The Stage-Gate Model

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The stage-gate model is a project management methodology used to drive a project from idea-to-launch in a structured way, including several decision-making points, so called gates, where senior management is involved to take decisions regarding the course of the project.

The stage-gate model was firstly developed by companies as a way to manage the product development process more efficiently. However, the model being intuitively appealing and simple, it was adopted to manage a variety of other projects like process improvements and process changes. Today, it is regarded as a general project management methodology with a wide range of variations. In its latest version the stage gate model has been combined with agile methodology for a more fast-paced and adapted response to the Voice of Customer (VoC).

A phase-gate process, a waterfall process, a front-end loading (FEL), a big design up front (BDUF) are identical methodologies to the stage-gate model.

Stage-Gate® is also a registered trademark of the Stage Gate Inc., which was founded in the year 2000 from Robert G. Cooper, the creator of stage gate model, and Scott J. Edgett and it is an innovation consulting firm.[1] The Product Development Institute Inc. [2] also uses the Stage-Gate® trademark. It was also founded by the aforementioned in 1996 with the purpose of helping companies to improve their portfolio management and product development approaches.

History

The Stage-Gate Model was created in the 1980s by Robert G. Cooper, a now internationally recognized expert in the field of innovation management. The Stage-Gate Model was the result of an extensive research about the new product development (NPD) practices followed by top performing companies, leading innovators and entrepreneurs, published by Robert G.Cooper in 1985.

Robert G.Cooper continued his research activities within new product development and innovation management, which has led to over 120 article publications and ten published books until today. Furthermore, along with his fellow researcher and innovation expert Scott J. Edgett, he founded the Product Developement Institute Inc. in the year 1996 and the Stage-Gate International in the year 2000. Scott J. Edgett has also extensive research activity and expertise in the field of innovation management with more than 60 academic articles and co-authoring of six books. The Product Developement Institute Inc. is helping companies to improve their approach to new product development and portfolio management, while Stage-Gate International is an innovation management consulting company that offers expert advice in companies globally.

As a result of all this research activity and the continuous contact with the industry, the Stage-Gate Model has evolved since 1985. Thus, there are plenty variations of the model, that follow the advances in the field of innovation management and the new needs for more flexibe, adaptive and lately fast-track product development.

It is important to mention that approximately the 80% of the Global 1000 companies had adopted a version of the Stage-Gate model up to 2015.

Typical Model

The model that is described here as the typical model, was the one that was developed from Robert G. Cooper after researching the product innovation processes of several top performing companies back in the 1980s. The processes of these companies, although not identically the same, followed the same pattern of stages and gates recognizing that innovation is a process that can be managed. Thus, Cooper incorporated all this knowledge into one, so called typical, model. The typical Stage-Gate model is comprised of stages and gates in a linear mode, where each stage is followed by a gate. The stages are the phases of the actual work that needs to be executed in a project/ new product development and the gates are points in time when a decision has to be made about the future of the project.

Stages

A variety of activities is performed at each stage. The type of activities undertaken varies depending on the stage of the project, but also on the type of the project that is managed. The stages allow for cross-functional work and for activities to be undertaken in parallel so as to minimize the developing time and increase the speed to market. Moreover, as the stages advance there is an increase in the resources needed on the project, resulting in increased commitment from the team managing the project and the decision makers. On the contrary, the risk of the project is effectively managed stage by stage, as the number of uncertainties is reduced as the model progresses.

Gates

At the gates, the decision about the course of the project is made by the gatekeepers. The gatekeepers have a very important role which requires a good understanding of the business, the business strategy, the market, as well as having the authority to make decisions, that is why as gatekeepers usually acts the senior management of the company. Three important elements are considered at the gates:

• Input

The input at each gate is comprised of the deliverables that should be submitted in order for the project to be examined and the decision to be agreed. Usually, the deliverables at each gate are either set from the beginning of the process, chosen from a predetermined list of deliverables, or determined at the previous gate.

• Criteria

The criteria are the elements based on which the project will be examined. The gatekeepers play a substantial role in setting the criteria for projects. The range of criteria may be broad, including both qualitative and quantitative criteria and it also depends on the gate and the project that is judged. Furthermore, there are ‘must meet’ criteria and ‘should meet’ criteria. The ‘must meet’ criteria are essential and must be fulfilled. Generally, the project is judged financially and in terms of its alignment with the business strategy. The ‘should meet’ criteria are not obligatory to be fulfilled but fulfilling them may be equally important to grant a GO decision. Sometimes, decision tools, like scoring boards and checklists, are used to keep track of the performance of the project and to facilitate the final decision.

• Output

The output of the gate is the final decision about the project. Sometimes, part of the output can also be detailed action plans or lists of deliverables for the next gate. The decision is usually a GO/KILL decision, but sometimes other options exist like HOLD or RECYCLE.

• GO - the project proceeds to the next stage
• KILL - the project is terminated
• HOLD - the project remains on hold
• RECYCLE - the project repeats the current stage

Explanation of the typical model

Usually, the typical Stage-Gate model is comprised from four to seven stages and gates. A skeleton of the model can be seen in the following picture:

Discovery stage:

The development process is initiated by a new product idea, that is submitted in gate 1.

Gate 1: Idea Screen

The idea screen is the first decision of whether the company will commit resources to the specific idea to develop a new product. This is usually a soft decision, since the uncertainty level is still high and a second screen will follow later in the process. The project is evaluated mainly based on criteria about the alignment with the general strategy and the company’s core business, as well as the feasibility of the idea and the opportunity it offers considering the market attractiveness. If the decision is GO, it marks the beginning of a new project.

Stage 1: Scoping

The purpose of this stage is to conduct a preliminary assessment of the project, so that it can be better re-evaluated at gate 2. In particular, two types of assessments are necessary: a preliminary market assessment and a preliminary technical assessment. The market assessment will gather information about the market and will try to determine the potential future market position of the product including the market acceptance and the potential market size. On the other hand, the technical assessment will respond to questions about the product’s manufacturing feasibility including an estimation of cost and time of production.

Gate 2: Second Screen

The second screen decision is similar to the decision on the idea screen gate with the consideration of the most recent information gathered from the stage 1. At this gate additional criteria may be added, depending on the stage 1 findings, as well as additional deliverables for the next gate, should the decision be GO. At this gate the financial feasibility of the project is assessed based on the input provided (preliminary technical assessment).

Stage 2: Building the business case

At this stage the project must be clearly defined. A variety of analysis are undertaken including detailed market analysis, technical analysis and financial analysis. The market analysis is focused on what the customers prefer and how the new product will satisfy their needs. A complete competitive analysis is undertaken and concept testing is used to determine the customer acceptance. The technical analysis consists of the definition of all technical requirements for the manufacturing of the product, potentially including some design or laboratory work to completely define the manufacturing feasibility. A preliminary development plan and an operations analysis is executed. Moreover, necessary investments are estimated both in terms of changes in the current production as well as in terms of legal or patent work. The financial analysis should also be detailed including a sensitivity analysis.

Gate 3: Go to development

Gate 3 is a very important decision gate as it is the final checkpoint before the development phase, where a substantial amount of resources is required. At this point a careful examination of all the information is conducted, including the validity of the information submitted. Furthermore, if a GO decision is selected it must be accompanied by strategic decisions regarding potential choices about the new product e.g. about the final features of the product, the market segment that will be targeted etc.

Stage 3: Development

At stage 3 the actual development of the product takes place, so potential authorizations are granted (legal, patents, etc), detailed plans are produced and actual financial/cost analysis is completed. Testing plans are also prepared to be examined at the upcoming gate.

Gate 4: Go to testing

At this point the development process is reviewed and it is ensured that the new product lives up to the existing plans and quality. Any necessary changes are decided at this point both concerning the development process as well as the financial analysis.

Stage 4: Testing and Validation

Validation and Testing are the main tasks that are conducted at this stage, aiming at validating that the product is of a certain quality and that it actually meets the expectations of the customers as defined at the design and plan of the previous stages. The validation and testing stage may include in-house product tests, user and field trials, pilot production and market tests. Also, if it is considered necessary the financial analysis is revised. At this stage a detailed marketing plan is also completed.

Gate 5: Go to Launch

This is the final approval before launching the product. At gate 5 the results from validation and testing are revised and the quality of the validation and testing stage is approved. Finally, the detailed marketing plan as well as the operations plan are approved.

Stage 5: Launch

The commercialization of the product is realized at this stage. All the plans are put into motion.

Post launch review:

The post launch review is a review of the whole process and the new product which becomes now part of the product portfolio of the company. An internal audit is executed to evaluate the product development process and to pinpoint its strengths and weaknesses, so that the process can be improved in the future. Lessons learned are gathered and stored. Moreover, a complete review of the new product and its launch are completed. Financial, market and performance data are gathered and compared with the analysis predictions from the previous phases.

Applications

The Stage-Gate model was developed for new product development (NPD) management and innovation management. However, it was adopted from a variety of companies to manage a variety of projects. This is mainly because the Stage-Gate model is a simple and intuitive model that can be easily modified to include more or less stages and gates and different sets of elements at the gate so as to accommodate the needs of a specific project.

The most common variations of the model that allow also for different applications are the following:

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Limitations

The typical Stage-Gate model has some limitations that the new versions have tried to overcome.

Firstly, although the Stage-Gate model was developed after examining the practices of the top innovative firms at the time, it has thereafter been accused of being too linear and rigid to handle innovative and dynamic projects. Also, a disadvantage of the model is that it is not adaptive and flexible enough to meet teh new reality of projects. Moreover, there is a lot of critisism about the decision making points and the criteria used for decision making. Senior management should be available and present to assess the progress of the project, and the financial perspective of the project should not be overweighted for the final decision.