What is Stage-Gate?

Stage-Gate process = A conceptual and operational map for moving new product projects from idea to launch and beyond—a blueprint for managing the new product development (NPD) process to improve effectiveness and efficiency. Stage-Gate is a system or process not unlike a playbook for a North American football team: It maps out what needs to be done, play by play, huddle by huddle—as well as how to do it— in order to win the game.

Stage-Gate, in its simplest format, consists of (1) a series of stages, where the project team undertakes the work, obtains the needed information, and does the subsequent data integration and analysis, followed by (2) gates, where go/kill decisions are made to continue to invest in the project. See Figure 1. A standard Stage-Gate system designed for major product developments is shown in Figure 2.

The Stages

The innovation process can be visualized as a series of stages, with each stage composed of a set of required or recommended best-practice activities needed to progress the project to the next gate or decision point. Think of the stages as plays in a football game—well defined and mapped out, clear goals and purpose, and proficiently executed:

• Each stage is designed to gather information to reduce key project uncertainties and risks; the information requirements thus define the purpose of each of the stages in the process.

• Each stage costs more than the preceding one: The process is an incremental commitment one—a series of increasing bets, much like a game of Texas Hold’em. But with each stage and step increase in project cost, the unknowns and uncertainties are driven down so that risk is effectively managed.

• The activities within stages are undertaken in parallel and by a team of people from different functional areas within the firm; that is, tasks within a stage are done concurrently, much like a team of football players executing a play.

• Each stage is cross-functional: There is no research and development (R&D) stage or marketing stage; rather, every stage is marketing, R&D, production, or engineering. No department owns any one stage.

The Gates

Following each stage is a gate or a go/kill decision point. Gates consist of the following:

• Deliverables: What the project leader and team bring to the decision point (e.g., the results of a set of completed activities). These deliverables are visible, are based on a standard menu for each gate, and are decided at the output of the previous gate.

• Criteria against which the project is judged: These include must-meet criteria or knock-out questions (a checklist) designed to weed out misfit projects quickly; and should-meet criteria that are scored and added (a point count system), which are used to prioritize projects.

• Outputs: A decision (Go/Kill/Hold/Recycle), along with an approved action plan for the next stage (an agreed-to timeline and resources committed), and a list of deliverables and date for the next gate

Frequently made misunderstandings

• Not a Functional, Phased-Review Process; Today’s Stage-Gate system is built for speed. The stages are cross-functional and not dominated by a single functional area: This is a business process, not an R&D or marketing process. The play is rapid, with activities occurring in parallel rather than in series. The governance process is clear, with defined gates and criteria for efficient, timely decision making. And the project is executed by a dedicated and empowered team of players and led by an entrepreneurial team leader or team captain

• Not a Rigid, Lock-Step Process; Stage-Gate is a map to get from point A (idea) to point B (sucessful new product). As in any map, when the situation merits, detours can be taken. For example, many companies tailor the model to their own circumstances and build lots of flexibility into their process

• Not a Linear System; Due to the visual graphics associated with Stage-Gate, some people see it as a linear model—the stages as linear and the activities within each stage as linear. They miss the point that although the stages are laid out in a sequential stepwise fashion, within each stage activities and tasks are anything but linear.

• Not a Project Control Mechanism; Stage-Gate is a playbook designed to enable project teams and team leaders get resources for their projects and then to speed them to market using the best possible methods to ensure success.

• Not a Dated, Stagnant System; Although Stage-Gate has endured for many years, today’s version is almost unrecognizable from the original model; it has evolved a lot over time.

• Not a Bureaucratic System

• Not a Data Entry Scheme; Although software, with its required data entry, can be a valuable tool and facilitator to the process, do not let the tail wag the dog here. Stage-Gate is composed of a set of information-gathering activities; the data that these activities yield can be conveniently handled by IT to facilitate document management and communication among project team members. But the software and data entry are tools, not the process.

• Not Just a Back-End or Product-Delivery Process

• Not the Same as Project Management; Stage-Gate is a macroprocess—an overarching process. By contrast, project management is a microprocess. Stage-Gate is not a substitute for sound project management methods. Rather, Stage-Gate and project management are used together. Specifically, project management methods are applied within the stages of the Stage-Gate process.

Problems with the Stage-Gate model

Gates with no teeth – The most common complaint is that even though the company has installed a stage-and-gate system, the gates, which are the vital component of the governance or decision-making process, are either nonexistent or lack teeth. The result is that projects are rarely killed at gates

Hollow decisions at gates – In still other companies, the gate review meeting is held and a go decision is made, but resources are not committed. Somehow management has missed the point that approval decisions are rather meaningless unless a check is cut: The project leader and team must leave the gate meeting with the resources they need to progress their project.

Who are the gatekeepers? Many companies also have trouble defining who the gatekeepers are. The gatekeepers are the senior people in the business who own the resources required by the project leader and team to move forward. Businesses should try to keep the number of gatekeepers as small as possible

Gatekeepers behaving badly – A very common complaint concerns the behavior of senior management when in the role of gatekeepers

Other problems companies are facing, and other misunderstandings;

• Misapplying Cost-Cutting Models to Innovation Projects like Six-Sigma or Lean Manufacturing.

• Trying to Do Portfolio Management without a Stage-and-Gate Process. Some managers mistakenly believe that they can get by with only portfolio management and no stage-and-gate process in place.

The argument is that their gates lack the real teeth necessary to make go/kill decisions and to prioritize projects, so portfolio management is the answer.

Too Much Bureaucracy in the Idea-to-Launch Process. Having a well-defined and efficient system that speeds new products to market is the goal. Instead, what some companies have done is to design a cumbersome, bureaucratic process with a lot of make-work and non-value-added activities

• Deliverables overkill. Most companies’ new product processes suffer from far too much paperwork delivered to the gatekeepers at each gate

• Demanding much non-value-added work in the stages. Some companies’ processes build every possible activity into each stage, and long lists of required tasks and activities per stage are the result. Moreover, most Stage-Gate processes over time become far too bulky as more and more make-work gets added to the system

Too Much Reliance on Software as a Solution. Some product developers see IT tools solving everything. Not so: The mistaken belief is that the purchase of a software tool will be a substitute for a robust idea-to-launch process or is the fix for an ineffective innovative system. Software is a great facilitator of a stage-and-gate process, yielding many benefits. For example, software tools available for Stage-Gate enable project teams members to communicate more effectively and to work on shared documents; they provide an electronic Stage-Gate manual complete with all deliverables templates, lists of task within stages and accompanying worksheets; and they track projects and provide tailored views of all the projects in the pipeline. Thus, IT can greatly ease the implementation and use of Stage-Gate. But an IT tool per se is not a substitute for the idea-to-launch process: You need a solid innovation process first, that you then incorporate into your software.

Expecting the Impossible from a Process. The implementation of a process is often assumed to be the magic bullet, the hope being that all these other problems will disappear

No Pain, No Gain. The implementation of any system requires some effort, and indeed Stage-Gate makes certain new demands on project teams, leaders, and gatekeepers

Next-Generation Stage-Gate: How companies have evolved and accelerated the process

Here now are some of the ways that progressive companies have modified, adjusted, and adapted Stage-Gate and have implemented the next-generation stage-and-gate process.

Scaled to Suit Different Risk-Level Projects

Perhaps the greatest change in Stage-Gate over the last few years is that it has become a scalable process, scaled to suit very different types and risk levels of projects—from very risky and complex platform developments through to lower-risk extensions and modifications and even to rather simple sales force requests. Management recognized that each of these projects—big and small—has risk, consumes resources, and thus must be managed, but not all need to go through the full five-stage process. The process has thus morphed into multiple versions to fit business needs and to accelerate projects. Stage-Gate XPress for projects of moderate risk, such as improvements, modifications, and extensions; and Stage-Gate Lite for very small projects, such as simple customer requests.

A Flexible Process

Stage-Gate is flexible as opposed to a rigid book of rules and procedures to be religiously followed. No activity or deliverable is mandatory: Stage-Gate is a guide that suggests best practices, recommended activities, and likely deliverables. Another facet of flexibility is simultaneous execution. Here, key activities and even entire stages overlap, not waiting for perfect information before moving forward.

An Adaptable Process

Stage-Gate has also become a much more adaptable innovation process, one that adjusts to changing conditions and fluid, unstable information. The concept of spiral or agile development is built in, allowing project teams to move rapidly to a finalize product design through a series of ‘‘build-test-feedback-and-revise’’ iterations. Spiral development bridges the gap between the need for sharp, early, and fact-based product definition before development begins versus the need to be flexible and to adjust the product’s design to new information and fluid market conditions as development proceeds. Spiral development allows developers to continue to incorporate valuable customer feedback into the design even after the product definition is locked in before going into Stage 3.

An Efficient, Lean, and Rapid System

Smart companies have made their next-generation Stage-Gate process lean, removing waste and inefficiency at every opportunity. They have borrowed the concept of value stream analysis from lean manufacturing and have applied it to their new product process. All the stages, decision points, and key activities in a typical project are mapped out, with typical times for each activity and decision indicated.

In undertaking this mapping, it becomes clear that there is often a difference between the way the process is supposed to work and the way it works in reality. Exhibit 6: Example of a ‘‘Value Stream Map’’ of the Current New Product Process

More effective governance

• Use of scorecards to make better go/kill decisions. A number of firms use scorecards for early stage screening, in which the project is scored by the gatekeepers right at the gate meeting on key criteria. Typical criteria for a new product projects are in Figure 7

• Employing success criteria at gates. A second selection method, and one employed with considerable success at firms

• Self-evaluation as an input to each gate. Some companies let the project teams submit their own filled-in scorecard prior to the gate meeting. The view is that the project team’s judgment of the project’s attractiveness is also important information for the gatekeepers.

• Displays of in-process metrics at gates. In-process metrics are also considered important by some management groups and hence are displayed at gates. Inprocess metrics capture how well the project is being executed and whether is it on course and on target.

• Integrated with portfolio management. Portfolio management and a gating process are both designed to make go/kill and resource allocation decisions and hence are being integrated into a unified system in the next-generation Stage-Gate.

• Accelerating the Gates

The need for fast go/kill decisions combined with global and diverse development teams means that effective and timely gatekeeping has become a major challenge

• Leaner and simpler gates

• Distinguishing between work done in the stages and deliverables to the gates

• Self-managed gates

• Electronic and virtual gates

Accountability, the Post Launch Review, and Continuous Improvement

Next-generation Stage-Gate systems build in a tough post launch review to instill accountability for results and at the same time to foster a culture of continuous improvement. Continuous improvement is one of the main tenets of lean manufacturing and lends itself readily to application in the field of product innovation.

Continuous improvement in NPD has three major elements:

1. Having performance metrics in place: These metrics measure how well a specific new product project performed. For example, were the product’s profits on target? Was it launched on time?

2. Establishing team accountability for results: All members of the project team are fully responsible for performance results when measured against these metrics.

3. Building in learning and improvement: When the project team misses the target, or when deficiencies occur, focus on fixing the cause—stop this from happening again—rather than putting a band-aid on the symptom or, worse yet, punishing the team.

An Open System

Stage-Gate has also been modified to accommodate open innovation. Best performers have reinvented their NPD process to handle the flow of ideas, intellectual property (IP), technology, and even totally developed products into the company from external sources and also the flow outward