. The model emphasizes the importance of continuous learning and feedback loops to improve the development process and increase the success rate of new product launches .

The triple A

The Triple A Model is an extension of the traditional Stage-Gate model for new product development proposed by Robert Cooper. The model consists of three key elements that organizations need to focus on to improve their innovation performance: Agility, Adapting, and Acceleration.

• Agility refers to the ability of the organization to respond quickly and effectively to changing market conditions and customer needs. This involves using iterative and flexible processes to test and validate ideas, as well as leveraging new technologies and collaboration tools.

• Adapting refers to the ability to learn and adjust based on feedback from customers, employees, and other stakeholders. This involves creating a culture of continuous improvement, using data analytics to track performance, and investing in employee training and development.

• Acceleration refers to the ability to speed up the time-to-market for new products. This involves reducing bureaucracy and decision-making bottlenecks, and leveraging digital tools.

Hybrid model

Combination with Agile methods

The combination of the Stage-Gate model with Agile methods in product development can offer organizations greater flexibility, speed, and improved communication throughout the development process. The hybrid model consists of seven stages: Discover, Define, Develop, Validate, Scale, Release, and Learn . The Agile principles are used in the early stages of the process to increase flexibility and adaptability in order to improve idea generation and validation, while the Stage-Gate principles are used in the later stages to manage risks and ensure that the project aligns with business objectives .

The hybrid approach offers several benefits such as increased flexibility, improved communication, reduced cycle times, and higher success rates in product development. However, they also note that implementing a hybrid approach requires careful planning and coordination between different teams and departments to ensure that the process runs smoothly.

To conclude, in the following video Dr. Robert Cooper talks about the evolution of product development and innovation methodologies. He highlights how the traditional "stage-gate" process was once a breakthrough approach, but has since become outdated in the face of modern competition and business conditions. Dr. Cooper argues for a more flexible and adaptable approach, with an emphasis on early customer feedback and continuous experimentation. He also presents several case studies and examples of companies that have successfully implemented these methods and achieved significant improvements in their innovation processes. Dr. Cooper concludes with a call to action for companies to embrace change and adopt more modern approaches to product development and innovation.

Annotated bibliography

• Cooper, R.G. (1986). Winning at new products: Creating value through innovation

The book emphasizes the importance of innovation in driving business growth. It provides a framework for creating successful new products by identifying customer needs, generating ideas, and developing a winning strategy. The book also raises awareness of the importance of understanding the market and competition to achieve success. Through real-world examples, the author demonstrates how innovation can lead to increased profitability and market share, and ultimately, drive business success. The book provides practical insights and tools for businesses of all sizes to create a culture of innovation and stay ahead of the competition.

• Cooper, R.G. (2008). Perspective: The Stage-Gate® Idea-to-Launch Process-Update, What’s New, and NexGen Systems

The article focuses on the need for better new product management in order to achieve innovation success and provides an overview of the Stage-Gate model as a solution to the challenge. The paper also gives evidence to prove the efficiency of the methodology and its advantages presenting several studies applied to firms using the Stage-Gate strategy. It is also exposed the next-generation model which incorporates an iterative development to get a minimum viable product earlier to the client using agile methodology within the framework of Stage-Gate, focusing on the acceleration of the whole process. All in all, the future approach for development methodologies is exposed as a way of showing the importance of continuous improvement in order to launch products faster to the market.

• Chao, R.O., Lichtendahl, K.C., Jr. and Grushka-Cockayne, Y. (2014), Incentives in a Stage-Gate Process. Prod Oper Manag, 23: 1286-1298

The article examines how incentives can be used to motivate individuals and teams to improve the performance of a stage-gate product development process. The authors identify four key stages in the process and outline the types of incentives that are most effective at each stage. They argue that incentives can help to align the interests of individuals and teams with the overall goals of the organization. The authors also discuss the potential drawbacks of using incentives, such as unintended consequences and the risk of creating a culture of competition rather than collaboration. Finally, they provide practical recommendations for implementing incentives in a stage-gate process.

• Paul O'Connor, Implementing a stage-gate process: A multi-company perspective, Journal of Product Innovation Management, Volume 11, Issue 3, 1994, Pages 183-200

The article examines the implementation of a stage-gate process in a variety of companies. The author outlines the benefits of using a stage-gate process, including increased innovation, reduced risk, and improved time-to-market. He also identifies some of the challenges and barriers to implementing the process, such as resistance to change, lack of buy-in from senior management, and difficulty in measuring success. The article provides practical recommendations for implementing a stage-gate process, including the importance of having a clear process definition, engaging stakeholders, and providing adequate training and resources. The author emphasizes the need for flexibility and continuous improvement in the process to ensure its ongoing success.

• Anita Friis Sommer, Christian Hedegaard, Iskra Dukovska-Popovska & Kenn Steger-Jensen. Improved Product Development Performance through Agile/Stage-Gate Hybrids: The Next-Generation Stage-Gate Process?

The article explores the benefits of combining agile and stage-gate methodologies in product development. The authors argue that the traditional stage-gate process can be too rigid and slow, while agile approaches may lack sufficient structure and oversight. They propose a hybrid approach that combines the best elements of both methodologies. The article outlines the key principles and practices of the hybrid approach and provides case studies of companies that have successfully implemented it. The authors argue that the hybrid approach can lead to improved performance in product development, including faster time-to-market, higher quality products, and greater customer satisfaction. They provide practical recommendations for implementing the hybrid approach, including the need for clear communication, flexible processes, and continuous improvement.