Stage-Gate Project Management Model

Revision as of 10:54, 6 April 2023

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" ^[1]. The Stage-Gate model applies traditional methodologies, such as The Waterfall method or The Spiral Modelto 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 that are review and key decision-making points, as they allow the team to evaluate the current situation, align the expectations and decide whether or not to proceed to the following stage ^[2]. This new approach helps companies to have a visual roadmap of all the developing tasks, to minimize risks while innovating, and to adapt to environmental changes while satisfying the expectations of the project and the stakeholders. 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 ^[3]. Therefore the point here relies on discovering the key success drivers and how to achieve them.

Proven success drivers

Successful companies share some common features when it comes to innovation and internal processes. In this section five success factors ^[4] will be exposed in order to understand how to take a new product to the market.

• Customer-driven focus: The goal is to deliver new products that are differentiated, solve major customer problems, and offer compelling value propositions to the customer. Customer focus innovation drives success rates that are twice as high in the marketplace and have a much higher productivity rate (4.5 times).

• Upfront activities: Activities such as preliminary market assessment and research, exploring the technological risks, looking at operations issues and financial assessment are critical for determining success before entering the development phase.

• Tough Go/kill decision points: Decision points throughout the process where management and project teams can come together to review the current situation and the project´s resource needs are decisive to avoid having too many projects with not enough resources that make the production pipeline move slowly. Blocking the early launching of the product decreases success rates.

• Truly cross-functional teams: Innovation projects are complex and require input from different parts of the organization. Teams need to work in a spiral method of development-build, test, feedback, and revise-putting as management will impact both time-to-market and project success rates.

• Top management involvement: The leadership is responsible to set and communicate the innovation strategy and direction, allocate the funds and provide guidance.

All in all, we observe that the foundations for innovation are based on the management of the project. Moreover, plenty of research in 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 ^[5].

How to achieve innovation?: The Stage-Gate model approach

As mentioned before, the main key to successfully launching a new product is the management of the project. Based on various independent studies, which were conducted by leading consulting companies in the field of innovation management, it was concluded that 70-85% of the leading companies in the U.S. use model Stage-Gate for managing the entire process from idea generation to launching of new product/service to market ^[4].

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 ^[6].

The main characteristics of the can be summarized in what is called the six Fs ^[1]:

• Flexibility:
• Fuzzy:
• Fluidity:
• Focus:
• Facilitation:
• Forever green:

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, where work has to be executed, that end in gates which are business evaluations ^[7]

Stages

-Common characteristics of gates

• Discover: Pre-work designed to discover and uncover business opportunities and generate new ideas.

Stage 1 – Scope

Stage 2 – Design

Stage 3 – Develop

Stage 4 – Scale Up

Stage 5 – Launch

- How to avoid common errors in stages

Gates

Following each stage is a gate that serves as quality–control check points, go/kill decisions, and points where the path forward for the next stage of the project is agreed to.

Structure of a gate:

• Deliverables:

• Criteria against which the project is judged:

• Outputs: a decision (Go/Kill/Hold/Recycle), along with an approved action plan for the next stage (an agreed-to timeline and resources committed), and a list of deliverables and date for the next gate.

- How to avoid common errors in gates

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 minimize new product failures, increase organizational discipline, accelerate speed-to-market and improve the allocation of resources ^[1].

• Quality of Execution:
• Sharper Focus, Better Prioritization:
• Fast-Paced Parallel Processing with Spirals:
• A True Cross-Functional Team Approach:
• A Strong Market Focus with Voice-of-the-Customer (VoC) Built In:
• Better Front-End Homework:
• Products with Competitive Advantage—Bold Innovations:

Application areas

- Variety of industries: ^{[8] [9]}

- Apart from innovation management is a general project execution model (due to the adaptation and flexibility of the model) ^[7]

- Rates of success regarding companies that do not use the model

Implementation key factors

^[10]

• Instilling the process. Establishing the need for the process and securing commitment and dedication
• Preparing the process. Key organizational issues, and crafting a realistic path forward
• Diffusing the process. Getting people to change and helping the organization gain meaningful value from the process.

Limitations of the model

^[11]

• Underestimation of Workload:

• Overestimation of Team Size:

• The Effect of Delays between Actions and Outcome:

• False Negatives: When the timing and investment of the first stage are based on an underestimated workload and an overestimated team size, the associated gate is difficult to pass; this leads to postponing the gate or perhaps cancelling the project—a false negative if the project could actually have succeeded.

• Not enough risk management tools

^[7]

• Discipline in the teams to follow accurately the tool

^[2]

• Need of organizational changes

^[10]

• process optimization and validation
• gaining top management commitment and involvement: gatekeepers rol
• structured decision making
• training critical skills and knowledge
• portfolio optimization
• linking and positioning the process

What´s next?

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

Open Stage-Gate model

^[3]

The model of open innovation is based on the movement of ideas across organizational boundaries. Valuable ideas can be generated externally (outside the organization) and internally (within the organization). On the other side, the conventional internal model of closed innovation is based on the principle of control for the success of innovation and innovation projects.

^[12]

Due to the fact that a lot of external knowledge is now accessible, companies which have been using Stage-Gate model for their new product/service development make a great effort to improve their model, broadening it with open innovation features. - Make the model flexible to include the surrounding for networks of partners, alliances and outsourced-vendors.

- What does the open model add to each stage of the Stage-Gate model

The triple A

ref> Cooper, R.G (2014). What´s Next? After Stage-Gate </ref>

New version of the model that adds the concepts of “Adaptive and Flexible”, “Agile” and “Accelerated”.

What is new? - Spiral development cycles: agile - Adaptation to the company - Risk contengency

Combination with Agile methods

^[13]

^[14]

- Use of agile principles in some of the stages. - Application of the scrum methodology for planning.

Annotated bibliography

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

• Cooper, R.G. (1990). Stage-Gate Systems: A New Tool for Managing New Products.

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. Some of the interesting conclusions that reflect the impact of performance that the model provides are quality focus on the activities, stronger market orientation, parallel processing, better project evaluations, and a visual road map. All in all, this article emphasizes the relevant steps in the Stage-Gate model and how its implementation leads to the market success of new products.

• Cooper, R.G (2014). What´s Next? After Stage-Gate

The article exposes a new approach emerging of idea-to-launch processes to make Stage-Gate a better and faster model. It suggests combining different systems in order to take the model to the next step: the integration of Adaptation, Agile, and Acceleration. The paper exposes 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.

• Cooper, R. G. and Sommer A. F. The Agile–Stage-Gate Hybrid Model: A Promising New Approach and a New Research Opportunity.

References

1. ↑ ^{1.0 1.1 1.2} Cooper, R.G. (1986). Winning at new products: Creating value through innovation. Addison Wesley
2. ↑ ^{2.0 2.1} Cooper, R.G. (1990). Stage-Gate Systems: A New Tool for Managing New Products
3. ↑ ^{3.0 3.1} Stošić, B., & Milutinović, R. (2014). Possibilities of opening up the stage-gate model. Romanian Statistical Review, 4, 41-53
4. ↑ ^{4.0 4.1} Edgett, S. J. (2015). Idea-to-Launch (Stage-Gate®) Model: An Overview. Stage-Gate International, 1-5
5. ↑ du Preez, N. D., & Louw, L. (2008). A framework for managing the innovation process. PICMET ’08 - 2008 Portland International Conference on Management of Engineering & Technology
6. ↑ Chao, R.O., Lichtendahl, K.C., Jr. and Grushka-Cockayne, Y. (2014), Incentives in a Stage-Gate Process. Prod Oper Manag, 23: 1286-1298
7. ↑ ^{7.0 7.1 7.2} R. G. Cooper (2008). Perspective: The Stage-Gate® Idea-to-Launch Process-Update, What’s New, and NexGen Systems
8. ↑ Ulf Högman, Hans Johannesson (2018). Applying stage-gate processes to technology development—Experience from six hardware-oriented companies, Journal of Engineering and Technology Management, Volume 30, Issue 3, 2013, Pages 264-287
9. ↑ Robert G. Cooper & Anita Friis Sommer Agile–Stage-Gate for Manufacturers Pages 17-26
10. ↑ ^{10.0 10.1} Paul O'Connor, Implementing a stage-gate process: A multi-company perspective, Journal of Product Innovation Management, olume 11, Issue 3, 1994, Pages 183-200
11. ↑ Van Oorschot, K., Sengupta, K., Akkermans, H., & Van Wassenhove, L. (2010). Get fat fast: Surviving stage-gate® in NPD: Get fat fast: Surviving stage-gate® in NPD. The Journal of Product Innovation Management, 27(6), 828–839
12. ↑ Grönlund, J., Sjödin, D. R., & Frishammar, J. (2010). Open innovation and the stage-gate process: A revised model for new product development. California Management Review, 52(3), 106–131
13. ↑ Improved Product Development Performance through Agile/Stage-Gate Hybrids: The Next-Generation Stage-Gate Process? Anita Friis Sommer,Christian Hedegaard, Iskra Dukovska-Popovska &Kenn Steger-Jensen Pages 34-45 | Published online: 28 Dec 2015
14. ↑ Agile–Stage-Gate Hybrids.The Next Stage for Product Development. Blending Agile and Stage-Gate methods can provide flexibility, speed, and improved communication in new-product development. Robert G. Cooper Pages 21-29 | Published online: 08 Jan 2016