The Agile Stage-Gate Model

Hybrid Project Management Models (in practice) (possible title)

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Abstract

BIG IDEA

Improving the Traditional Stage Gate® with Agile principles

One of the first signs of “plan-driven”, called “traditional”, project management models can be found in the Manhattan Project, around the 1940s. The main goal of these approaches is to control the project and mitigate uncertainty through the application of a series of tools (PERT, Gantt Chart ecc.) and the continuous evaluation of the project with a phase-gate strategy. These rigid methods unfold their maximum potential in low-uncertainty projects, where most of the requisites are clear at the beginning of the process. These models are largely applied even today (Walrave et al.2022). In the last forty years, project manager techniques have been deeply renovated due to the increasing speed of business, and rising uncertainty in the market. Software companies were one of the first to abound traditional project management models in favor of more light, fast and adaptive approaches. In 2001, a group of developers published the Agile Manifesto, defining 12 principles that inspired practitioners, firstly in the IT sector, to move toward a more iterative way of work that highly involved the customer in the development process (Zasa et al.2021). Pre-established, detailed plans were replaced with time-boxed iterations, usually called “sprint”, during which developers implement the customer’s feedback and needs listed in the product backlog (Walrave et al.2022). Over the years, the interest in agile practices spread over the boundaries of software development, and involved manufacturing companies that want to develop a physical product, because even if traditional methods help the project be on track, they are “not conducive to breakthrough innovation”. (Beaumont et al.2017). For this reason, an increasing number of companies decided to implement agile methods in their phase-gate processes (especially in engineering and R&D) with a visible improvement in several areas (Beaumont et al.2017), such as employees’ motivation, planning and control abilities, customer’s needs understanding, peers communication and bureaucratic issues. (Cooper 2016). Several hybrid models have been proposed, like the Waterfall-Scrum-Fall, the Waterfall-Agile, the Hybrid V-model, and the Agile-Stage-Gate. (Reiff, Schlegel, 2022). However, Scrum seems to be the most suitable framework to be integrated with the waterfall model. (Cooper 2016). To better describe the integration between agile and traditional methods, Cooper(2016) affirmed that “Stage-Gate is a macroplanning process, and Agile is microplanning project management methodology”.(Cooper, 2016): practically, agile is integrated within a single phase/stage, or added parallelly to the existing process. (Beaumont et al. 2017)

THE COEXISTENCE OF AGILE AND STAGE-GATE

Agile practices and Stage-Gate® are two of the most famous development approaches in new product development (NPD). According to the PMBOK®Guide, there are three types of development approaches: predictive, adaptive, and hybrid. Predictive, or waterfall, approaches are mostly used in those projects that are “not new” to managers. Project characteristics and requirements can be easily depicted from previous projects, and the features of the final products are clear at the beginning of the process. ( PMBOK®Guide) The scope of the project is fixed, while the budget and time might change in the process. (Cooper 2016). The Stage-Gate® is considered one of these traditional methods. The model gives a rigid and plan-based structure to the idea-to-launch process in new product development, alternating evaluating and assessing stations called “Gate” to more operative “Stage”. A Gate is a set of expected results that must be met by the project leader to access the next Stage. The project leader enters a Gate with some “deliverables” which are evaluated through some predetermined “exit criteria”. These criteria may vary from one project to another, but generally, they should be a set of benchmarks for the strategic, marketing, and financial aspects of the project. In the beginning, these standards are mostly qualitative, while they gradually become more quantitative in the final stages. (Cooper, 1990, pag. 50). The respect of criteria needs to be assessed by an experienced manager, whose knowledge plays a key role in the decision-making process. Management oversees the greenlighting of the heavy spending decision through the path and helps the team meet the deadlines. Furthermore, involving senior managers is a crucial factor in the success of the project even from the point of view of the company: management's commitment and support are fundamental in aligning the project's development with the organization's objectives. (J. Edgett, 2015) The output of a Gate results in a Go/Kill/Hold/Recycle:

• GO: the project fulfills and respects the desired criteria. It can move on to the next stage.
• KILL: the project cannot progress
• HOLD: the project must wait to be completed, or it can move forward fulfilling some requirements
• RECYCLE: the project needs to be improved before the next stage

If the deliverables satisfy the exit criteria, the project can move on to the next Stage. As its inventor stated, a Stage can be defined as “a set of required or recommended best-practice activities needed to progress the project to the next gate or decision point” (Cooper, 2008). In each stage, cross-functional types of analysis are carried out concurrently by multidisciplinary teams of individuals coming from different areas of the company. By gathering information, both the project leader and the management will have the key features of the project. Since every stage has incremental costs, the knowledge acquired thus mitigates the risk and offers a broader vision and an analytical approach to decision-makers rather than relying on intuitions (Cooper, 1990). The first formal Stage-Gate® model introduced by Cooper consisted of five main stages:

1. Preliminary assessment: Users’ feedback about the concept is gathered through quick research to evaluate how the product would be perceived by the customers. (Cooper 1990, pag. 52)
2. Definition: In this stage, the customers’ preferences are deeply analyzed. Thus, the team can describe the basic principles of the product and assess the first approximate financial and technical prospects. Here legal matters are also considered.
3. Development: the design of the product is finally developed, and all operative needs and processes are clearly defined.
4. Validation: once the product is ready prototyped and ready to be produced, the company has to test it, to evaluate its quality. The customer plays a crucial role in helping the producer understand if the usability of the product is by what has been stated in the previous stages. After the first tests, more information is available and can be used to improve the product and the production process. Furthermore, considering the new data, the financial prospect of the entire project can be reassessed. (Cooper 1990)
5. Launch: The product is finally launched on the market, and production can start. (Cooper, 1990) (maybe extend the descriptions of the stages)

AGILE

On the other side, Agile is the core of adaptive developmental approaches. The PMBOK® Guide states that those methods are characterized by an “iterative and incremental” process that uses stakeholders’ feedback to adjust the product. Adaptive methods are largely used in those projects where the scope is likely to change, as well as the details of the final product, based on the customer’s needs(PMBOK® Guide). In adaptive models, budget and time are often fixed, while the scope may vary, based on the voice of the customer(Cooper, 2016) .Arguably, the primal ancestor of Agile practice can be found in Deming’s PLAN-DO-CHECK-ACT (PDCA) cycle and its first application was in the Japanese automotive industry. This means that, even if the IT sector was the first field to be innovated by Agile practices, its roots must be found in manufacturing. Agile and Scrum, the most used framework in hybrid stage-gate models, don’t have the same meaning. Scrum is a framework, and agile techniques embed some Scrum features. (Abbas et al. 2008). In “The New New Product Development Game” Takeuchi and Nonaka formulated a rugby-inspired approach looking at management methods of different companies, such as Honda, Canon, and Hewlett-Packard. The authors seemed to see forward in the future of the development of hybrid methods: as they stated: “Just as important, the new approach can act as a change agent: it is a vehicle for introducing creative, market-driven ideas and processes into an old, rigid organization.”(Takeuchi Hirotaka and Ikujiro Nonaka, 1986). In the context of Agile method applied in product development, Beaumont et al.(2017) addressed the areas that are most involved in the change:

• Iterative Process: “Iterative learning loops” (Beaumont et al. 2017) are

• Teams

• Governance

The integration of Agile methods in well-established procedures could be a difficult challenge, as the change of management makes the complexity rise. Taking responsibility, self-management, transparency, and peer agreement are the keywords of the method. Agile is a way of thinking, and it has to deal with the culture of the organization. All these features must be understood by the management and applied properly in line with the goal of the organization. (Maximini and Rauscher, 2018).

According to the studies by Karlstrom and Runeson reported by Cooper(2016), the idea of merging Agile and Stage-Gate® models was born in the IT sector. Companies in this field often aimed to sell a product that involved both the software and hardware. The development of the two components was strongly correlated, and the processes were also linked to several different functions that must be aligned to reach a common goal. These companies already applied their phase-gate structure to the development of new products: they tried to insert agile practices into the stages, thus creating a hybrid model. The mix provided benefits and created new challenges, but generally, it proved that the coexistence between two the approaches is possible. Nowadays, the hybrid model is relevant even for those companies which develop physical products. New technologies on the market allow teams to develop and test new ideas faster, reproducing working rhythms that are common in the software development world. In this context, the importance of agile arises even in the manufacturing world, and a new way of exploring new solutions is needed. (Cooper 2016).

Hybrid Models in practice

Hybrid project management approaches are already well-known in standards. The PMBOK® Guide, in the Project Performance Domain, proposes the hybrid approach as a “combination of adaptive and predictive approach”, suitable for uncertain and risky projects, or when “deliverables can be modularized”. Following the standard, a hybrid approach could be applied when two teams are working on the same project but on different deliverables, and sometimes they might need to apply different methods, one team a predictive approach and the other an adaptive approach. When project managers are required to choose a methodology or a framework, usually there are two possible ways:

• Look for an off-the-shelf hybrid solution, and try to implement it verbatim

• Try to develop their own tailored procedure, starting from what works and what should be improved, involving the team in creating the most suitable process for the current project. (PMBOK® Guide)

The same works for hybrid approaches. A hybrid approach can be obtained as a tailored solution, especially in those companies that want to implement new elements in their well-established procedures. The PMI defines tailoring as “the deliberate adaptation of the project management approach, governance, and processes to make them more suitable for the given environment and the work at hand.” (PMI – The Standard for Project Management). A project manager may decide to tailor the project development approach, as well as processes, engagement, tools, methods, and artifacts depending on different types of factors: the number of people involved, the complexity of the project, and so on. The PMI also lists some of the possible benefits provided by tailoring, such as a major respect for project constraints, a higher buy-in of the team in day-to-day activities (especially for those who have played a role in the tailoring process), and an empowered focus on the market and client’s needs (PMI – The Standard for Project Management).

Generally, the PMI describes the tailoring process with the following 4 steps:

1. Select Initial Development Approach: in the first step, the team decides which type of approach should be applied to the project. The final decision may depend on several internal factors, like the team's working culture, their knowledge about the product and different options, and so on.
2. Tailor For Organization: the tailoring process should be in line with organizational direction and policies. Usually, organizations already have well-established procedures that work as a basis for further developments. New proposals should be properly explained and should reach an initial consensus between decision-makers. Thus, the manager will be sure that the new approach won’t jeopardize organizational objectives.
3. Tailor For Project: it is important to lead the team through the tailoring process.
4. Implement Ongoing Improvement: the tailored process should be improved while used, and any experience may be useful to take the model to the next level. Moreover, a “continuous improvement” approach could enhance the involvement of the team.

A framework to tailor Agile practices in well-established procedures

A possible framework for tailoring agile practices in a manufacturing environment is proposed by Brandl et al. (2021). In their research, they developed a method that helps project managers:

• Adopt agile practices, creating a “local agility” instead of trying to implement a whole framework

• Identify and choose the most suitable practice in relation to the problem to be solved without a deep understanding and experience of the agile world.

in what they called a complex technical planning project (CTTP). Those projects are characterized by a high level of uncertainty due to internal and external factors. The company, operating in the automotive sector, had already tried to implement agile practices into their CTPPs, but the adoption required excessive effort in terms of resources and time, and in the end, the managers returned to their initial approach. The method aims to make the adoption process easier, and instead of implementing an off-the-shelf solution, it suggests starting from pinpoint a specific obstacle and trying to overcome it with the most suitable agile practice. The study considered three of the most famous agile framework, Scrum, Kanban, and Xtreme Programming, and selected only those practices "transferrable, deployable and independent" (Brandl et al, 2021). The model consists of three phases: “Assess”, “Supplement the modus operandi” and “Operationalize”. In the first two steps, four “auxiliary models” (two checklists and two matrices) are applied.

• Assess

During the Assess phase, project managers are required to reflect on their project and on the necessity whether adopting agile project management or not, as well as to state what is needed to implement agile with upper managers and their teams. A self-reflection on the complexity of the project is done by answering the question in the following checklist (A). As the author suggests, an overall difficulty in answering the questions may indicate that they are operating in a complex environment. At the same time, managers can investigate if there is a breeding ground for agile project management by evaluating the statements in the checklist (B).

Checklist (A)

* Stakeholder Who contributes to the project? How many and which departments participate? How many and which persons participate? How many and which external stakeholders participate? Technology Which technologies are involved now and throughout the project? How ranks the maturity level of these technologies How can my team cope with the requirements of these technologies Do the involved persons have knowledge about these technologies? Are the involved persons experienced in practice with these technologies? Market Is the relevant market stable and predictable? How does a market change affect the project? Project Management What tangible project requirements do I know? Are they valid? How can I guarantee transparency? How can I coordinate the project? How does the tangible project plan look like? (considering super-and sub-ordinate project and their respective plans) Do I know all essential milestones and their deadline? Is the project plan reliable? Scope What is my scope of accountability What is my direct interfaces' scope of accountability? Are the accountabilities between the interface partners clearly regulated? Is the arrangement solid? Competence Which competencies do I need in my team to achieve the project goal? Do I know all the necessary competencies? Are all required skills and competencies included in the project team? CAN I GIVE SATISFYING ANSWERS TO ALL QUESTIONS?

Checklist (B)

Project I am the initiator for an agile approach I know my project's internal or external customer The customer can test and review partial results The project's goal is clearly defined. I understand this goal I cannot specify the requirements of the project in detail The project requirements may change Pace plays a significant role throughout the implementation Team I need interdisciplinary competences in my team to achieve this goal My team welcomes new ideas and changes My team appreciates community spirit I have trust in my team I let my team make mistakes to learn from them Company The superior management grants the required room from maneuvre The core project team is fully dedicated

• Supplement the Modus Operandi

The main goal of this phase is to choose the most fitting practice to solve a specific problem. The authors developed a linking model with the help of experts’ knowledge in agile. The model involves two matrices, an objective-principle-matrix, and a principle-practices-matrix. The first creates a relationship between common areas of improvement in a project and the 12 principles in the Agile Manifesto, while the second links the same principles to a group of selected agile practices. Then, each expert assigns a value to each practice for each principle, evaluating to what degree a practice can enhance a specific principle. Summarizing, the connection between the two matrices is given by the linking model, as it is shown in the figure below. Now, the manager can pick and implement the practice that fits most to the situation.

The linking model creates a relationship between the objectives-principle-matrix and the principle-practices matrix

• Operationalize

At the operational level, the adoption of new practices falls within the field of change management. The authors applied Kotter’s eight steps of successful change management. As with every type of change, this phase may face some resistance. A good way of overcoming the initial obstacles might be organizing workshops to facilitate the understanding and implementation of these new practices. However, it is important to pay attention to the language used. Introducing terms specific to the agile field might be counterproductive.

Traditional or Hybrid Model? The Hybrid Model Matrix

More and more companies are embracing hybrid models for new product development. For those organizations that are already applying successful hybrid strategies, it could be difficult to choose a suitable model for a specific product development project. Cocchi et al. (2021) introduced a tool for project managers, the Hybrid Model Matrix, that aims to make easier the decision-making process to choose the right model for the right project. The matrix is a result of a case study carried out on a firm in the food industry. This company already applied hybrid methods combining a five-phase Stage-Gate(Ideation, Concept, Business case, Testing, and Launch) with Agile, Lean Start-up, and Design Thinking practices.

Although the company applied the most recent techniques, it lacked a structured framework that can facilitate the decision on the appropriate methodology to be employed for a particular project. The choice of the model depended on the management’s on-the-field knowledge and their ability to evaluate resources in conjunction with the financial return of the project. (Cocchi et al, 2021). The matrix provides some useful guidelines for the agile methods implementation. The matrix states two important factors to be considered before the start of the process:

- Knowledge about Users (KAU): this could be “wide” or “limited” and it refers to the point of view of the customers. “Wide” means that the company is aware of costumer’s tastes and preferences. The target is clear. On the contrary, when the KAU is “limited” it indicates a knowledge gap in understanding the customer’s need.

- Knowledge about Product Category (KAPG): this indicator includes a broad range of elements that define how is deep the knowledge of a company for a specific product. This involves the strategic relationship with stakeholders and market positioning. A product category can already exist or can be new.

Image of the Matrix

The Matrix consists of four quadrants, and each one suggests a possible developmental approach. - Low Knowledge about Users/ High Category Knowledge

- Low Knowledge about Users/Low Category Knowledge

- High Knowledge about Users and Category

- High Knowledge about users and Low category knowledge

Each hybrid approach proposed is strongly linked to the company analyzed in the case study. However, the matrix proposes a possible approach to the challenges that may arise in each quadrant. The traditional predictive model (the Stage-Gate® only) is the perfect solution when the company has all the needed knowledge before the development process, following what the standard suggests. Generally, hybrid models are applied when some pieces of information are missing, confirming the standard’s guidelines. When the company has limited knowledge of customers’ habits, but the product concept is clear, a possible solution might be using a hybrid model. Design Thinking techniques are implemented in the ideation phase to empathize with the client and learn about his habits deeper than what a simple phase-gate model allows. When the company wants to explore new markets, and a whole new product has to be developed, design thinking is used in the ideation and in the concept phase, while lean startup gathers information about the unknown market in the business case. Finally, when the knowledge about the user is high but the company wants to develop a product that couldn’t be associated with existing categories, the Agile-Stage-Gate model is the chosen one, with agile elements in the development and testing. Iterations are useful to try different solutions and their impact on production or on sales, like packaging or pricing.

Overall, the Matrix provides some benefits. It is a powerful decision-making tool that fosters an objective evaluation of the developmental approach for a given project. In this way, managers can reach an agreement on the methodology, avoiding plan changes on-the-fly. Moreover, the internal point of view of the matrix protects the company from uncertain financial estimations or inaccurate technological evaluations, supporting managers in the choice of what product to develop, and enhancing the innovation in the portfolio. Finally, the matrix gives HR managers a broad overview of what kind of techniques will be applied to the NPD, thus supporting them in the resource selection process. Those companies that cannot hire specialists in those areas could rely on “ad hoc consultancy”. (Cocchi et al. (2021))

Limitations

Implementing agile practices in a non-software environment is an ambitious challenge, as it requires the ability to face different types of obstacles that may arise during the project life cycle. In addition to the economic effort, hybrid models can only be implemented if aligned with the organizational culture. (Cocchi et al 2021) A clear overview of the challenges and their respective possible solutions is given by Zasa et al. (2021) in their research about the contemporaneous presence of agile practices and traditional project management methods. There are three areas of interest when it’s time to implement agile in your company:

- Integration: since the two methods are deeply different, a step-by-step process is more appropriate. One specific obstacle may be the definition of what to achieve at the end of each sprint. In a software context, it should be a product that, hypothetically, could be sold on the market, but physical products are completely different, and such a target is hard to meet. Workshops are the way suggested to enlarge the understanding of agile elements within managers and operational teams.

- Culture: integrating agile is also a matter of culture. Agile foster horizontal communication, overcoming hierarchical barriers. This means that each team is more responsible for its own activities. This change should be accepted as a team but also individually, and a team reorganization is needed. The application of a contract to clearly state roles, responsibilities and way of work can make the process smoother and enhance the ability to work together, as well as the use of product design tools or tools for stakeholder management.

- Perceptions: managers should clearly know the advantage of adopting a hybrid model for a project. Different approaches may misalign the expectations between managers and teams, because the “test-and-learn” method clash may not perfectly fit with the pre-established plan. Communication plays a key role in outlining new opportunities and giving a clear overview to decision-makers. In this way, it will be clearer to decide when to use a Stage-Gate, and when a hybrid model.

References

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