Stage-Gate Project Management Model

Revision as of 12:02, 7 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 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 ^[2]. 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 ^[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 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 ^[5]. 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 mentioned before to establish the foundations of the model to minimize the innovation risk and ensure that new products are developed efficiently and effectively.

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. 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]. 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].

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

• Flexibility: The stage-gate model is designed to be flexible and adaptable to the needs of the organization and the product being developed. The model can be customized to fit the specific needs of each project and can be adjusted as the project progresses to accommodate changes in market conditions, customer needs, or technical requirements.

• 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. This incorporates a degree of flexibility and uncertainty in the early stages of product development.

• Fluidity: The stage-gate model recognizes that product development is not a linear process and that there may be a need to revisit earlier stages of the process as new information becomes available. 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, where work has to be executed, that end in gates which are business evaluations. As you can see from the diagram, it is a linear process that progresses from ideation to product launch, 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. This helps organizations minimize risk and optimize their investment in new product development ^[7].

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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 and the top management ^[8]. When choosing the gatekeepers, Cooper gives the following advice ^[7]:

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.

As mentioned before in the success drivers, the project team in charge of bringing the idea from concept to launch should consist of a cross-functional group. Skills and competencies from different departments are needed such as R&D, marketing, production, business and engineering ^[9]. 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 ^[7].

Stages

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 ^[4]:

• Activities: Tasks that the project team must complete during the stage to move the project forward. These activities can include market research, product design, prototype development, testing, and validation. 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. This analysis can include market analysis, technical analysis, risk analysis, and financial analysis. 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. These can include design documents, specifications, prototypes, test results, and other project artifacts. The deliverables are typically defined at the beginning of the stage and 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.

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Gates

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 ^[9]:

• Deliverables: Tangible or intangible items that the project team must produce to meet the gate's requirements. These can include design documents, prototypes, market research reports, and other project artifacts.

• 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.

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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

Stage 0 - 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.

Stage 1 – 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.

Stage 2 – Design ‎

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.

Stage 3 – 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.

Stage 4 – 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.

Stage 5 – 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. It is also necessary to conduct a post-launch review to evaluate the project's success.

Application areas

- Variety of industries: ^{[10] [11]}

- 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

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• 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

^[13]

• 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

^[12]

• 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.

^[14]

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

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^[16]

- 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 4.2} 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 7.3 7.4} R. G. Cooper (2008). Perspective: The Stage-Gate® Idea-to-Launch Process-Update, What’s New, and NexGen Systems
8. ↑ Robert G. Cooper & Scott J. Edgett (2019). Best Practices in the Idea-to-Launch Process and Its Governance
9. ↑ ^{9.0 9.1} The official site of Stage-Gate. https://www.stage-gate.com/ | Last visited: 07 April 2023
10. ↑ 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
11. ↑ Robert G. Cooper & Anita Friis Sommer Agile–Stage-Gate for Manufacturers Pages 17-26
12. ↑ ^{12.0 12.1} 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
13. ↑ 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
14. ↑ 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
15. ↑ 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
16. ↑ 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