Stage-Gate Project Management Model

Revision as of 14:53, 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].

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 ^[4]. 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.

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 ^[5].

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.

• 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 ^[6].

Stage-Gate model process ^[2]

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 ^[7]. When choosing the gatekeepers, Cooper gives the following advice ^[6]:

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 ^[8].

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 ^[9]:

• 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.

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 ^[7]:

• 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.

FOTOO

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 ^[1].

• 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.

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 ^[2].

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 ^[10].

• 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.

Limitations of the model

Overall, while the stage-gate model has been successful in many organizations, it is important to recognize its limitations and adapt the process to fit the unique needs and challenges of each project.

• Emphasis on gatekeeping ^[6]: The model places a heavy emphasis on gatekeeping, which can result in missed opportunities or delayed decision-making.

• Underestimation of workload ^[11]: Prediction of activities in stages can be inaccurate and lead to underestimating time resources.

• Linear and sequential process ^[11]: The stage-gate model assumes a linear and sequential process, where each stage must be completed before moving on to the next, this unfolds the inability to account for unexpected events or changes in the market

• Overemphasis on upfront planning ^[11]: The stage-gate model tends to focus heavily on upfront planning and screening, which can limit flexibility and agility in responding to changing market conditions and customer needs.

• Insufficient attention to the execution and launch phases ^[10]: Critical for successfully bringing a product to market.

• Risk-averse culture^[11]: The stage-gate model can encourage a risk-averse culture, where the emphasis is on minimizing risk rather than maximizing potential value.

• Limited Stakeholder Input^[2]: The model does not provide a structured mechanism for incorporating stakeholder input throughout the development process, potentially leading to a lack of customer satisfaction or stakeholder buy-in.

• Focus on Control^[2]: The model is designed to provide control over the product development process, but this can result in a rigid approach that stifles creativity.

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 ^[3] 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 ^[12].

The triple A

The Triple A Model ^[13] 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 and services. This involves streamlining the Stage-Gate process, reducing bureaucracy and decision-making bottlenecks, and leveraging digital tools and automation.

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 ^[14]. 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 ^[15].

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.

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.

• The Stage-Gate Idea-to-Launch Process-Update, What's New and NexGen Systems. The article focus on the many misconceptions and challenges in using Stage-Gate. It also looks at the next generation of Stage-Gate where firms are adjusting the model to be more adaptable for concepts like open innovation, value stream and lean. Moreover, it gives valuable knowledge on portfolio management using Stage-Gate.

• Phase model for product development. Article developed by a professor at the Norwegian University of Science and Technology. It describes success criteria for product development and market launch as well as the importance of a process model when it comes to product development.

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 2.2 2.3 2.4} 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. ↑ 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
5. ↑ Chao, R.O., Lichtendahl, K.C., Jr. and Grushka-Cockayne, Y. (2014), Incentives in a Stage-Gate Process. Prod Oper Manag, 23: 1286-1298
6. ↑ ^{6.0 6.1 6.2} R. G. Cooper (2008). Perspective: The Stage-Gate® Idea-to-Launch Process-Update, What’s New, and NexGen Systems
7. ↑ ^{7.0 7.1} The official site of Stage-Gate. https://www.stage-gate.com/ | Last visited: 07 April 2023
8. ↑ Robert G. Cooper & Scott J. Edgett (2019). Best Practices in the Idea-to-Launch Process and Its Governance
9. ↑ Scott J. Edgett (2018). The Stage-Gate® Model: An Overview
10. ↑ ^{10.0 10.1} 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
11. ↑ ^{11.0 11.1 11.2 11.3} 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. ↑ Cooper, R.G (2014). What´s Next? After Stage-Gate
14. ↑ 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
15. ↑ 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