Stage-Gate process

From CEOpedia | Management online

The concept of the Stage-Gate process is derived from the product innovation management. It involves specific design of the development process, product innovations, in which different stages of the process are distributed among decision-making points. The Stage-Gate model assumes six stages of innovation implementation, with only the best ideas getting through to the next stages. Ideas that have not gone further can be recycled and wait for a new process in other circumstances, be resold to the entity for which they are worth, or transferred to the "open innovation" activities (R.G.Cooper 2016).

Characteristics of the model

The Stage-Gate process is characterized by:

  • big picture view of the conception to launch process that possible optimal novation management to realize rapid, remunerative and successful new product development.
  • a roadmap that organizes the chaotic time, inception to launch new product development process into smaler, more manageable stages to manage risk.
  • process rigor is right-sized to project context and risk at the first and at each subsequent Gate enabling real-time prcess routing to optimize new product development pipeline productivity.

Advantages

Benefits of Using a Stage-Gate Model:

  • success on the market, sale of a new product and profits from sales
  • the success of making and implementing the project in the company (somehow and the speed of the project is at a high level)
  • better somehow cooperation within the company, improving interpersonal relationships
  • good communication between external stakeholders, including customers, partners and suppliers

History

After receiving a grant from a government, Dr Robert Cooper started to gather to information about project management in big companies. He spent a few months to collect stories from different managers and experts. That stories helped him to find a pattern of managing projects that later he called "Stage - Gate Process".

Stages and gates of the process

The Stage Gate process consists of several stages that are connected with each other by gates. Each stage is aimed at gathering specific information:

  • Stage 0: discovery
  • Gate 1: Initial Screen
  • Stage 1: range determination
  • Gate 2: Second Screen
  • Stage 2: business plan concept
  • Gate 3: Decision on Business Case
  • Stage 3: development
  • Gate 4: Post-development Review
  • Stage 4: testing and validation
  • Gate 5: Precommercialization Business Analysis
  • Stage 5: commissioning and implementation

Stage 0: Discovery

At this stage, you must specify the scope of the project that can be implemented in the company. Ideas can be generated using brainstorming. Ideas can be invented by employees and customers. The idea is first selected and then proposed. If the idea is not worth the effort, the project is rejected.

Gate 1: Initial Screen

Creative thinking and screening of ideas. It is the first signal of commitment to the project.

Stage 1: Range determination

This stage involves the evaluation of the product and the related market. The strengths and weaknesses of the product and possible competition risks should be identified. Based on the estimated risk, production will continue or not.

Gate 2: Second Screen

More rigorous screen after which the project starts to be more expensive as a company starts to invest in more detailed investigation.

Stage 2: Business plan concept

Now that the product is not immune to competition, a business plan is being developed. This is the last stage of concept development and is important before starting product development. This stage is very labor-intensive and includes stages that must be completed: - Definition and analysis of the product - Creating a business plan - Creating a project plan - Feasibility study

Gate 3: Decision on Business Case

The last moment for withdrawal from the project before huge amount of money is invested.

Stage 3: Development

At this stage, the plans from previous stages are implemented and simple tests are carried out. At this stage, the opinion about productions can be verified. Finally, a prototype of the product is created, which will be widely tested during the next stage.

Gate 4: Post-development Review

Checking if the product after development is still as appealing as we want it to be.

Stage 4: Testing and validation

This stage includes product testing and validation. They also look at the production process and the way in which the product is accepted by customers and the market. At this stage, the product and the production process should be tested to correct errors. Check if it meets the expectations of customers.

Gate 5: Precommercialization Business Analysis

The last moment before the whole project is being commercialized. At the same time it is the last moment for withdrawal from the launch of the project if needed.

Stage 5: Commissioning and implementation

The marketing strategy comes into play at this stage of the Stage Gate process. The product is ready to run. An estimate of the quantity to be sold is given. Rules on production, inventory and distribution should be laid down. The team responsible for sales is responsible above all for ensuring a smooth process (R.G. Cooper 2015).

  • As a final point we can also distinguish Post Implementation Review. It involves checking the strengths and weaknesses of the whole project and drawing conclusions for future.

The implementation

More and more companies represent a new generation of idea-to-launch processes. In some cases, it's an evolution of Stage-Gate to a better, faster mode (R.G. Cooper 2015).

Robert G. Cooper and Elko J. Kleinschmidt examined the implementation of Stage-Gate Process for 21 leading companies. They published their results and observations in the article titled ‘STAGE-GATE® PROCESS FOR NEW PRODUCT SUCCESS’. According to the paper, Stage-Gate Process has strong positive impact on teamwork, success rates, cycle times or launch of a product. What is more, using this theory may help to detect failures earlier and to avoid reworking. As the researchers say in their essay, ‘strong evidence supports the approach.’

Examples of companies that, due to the article mentioned above, implemented (or partly implemented) the Stage-Gate Process in their actions: Exxon Chemicals, Procter & Gamble, Du Pont, Polaroid, US West, B.F. Goodrich, Corning Glass, Labatts, the Royal Bank of Canada, and Rohm & Haas.

Conclusion

Robert G. Cooper in his article ‘Stage-Gate Systems: A New Tool for Managing New Products’ says that ‘Product innovation will always be a high-risk endeavor.’ However, using proper technique and implementing know-how in the field of project or process management may help to achieve better results in a company.


Examples of Stage-Gate process

  • The classic example of a Stage-Gate process is the development of a new product. In this process, the stages are: idea generation, concept development, prototype development, product testing, production launch, and product sales. At each stage, the team must assess the progress and determine if the product should move on to the next stage or be abandoned.
  • Another example of the Stage-Gate process is the development of a new process or system. This process may involve a number of steps, such as requirements gathering, design, development, testing, implementation, and maintenance. The team must assess the progress at each stage and determine if the process or system should move on to the next stage or be abandoned.
  • A third example of the Stage-Gate process is the development of a new marketing campaign. In this case, the stages are: research, planning, development, testing, launch, and evaluation. At each stage, the team must assess the progress and determine if the campaign should move on to the next stage or be abandoned.

Limitations of Stage-Gate process

The Stage-Gate process has a few limitations, including:

  • Difficulty in accurately predicting market trends: The Stage-Gate process requires a certain amount of market research and forecasting, which can be difficult to accurately predict. This can lead to the release of products that are not suitable for the current market, or late releases of products that are not timely enough to be successful.
  • Costly resources: The process can be costly, as it requires the use of resources such as personnel, marketing, and research. This can limit the innovation process as there may not be enough funds to support the process.
  • Lack of flexibility: Once the process is determined, it is difficult to change or modify it. This can limit the ability of the company to react to changes in the market quickly, which can be detrimental to their success.
  • Complexity: The process can be complex, which can make it difficult for the company to understand and implement. This can lead to errors and delays in the process, which can be costly.

Other approaches related to Stage-Gate process

  • An alternative to the Stage-Gate process is the Lean Start-up method, which is based on the principles of rapid experimentation, customer feedback, and fast iteration. It encourages businesses to focus on customer needs and quickly develop and launch products.
  • The Lean Canvas is an alternative approach that focuses on creating a roadmap for a product, taking into account customer feedback and market opportunities. It helps to prioritize ideas and resources and to focus on the most important ones.
  • Agile Innovation is an iterative approach that helps companies to quickly respond to customer needs, build prototypes, and test them in the market. It also helps to build relationships with customers, allowing companies to quickly adapt to changing customer needs.
  • Design Thinking is an approach that focuses on understanding customer needs and creating a product or service to meet those needs. It emphasizes the importance of user experience and helps to create products that are user-friendly and have potential for long-term success.

In conclusion, there are several alternative approaches to the Stage-Gate process, such as the Lean Start-up, Lean Canvas, Agile Innovation and Design Thinking, which can help companies to prioritize ideas, build customer relationships, and quickly respond to customer needs.


Stage-Gate process — recommended articles
Lean startup — Innovation cycle — Decision point — Concept engineering — Innovation models — Feature-driven development — Methods in management — Creative process — Lean product development

References

Author: Maria Drzazga, Aleksandra Borkowska

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