Stage-Gate Process
Contents |
Abstract
The Stage-Gate Process (also referred to as Phase-Gate Process) is a project management tool, dividing the time horizon of a project into several information-gathering stages. These stages are separated by so-called gates, which represent go/kill/recycle decisions for the project. The concept was introduced by Cooper (1986) in his book 'Winning At New Products'[1].
The central background of the Stage-Gate Process is rooted in the fact that companies have limited resources (e.g. time, money & capital goods). To make effective use of the available resources and to manage risks, a firm has to develop its project portfolio in a manner that only the most promising/beneficial projects are put through. Regular Stage-Gate Processes include 4 to 8 stages, which can be conducted in parallel or can be skipped depending on the preferences of the company [2][3]. The evaluation criteria at each gate are discussed upfront with the project group and are acted upon by the gatekeeper during a gate meeting. Each gate decision should be a objective process; anybody in the organization should come to the same conclusion.
A Stage-Gate Process is complementary to project evaluation methods that, for example, analyze resource availability, project-related risks or costs and benefits of the project. The method is also frequently used in combination with other project management tools, like Gantt Charts or Concurrent Engineering theory [4] The process can be used in most project-related contexts, but gained a lot attention in the field of new product development as a strategic pacing method [5]
Basic Elements of the Stage-Gate Process
The basic idea of a Stage-Gate Process is that the whole project is divided in a predetermined set of stages. These stages consist of groups of related activities that end in so-called gates. Gates are characterized as containing a set of deliverables or inputs, a set of criteria, and an output [6].
Stages
Stages often consist of activities that roughly follow the same trajectory, where first the data is collected, integrated and analysed[3]. Cooper (2008) mentions several key characteristics that need to be taken into account when identifying stages[7]:
A. Each stage should strive to reduce endogenous and exogenous uncertainties and risks. For the stage information requirements guide the team in their way-of-working.
B. Each stage is more costly than the preceding one. Combined with the element (1) above, this means that there exists a trade-off between uncertainties and risks on the one hand, and costs on the other hand.
C. Activities within stages are undertaken in parallel and by a team of people from different backgrounds.
D. Each stage is cross-functional; so no departmental focuses are present
Several authors emphasize a standardized selection of stages that can provide the basis for implementing a Stage-Gate Process [3][6][8]. Cooper (1990) emphasized the following 5 stages, that roughly reflect the different phases of a (new product development) process [6]:
1. Preliminary Assessment: here the project's technical and marketplace dynamics are explored. Often this stage is conducted internal to the firm at low cost and in a short term.
2. Definition: here the product characteristics are defined and the attractiveness needs to be verified. This is the last stage, before the company starts spending large amount of money developing the product.
3. Development: here the product is developed, tested, marketed, and operations are set-up. The initial financial assessment is extended to also include new information such as information about intellectual property (IP).
4. Validation: here the entire viability of the project is assessed, including the production process, user acceptance, and costs and benefits. Activities within this stage include in-house product tests, user/field trials, trail/pilot production, or a pre-test market.
5. Commercialization: here the marketing launch plan and operations plan are put to work.
Gates
Where stages represent a longer period of time (weeks or months); gates represent meetings with a time-span of several hours. At each gate the following elements are relevant to keep in mind [6]:
Inputs/Deliverables: the deliverables that the project leader must bring to the gate
Criteria: which are the items upon the input will be judged.
Outputs: the decisions at the gate, and possible the approval of an action plan for the next stage
Senior managers man the gates, and act as so-called gatekeepers. This group is diverse in nature and each member has the power to approve the resources needed for continuation of the project [6]. During the gate meeting the gatekeepers meet to discuss the future of a project. The objective decision they make is fully based at the ability of the team to meet the gate criteria. The following outputs can be generated during the gate meeting:
1. Go: here the input created by the project team is sufficient. The next step is to proceed with the next stage.
2. Kill: here the input created by the project team is insufficient or the result imply that the project will not be able to yield the desired benefits. The next step is to terminate the project, and review the process.
3. Recycle: here the input created by the project team is insufficient, but the project still has potential to yield benefits. The next step is to restart the current stage, and update the inputs.
4. Hold: here the input created by the project team may be sufficient or insufficient. The gatekeepers decide to delay their decision, and wait until inputs of parallel processes are provided at the next gate. Based on the input of these processes a decision will be made about continuing, stopping or recycling the project.
Application areas for the Stage-Gate Process
Cooper's original publication on the Stage-Gate Process focused itself on applications within the field of new product development [1] [6] [3]. He positioned his theory as a method to reduce cycle time and improve new product "hit rate". Over the years academics and professionals tuned the model to make it even more efficient in the field of new product development, and even used it to research other project-related environments. These developments are summarized by Cooper (2008) in his work about 'the Next-Generation Stage-Gate, he emphasizes the following elements [3]:
A. Scaled to Suit Different Risk-Level Projects: the Stage-Gate Process has become a scale-able process. Firms are able to adjust the method for different types of risk levels of projects; ranging from radical new product solutions to lower-risk line extensions.
B. Flexible Process: after more information about the Stage-Gate Process became available, academics started to experiment with more flexible versions of the tool. The key is, however, that the process suggests best practices, but nothing is mandatory. Activities can be conducted simultaneously and stages can be skipped.
C. Adaptable Process: not only can stages be skipped, they can also be adjusted to a firm's specific needs. An example is provided below in the 'Possible Theoretical Synergies' section, emphasizing the combination of Agile Project Management methods with the Stage-Gate Process.
Coulson (2010) stressed the use of the Stage-Gate Process in the field of life cycle management (see Life Cycle Model) [9]. To fit the purpose, Coulson added two stages providing after sales product maintenance and product obsolescence, and emphasized that a share of the project responsibilities in pharmaceutical and biomedical environments are positioned in after-sales activities.
More recently Wuest et al. (2014) researched the possible positive effects of using the Stage-Gate Process in manufacturing and assembly systems [10] Their main finding is that, if adapted to the project scenario, the Stage-Gate Process could be beneficial for companies in manufacturing and assembly. Here the goal was to identify flaws in the manufacturing systems early on, this to make sure that they do not amount up to problems. These processes share the characteristic that late identification of inefficient processes may add up to significant amounts of money spend to fix the problems.
Theoretical Synergies
Synergies in Project Formalization
One of the main theoretical synergies that have been discovered by Sommer & Cooper (2016), who combined the Agile Project Management with the Stage-Gate Process [11]. For information technology (IT) companies both methods were already beneficial and the use the developed the Agile-Stage-Gate Hybrid Model should bring companies even more benefits, namely [11]:
1. Faster and more adaptive response to changing customer needs
2. Better integration of the voice-of-the-customer
3. Better team communication
4. Improved development productivity
5. Shorter time-to-market
Another theoretical synergy was identified by Thamhain (1996), who combined the Stage-Gate Process with a Concurrent Engineering. This method focuses on in-parallel execution of project activities and phases with the objective of minimizing overall project cycle time [4]. This combination is already emphasized in Cooper's later work, where he emphasizes the relevance of cross-functional work and the use of parallel activities within stages.
Synergies in Project Execution
A lot of companies have made their Stage-Gate Process lean. This is done by enriching their Stage-Gate Process with elements from Value Stream Analysis and Mapping for Project Management [3]. When analyzing the value stream, the stages are kept in mind and the criteria at each gate are adapted to the insights gained. The goal is to optimize the Stage-Gate Process by assessing if all stages are relevant and efficient.
Cooper (2008) also emphasize several governance methods that be combined with the Stage-Gate Process to optimize decision making [3]:
A. The use of scorecards (see Implementing KPIs section Scorecards and Dashboards) or success criteria to optimize go/kill/recycle/hold decisions. The method can be used to formalize the gate meetings and secure that gate keepers only keep relevant criteria in mind.
B. An extension to the point mentioned above is the inclusion of self-evaluation scorecards as an input to the gate. Here the scorecards of projects members are used as valuable input for the gate decision.
Developments in the field of project management have led to the introduction of alternative collaboration methods, like self-managed teams or virtual teams [12] [13] [14] The Stage-Gate Process developed with these theories, which led to the development of self-managed gates and virtual gates.
Synergies in Portfolio Management
Firms often use Stage-Gate Process methods in portfolio management (see Portfolio Management and complexity in organizations). Here the gates are replaced by portfolio reviews. Portfolio reviews are conducted periodically and discuss the mix and balance of projects in the firm's portfolio. Connecting the Stage-Gate Process with the concept of portfolio management describes the link between the method and its implications for firm strategy. It is important that firms consider the (possible) influence of portfolio management practices in gate decisions when setting-up the gate criteria; simply because project team members cannot influence portfolio strategy in their activities.
Due to the lack of influence of the project team of reaching portfolio review criteria, communication is important [3]. A lack of communication of senior management about the project's position in the portfolio may result in unexpected gate outputs. The unexpected stop of a project diminishes the relevance of using the Stage-Gate Process, and may result in a great decrease of motivation for project members to participate in future projects.
When considering the concept of portfolio reviews, the importance of the 'hold' gate output can be stressed. The output of portfolio reviews is dependent on the firm's available resources, the relative potential of each project and the desired distribution of project-types within the portfolio (see Project Portfolio Management Vs. Programme Management section 'Portfolio Management'). The hold decision is often used to temporary stop projects which characteristics do not fit the portfolio or might not be promising enough for the allocation of additional resources.
Limitations of Using the Stage-Gate Process
The Stage-Gate Process has been linked with several limitations, some of them have already been solved over time. Below you find a list of limitations/problems that are still present after applying Stage-Gate processes:
A. The effectiveness of the method highly depends on the behavior of senior management members that are appointed as gatekeepers. Cases exist where gatekeepers did not objectively decide on the gate output, or where personal prioritization was given for certain criteria [3].
B. The method requires a certain organizational mindset, where "homework" has to be done. In other words, companies have to do research when determining criteria at the gates and have to keep track of resource availability across the time-span of the projects. Using a Stage-Gate Process does not guarantee success, where its added value depends heavily on the right use of other tools [3].
C. The method assumes that cross-functional activities during each stage will reduce risks optimally. However, research emphasizes the relevance of risk management practices in the success of new product development (NPD) projects. [15] [16] Research in the field of risk management suggest that risk reduction in project environments is more complex than is suggested in the Stage-Gate Process model.
D. Some projects require a more flexible framework. For designers it is often hard to follow a linear progress. For these projects the structural characteristics of the Stage-Gate Approach will not provide as much added value. Boland & Collopy (2004) stresses the relevance of designing outside of existing company systems in a free-space [17]
E. Where the Stage-Gate Process allows many other tools to be incorporated within the framework, no clear guidelines are given on possible limitations or guidelines for implementation. Cooper (2008) already emphasized that firms occasionally use cost-cutting models in the wrong manner within Stage-Gate Processes [3]. Ringen and Welo (2016) emphasize the fact that the Stage-Gate Process is not really a "process", but more of a governance concept [18]
Key References
1. Stage-gate Project Management Processes as Professional Communication Practice: Connecting Technical and Marketing Communication in New Product Development - Berggreen, L. & Kampf, C. (2016) [19]
Berggreen and Kampf stress the relevance of the Stage-Gate Process in communication in new product development scenarios. The concept of the marketing circle is introduced, describing that technical communication is situated in a field connecting technical communication, marketing, and business process understanding. For engineering students, it is relevant to know how projects are managed and how the Stage-Gate Approach connects these fields of interest in a comprehensive framework. Students in the field of engineering will be confronted with project environments in the future, and should know how business processes are relevant for designing new products.
2. Towards a More Event-Driven NPD Process: First Experiences with Attempts of Implementation in the Front-End Phase - Ringen, G. & Welo, T. (2016) [18]
The work by Ringen and Welo (2016) has been emphasized above in the 'limitations' section, and deserves extra attention regarding their distinction between event-driven NPD guidance and Stage-Gate Process use in NPD projects. The authors emphasize the need for guidance in process prioritization based on knowledge gaps identified during the project. Their main reason for supporting this need is the fact that, although Stage-Gate Process has been used for 30 year, no real progress has been made on NPD project effectiveness (70 to 98% of the projects still fail). Several tools are introduced to reach their goal, including visual planning and management, stand-up meetings, and learning cycles.
References
- ↑ 1.0 1.1 Cooper, R.G. (1986). Winning At New Products. Addison-Wesley, ISBN 0201136651
- ↑ O'Connor, P. (1994). From Experience; Implementing Stage-Gate Process: A Multi-Company Perspective. Journal of Product innovation Management. Vol 11. pp 183-200
- ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 Cooper, R.G. (2008). Perspective: The Stage-Gate Idea-to-Launch Process — Update What’s New, and NexGen Systems, Product Development & Management Association, Journal of Product Innovation Management. Vol. 25. pp 213–232
- ↑ 4.0 4.1 Thamhain, H. (1996). Applying stage-gate processes in concurrent engineering. Wescon/96. pp 2-7
- ↑ Sharma, A. (1999). Central Dilemmas In Managing Innovation in Large Firms. California Management Review. Vol 41. No 3. pp 146-164
- ↑ 6.0 6.1 6.2 6.3 6.4 6.5 Cooper, R.G. (1990). Stage-Gate Systems: A New Tool for Managing New Products. Business Horizons. pp 44-54
- ↑ Cooper, R.G. (2008b). Perspective: The Stage-Gate Idea-to-Launch Process — Update What’s New, and NexGen Systems, Product Development & Management Association, Journal of Product Innovation Management. Vol. 25. pp 215
- ↑ Chao et al. (2014). Incentives in a Stage-Gate Process. Production and Operations Management. Vol 23. No 8. pp 1286-1298
- ↑ Coulson, K.E. (2010). Stage Gate Product Development Processes and Lifecycle Management. Pharmaceutical and Biomedical Project Management in a Changing Global Environment
- ↑ Wuest, T. Liu, Lu, S.C.Y. & Thoben K.D. (2012). Application of the stage gate model in production supporting quality management. Conference on Manufacturing Systems. Vol 47. pp 32-37
- ↑ 11.0 11.1 Sommer A.F. & Cooper, R.G. (2016). From Experience: The Agile-Stage-Gate Hybrid Model: A Promising New Approach and a New Research Opportunity. Journal of Product Innovation Management. Vol 33. No 5. pp 513-526
- ↑ Wilson, T.B. (1992). Why Self-Managed Teams Work. International Industrial Engineering Conference. Chicago. ISBN 0898061237
- ↑ Silverman, L. L., & Propst, A. L. (1996). Ensuring success: A model for self-managed teams. International Industrial Engineering Conference Proceedings, pp 426–437
- ↑ Brandt, V., England, W., & Ward, S. (2011). Virtual Teams. Research-Technology Management. Vol 54. No 6. pp 62–63
- ↑ Jacob, W.F., Kwak, Y.H. (2003). In search of innovative techniques to evaluate pharemaceutical R&D projects. Technovation 23. pp 291-296
- ↑ Raz, T., Shenhar, A.J., Dvir, D. (2002). Risk management, project success, and technological uncertainty. R&D Management. Vol 32. pp 101-109
- ↑ Boland, R.J. & Collopy, F. (2003). Managing as Designing. Stanford University Press. ISBN 9780804746748
- ↑ 18.0 18.1 Ringen, G. & Welo, T. (2016). Towards a More Event-Driven NPD Process: First Experiences with Attempts of Implementation in the Front-End Phase. Engineering Design and Materials. pp 1-10
- ↑ Berggreen, L. & Kampf, C. (2016). Stage-gate Project Management Processes as Professional Communication Practice: Connecting Technical and Marketing Communication in New Product Development. IEEE International Professional Communication Conference (IPCC), Austin, TX, 2016, pp. 1-7
