idea to-launch stage-gate model an overview

©2015Stage‐GateInternational +1.905.304.8797Stage‐Gate®andtheInnovationPerformanceFramework™areregisteredtrademarksofStage‐GateInc.www.stage‐gate.com

Idea‐to‐Launch(Stage‐Gate®)Model:AnOverviewbyScottJ.Edgett

Success. Do you have the ability to successfullydevelop and launch new products and servicesinto a competitivemarketplace on a sustainablebasis?

ompanies that answer yes to this question have one thing in common: They understand that product innovation is a critical capability.They have successfully designed, implemented andinternalized Idea‐to‐Launch innovation processesfor conceptualizing, developing and commercial‐izing newproducts and services. More commonly,these processes are known as the Stage‐Gate®model.1

Stage‐Gate®:AProvenApproachStage‐Gate isavalue‐creatingbusinessprocessandriskmodel designed to quickly and profitably transform anorganization's best new ideas into winning newproducts.2Whenembracedbyorganizations,itcreatesaculture of product innovation excellence ‐ productleadership, high‐performance teams, customer and

marketfocus,robustsolutions,accountability,alignment,discipline,speedandquality.

Companieswillingtoworkhardatcreatinginnovationcapabilitiesbecome topperformersandare realizingthebenefits.Successrates,inthemarketplace,are2.5times higher (63‐78 percent) than the poorperformers that achieve only a 24 percent successrate.Giventhelargeamountofresources–bothpeopleandmoney‐dedicatedtoinnovationinmostcompanies,the rateof return for success versus the cost of failurewill have a significant impact on whether yourorganization will achieve its revenue and profit goalsfrom new product innovation. Hence the need for abusinessprocesslikeStage‐Gatewhichdrivesvalue.

Who are these companies with Stage‐Gateinnovation processes that seem to win more in themarketplace than they lose? It is not hard to identifytheminanygivenindustry.Thesearethecompaniesthatyear‐over‐yearhaveaproveninnovationtrackrecordintheir industry sectors. Firms, for example, like 3M,Abbott Nutrition, Baker Hughes, BASF, Corning, Exxon,GE, Hallmark, Kellogg, Pepsi, National Oilwell Varco,Procter&Gamble,tonamebutafew. More than 80 percent of companies in NorthAmericausesometypeofaStage‐Gateinnovationmodel.WorldwidetheadoptionofStage‐Gatecontinuestogrowas organizations seek to improve their innovationcapabilities.

ProvenSuccessDrivers Justhavingan Idea‐to‐Launchprocess inplacedoes not guarantee success. It must also have thetraitsthatareproventoimpactsuccess.Doesyourprocesshavethosetraits? Benchmark data has proven that successfulcompanies share some common features when itcomes to innovation and their internal processcapability.Fiveof theseprovensuccess ingredientsofagoodprocessare:1. Customerdrivenfocus2. Upfrontactivities3. ToughGo/Killdecisionpoints4. Trulycross‐functionalteams5. Topmanagementinvolvement

These success traits should be built into anorganizations’DNA.Aretheybuiltintoyours?

©2015Stage‐GateInternational Page2Stage‐Gate®andtheInnovationPerformanceFrameworkareregisteredtrademarksofStage‐GateInc.www.stage‐gate.com

1. CustomerDrivenFocusCustomerfocussedinnovationdrivessuccessratesthatare twiceashigh in themarketplaceandhaveamuchhigher productivity rate (4.5 times). It is the numberone key to success and profitability. The goal is tomaintain a sharp focus on developing and deliveringnew products that are differentiated, solve majorcustomer problems and offer compelling valuepropositionstothecustomer.How: A customer driven focus is built into the entireIdea‐to‐Launch process. Beginning right at the startwiththefront‐endoftheprocess,ideas,bothinternallyand externally generated, are validated by voice‐of‐customer analysis. A customer driven focus continuesin each subsequent stage of the process by havingconstant interactions with the customer, for example:concept screening and testing, early and rapidprototypetestingtoensurethedesignisstayingtruetowhat the customer wants and will pay for, gaugingcustomer reaction and purchase intent via workingprototypesandcustomertrials. Key questions are asked and answeredthroughouteachstageoftheprocesstoensurethatthedevelopmentteamunderstandswhatmainbenefitsareimportant to the customer. This ensures that the newproduct/servicewilloffernewanduniquebenefitsthatprovidesuperiorvalue to thecustomerandarebetterthanthecompetition’soffering.

2. UpfrontActivities Success or failure of a new product is oftendetermined before it even enters the developmentstage.Itisthecriticalupfrontactivitiesthatdefinetheattributes, features and benefits that will comprise awinningnewproductandprovideanunderstandingofthecustomer’sperceivedvalue.

Companieswithsolidupfrontactivitiesbuiltintotheirinnovationprocessfindthisalsoreducestimetomarket. It does so by sharpening the product andproject definition; ensuring the product specs arecorrect; confirming product design early in theprocessandminimizingexpensivelastminutechangesand project scope creep. Top performing companiesavoidrushingintoproductdevelopmentthinkingthattheyknowbestwhat themarketwants. Instead, theytakethecriticalstepstoensureawell‐definedproductdefinition exists that has been validated with solidinput from marketing. Project scope creep andexpensive, time‐delaying, last minute changes thatcould have been prevented with better informationareminimized.

How:Upfrontactivitiesarebuiltrightintotheprocesswith the necessary time and resources allocated. Athorough analysis of the market, competition andcustomer is undertaken in advance of thedevelopmentoftheproduct.Activitiessuchasconceptscreening and testing, feasibility assessments fortechnical, legal, financial and manufacturing are alsoconducted to create a solidbusiness case to evaluatetheproject’smeritsbeforedevelopmentworkbegins.Time is spent to understand what a winning newproduct must be. In many top performing firms oneoutcome of building into the process a strongcustomerdrivenapproach,supportedbysolidupfrontactivities,isthecreationofaclear,fact‐basedproductdefinition. This then becomes a key output ordeliverableforthisstageofwork.3. ToughGo/KillDecisionPointsToo many projects, not enough resources; pipelinemoving too slowly; projects that are never killed.These are all commonsymptoms that the innovationgovernance system is not working properly. TopperformersensurethattheyhaveinplaceclearGo/NoGo decision points (or Gates) and clearly identifieddecision makers. Decisions are made at their Gatemeetings. They understand that effective Gatemeetingsarecriticaltoenablingtheentireprocess.Infact,havingtoughGo/NoGodecisionmeetingsisoneofthetopdriversofasuccessfulStage‐Gateprocess.

How:Move towardshaving ‘GateswithTeeth’.Selectdecision points throughout your process wheremanagementandproject teamscancometogether toreviewaprojectanditsmeritsforfuturefunding.Eachprojectisreviewedagainstcleardecisioncriteriaandthe project’s resource needs are compared againstother competing projects in the pipeline. Fact baseddecisions are made at these meetings. The decisionmakersarethepeoplewhoowntheresourcesandcanmaketheallocationdecisionsrequiredbytheprojectteamstomovetheirprojectforward.Timelydecisionsaremadeandprojectsareactuallyapprovedorkilled.

4. TrulyCross‐FunctionalTeamsInnovationprojectsarecomplexandaffectorrequireinput from many different parts of an organization.Therefore, the way project teams are organized andhow well team members work together will impactbothtime‐to‐marketandprojectsuccessrates.Strong,talented project leaders who are accountable for aproject’s success leading truly cross‐functional teamsis a well‐known success driver. Unfortunately manycompaniesfindtheydonothaveenoughofthesetypes


of skills within their innovation teams andorganizations. Some companies still follow afunctional silo resource allocation approach toprojects.How: Ensure your organization has clearly identifiedproject leaders with the skills to manage complexprojects under tight timelines. In today’s globaldevelopment environment teams need to have thecross‐functional skills and resources necessary toensurethattheycanbesuccessful.Removeroadblocksthatmight hinder teammembers and, in turn, ensureprojectleadersandteammembersareaccountablefortheresults.

5. TopManagementInvolvementItallstartsat thetop.Topmanagementmustnotonlybe clearly committed to product innovation, they alsoneed to demonstrate strong and visible support. Itcannot be understated. Without this visible supportsuccess rates will decrease. Senior managementmust‘walkthetalk’.How: The leadership is responsible to set andcommunicate the innovation strategy and direction,allocatethenecessaryfundingandprovideguidanceonthe balance between short term needs and long termgoalsoftheorganization.Seniormanagementmustalsomaintain the right balance between oversight ofinnovation projects and empowering teams to get thejobdone.Executivesneed to set thepace andprovidethesupportnecessaryforsuccess.

Stage‐Gate®–AnIdea‐to‐LaunchProcess3

Can an organization dramatically improve thequality, speed, and profitability of their new productprojects while driving down the risk of failure?Absolutely.

TheStage‐Gateidea‐to‐launchmodelistheindustrystandard for managing new product innovationexcellence. The ground‐breaking, widely implementedprocess expertly integrates numerous performancedriving best practices into an easy‐to‐understandrecipeforsuccess.Itsrobustdesignengagesusersofalldecision levels and functions, enabling qualityexecution, timely Go/Kill decisions, alignment andspeed.Theresult:Superiorproductsreachingmarketsfasterandmoreprofitably. Whether a company is developing game changingtechnologies and products that alter competitivelandscapesandcreatenewmarkets,oritisintroducingnew‐to‐company products to generate new revenuestreams, or whether it is defending market share byreleasingimprovedversionsofproducts,theStage‐Gatemodel improvesperformanceandreducesyourriskoffailure.

Inadditiontothebenefitsthatarewell‐documentedbyresearchandbenchmarkingresultsmanycompaniesthathaveimplementedandadoptedanauthenticStage‐Gateprocessrealizethefollowingbenefits:4

Acceleratedspeed‐to‐market Increasednewproductsuccessrates Decreasednewproductfailures Increasedorganizationaldisciplineandfocusonthe

rightprojects Fewererrors,wasteandre‐workwithinprojects,less

scopecreep Improvedalignmentacrossbusinessleaders Efficientandeffectiveallocationofscarceresources Improvedvisibilityofallprojectsinthepipeline Improvedcross‐functionalengagementand

collaboration Improvedcommunicationandcoordinationwith

externalstakeholders.

Figure1: ATypicalStage‐Gate®Process


HowDoesaStage‐GateProcessWork?The Stage‐Gate process is based on the belief thatproduct innovationbeginswith ideasandendsonceaproduct is successfully launched into the market.(SeeFigure1) The Stage‐Gate model breaks down the oftencomplex and chaotic process of taking an idea frominception to launch into smaller stages (where projectactivities are conducted) and gates (where businessevaluations and Go/Kill decisions are made). In itsentirety, Stage‐Gate incorporates upfront pre‐development activities (customer driven businessjustification and preliminary feasibilities), developmentactivities (technical, marketing, and operations) andcommercialization activities (market launch and postlaunch learning) into one complete, robust businessprocess.

TheStages A project leader drives the project through eachstage. Each stage is designed to collect specificinformationtohelpmovetheprojecttothenextstageordecision point. Each stage is defined by the activitieswithin it. These activities are completed in parallel(allowing for projects to quickly move towardcompletion) andare cross‐functional. The activities aredesignedtogatherinformationandprogressivelyreduceuncertainty and risk. Each stage is increasingly morecostly and emphasizes collection of additionalinformation to reduce uncertainty. The results of thisintegrated analysis become a set of deliverables thatprovidetheinputtodecisionmeetings(Gates). In the typical Stage‐Gatemodel, there are5 stages,inadditiontoarobustfront‐endorIdeastage.

IdeaGeneration Pre‐workdesignedtodiscoveranduncoverbusiness

opportunitiesandgeneratenewideas.Stage1–Scoping Quick, inexpensive preliminary investigation and

scopingoftheproject.Itislargelydeskresearch.Stage2–BuildtheBusinessCase Detailed investigation involving primary research

(customer, market and technical) leading to aBusiness Case that includes product and projectdefinition, project justification, and the proposedplanfordevelopment.

Stage3–Development The actual detailed design and development of the

new product and the design of the operations orproduction process required for eventual full scaleproduction.

Stage4–TestingandValidation Tests or trials in the lab, plant and marketplace to

verify and validate the proposed new product,brand/ marketing and production or operationsplans.

Stage5–Launch Commercialization: the beginning of full scale

operationsorproduction,marketingandsales.

TheGates Preceding each stage, a project passes through agate where a decision is made whether or not tocontinue investing in the project (a Go/Kill decision).These serve as quality‐control checkpoints with threegoals: ensure quality of execution, evaluate businessrationale,andapprovetheprojectplanandresources. Eachgatehasadifferentpurpose.Forexample,Gate1isagentle,earlyscreenofnewideaswhileGate3isatougher, business rational driven decision gate that

Figure2: SampleGate2Scorecard

Source:SGNavigator™(seewww.stage‐gate.com)


approves projects to enter into the more expensivedevelopmentstage.EachGateis,however,structuredinasimilarway:Deliverables:Theprojectleaderandteamprovidedecisionmakers (Gatekeepers) with the high‐level results of theactivitiescompletedduringthepreviousstage.Decision Criteria: Every project is measured against aclearlydefinedsetofsuccesscriteria.Thecriteriashouldberobusttohelpidentifywinningproductssooner.Theauthentic Stage‐Gate process typically incorporates sixprovencriteria:(SeesamplescorecardinFigure2)

StrategicFit ProductandCompetitiveAdvantage MarketAttractiveness TechnicalFeasibility Synergies/CoreCompetencies FinancialReward/Risk.

Outputs:Adecisionismade(Go/Kill/Hold/Recycle).IfaGo decision is made then new product developmentresources are committed to continue the project. Theaction plan for the next stage is approved. A list ofdeliverablesandadateforthenextgatemeetingisset. The Stage‐Gate model is designed to improve thespeed and quality of execution of product innovationactivities. The process helps project teams prepare theright information, with the right level of detail, at theright gate to support the best decision possible. Theprocess empowers the project teamby providing themwith a roadmap with clear decisions, priorities, anddeliverables at each gate. High quality deliverablessubmitted to Gatekeepers enables better, more timelyand fact‐based decisions for allocating capital andoperatingresources. Modern Stage‐Gate models also embrace andstronglysupporttheneedtobe:

Fast and flexible – multiple processes exist tomatchprojectcomplexityandrisk

Customerdriven‐acustomercentricapproachisbuiltthroughouttheentireprocess

Dynamicandvibrantfront‐end–anideationstagethat is both internally and externally focussed togeneratethebestnewideas.

ACompleteInnovationPerformanceFramework5

The conceptualization and development of newproducts and technologies is one of the morecomplicated initiatives an organization can undertakeas new ideas migrate from ideation through thefeasibility, development and scale‐up stages and,finally, intocommercialization.TheStage‐Gateprocessis a time tested and proven way to guide anorganization though this. However, top performing

companiesalsorealizethatthisisonlyonepiece,albeita critical part of their internal innovation capability.The Stage‐Gate process cannot be successful inisolation from other critical innovation capabilities.Insteadtopperformershavealsotakenstepstoensurethat their innovation strategy, portfolio managementand culture is aligned and integrated with theirStage‐Gateprocess.(SeeFigure3).

These four, key internal pillars (InnovationPerformanceFramework)combineddriveinnovationvalue on a sustainable basis. Top performingcompanieshavemasteredallfourcriticalcapabilities–haveyou?

Footnotes:1. Stage‐Gate®andInnovationPerformanceFrameworkareregisteredtrademarksofStage‐GateInc.

2. Stage‐Gate process was originally created by Stage‐GateInternational’s co‐founder Robert Cooper. For acomprehensive overview seeWinning atNew Products, 4thEdition

3. Thissectionisadaptedfromhttp://www.stage‐gate.com/resources_stage‐gate_full.php

4. Additionalbenchmarkingdataandarticlescanbefoundonwww.stage‐gate.com.

5. Edgett,S.J.“Innovation:ACriticalCapability”,TheEuropeanBusinessReview,January‐February,pp.28‐30,2014

AbouttheAuthor

ScottJ.Edgett,Ph.D.isChiefExecutiveOfficeratStage‐GateInternationalandisinternationallyrecognizedasoneoftheworld's top experts in product innovation. A co‐author ofeight books and numerous articles, Dr. Edgett is a formerprofessor at the DeGroote School of Business atMcMasterUniversity. Formoreinformationvisit:www.stage‐gate.comEmail:scott.edgett@stage‐gate.com

Figure3: TheInnovationPerformanceFramework™