Cooper: Chapter 4

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Cooper Chapter 4

• The Stage-Gate New Product Process
• Cooper, Robert G., Product Leadership, Perseus,
  2000

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Challenges of Chapter 4

• How to translate the 13 (67) critical success
  factors into an operational, effective NPD
  process?
• How to build in quality of execution?
• How to build in strong market orientation?
• How to build in good predevelopment homework?
• How to ensure process is implemented and
  followed?

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Goals of an NPD Process

• Exemplary quality of execution
• Sharper focus, better project prioritization
• Strong market orientation
• Good up-front homework sharp, early and stable
  product definition
• Fast-paced parallel processing
• True cross-functional team approach
• Products with competitive advantage
• A fast-paced and flexible process

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The Stage-Gate Process

• A conceptual and operational model for moving a
  new product project from idea to Launch
• Breaks the process into a predetermined set of
  stages
• The entrance to each stage is a gate

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The Stage-Gate Process
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The Stage-Gate Process
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The Stage-Gate Process

• Stages
• Each stage consists of a set of parallel
  activities undertaken by people from different
  functional areas
• Each stage is designed to gather information
  needed to advance the project to the next gate
• Each stage is cross-functional no stage owned by
  a functional area
• Generally, each stage costs more than the
  preceding one

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The Stage-Gate Process

• Gates
• Precede each stage
• Project review and decision meetings
• Go/Kill decision points in the NPD process
• Usually manned by senior managers from different
  function areas the owners of the resources

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The Stages

• (Stage 0 Ideation)
• Stage 1 Preliminary investigation
• Stage 2 Detailed investigation (build the
  business case)
• Stage 3 Development
• Stage 4 Testing and validation
• Stage 5 Full production and market launch

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Gates Three Main Elements

• A set of required deliverables
• Visible, standard by gate, decided at the output
  of previous gate
• Criteria against which the project is judged
• Must-meet and should-meet criteria
• Defined outputs
• A decision, an action plan, resources, list of
  deliverables, date for next gate

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Stage 0 - Ideation

• Ideas make or break NPD
• Four components of ideation
• Establish a focal point
• Assign responsibility to stimulate, generate,
  handle new product ideas
• Identify the sources
• Who supplies good ideas? Who should?
• Grease the path
• Stimulate and facilitate the flow of new ideas
• Set up an idea and capture system
• Easy submission, periodic review, provide feedback

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Gate 1 Initial Screen

• A gentle screen
• A handful of key must-meet, should-meet criteria
• Strategic fit?
• Market attractiveness?
• Technical feasibility?
• Killer variables?
• The first decision to commit resources

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Stage 1 Preliminary Investigation

• Preliminary market assessment
• Quick scope of marketplace market existence,
  probable market size, market acceptance
• Preliminary technical assessment
• Propose a technical solution, map out route,
  assess costs, risks, time
• Preliminary business assessment
• Quick financial assessment estimate sales,
  costs, investment, payback, risk

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Gate 2 Second Screen

• A somewhat more rigorous screen
• A repeat of Gate 1, but now with the deliverables
  of Stage 1
• A checklist and scoring model facilitate decision
• If decision is Go, project moves to heavier
  spending stage

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Stage 2 Detailed Investigation

• Build the business case opens the door to
  product development the critical homework stage
• Key actions
• User needs-and-wants studies
• Value-in-use studies
• Competitive analysis
• Concept testing
• Detailed technical assessment
• A manufacturing (or operations) assessment
• A detailed financial analysis

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Stage 2 Business Case

• What is the product and who will it be sold to?
  (the product definition)
• Target market
• Product concept and benefits delivered
• Positioning strategy
• Products features, attributes, requirements
• Why invest in this project?
• Thorough project justification
• How will it be undertaken, when, by whom, at what
  cost? (the project plan)

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Gate 3 Decision on the Business Case

• The money gate
• The final gate prior to Development
• A Go here means go to a heavy spend
• A Go yields a sign-off on product definition
• Gate 3 gatekeepers usually the leadership team of
  the business

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Stage 3 - Development

• Implementation of the Development plan and
  physical development of the product
• Main deliverable is a prototype product
• Development plan
• WBS, schedule, resources, milestones
• Emphasis on technical work
• Plan includes periodic project reviews

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Gate 4 Post-Development Review

• A check on the progress and continued
  attractiveness of the product and project
• Development work reviewed and checked
• Work completed in a quality fashion?
• Product consistent with original definition
  (product design specifications)?
• Plans for test and validation
• Plans reviewed for marketing/manufacturing

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Stage 4 Testing and Validation

• Tests and validates entire commercial viability
  of the project
• The product, the production process, customer
  acceptance, the economics of the project
• Type of activities
• In-house product tests
• User tests, field trials
• Pilot production
• Pretest market, test market, trial sell
• Revised financial analysis

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Gate 5 Precommercialization Business Analysis

• Opens the door to market Launch and full
  production
• The final point at which project can still be
  killed
• Scrutinizes the quality of testing and validation
  results
• Focus largely on expected financial return,
  appropriateness of start-up plans
• Operations/marketing plans reviewed for
  implementation

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Stage 5 Full Production and Market Launch

• Implement production/operations plan and the
  marketing Launch plan
• Execute supporting plans distribution/
  logistics, quality assurance, post-Launch
  monitoring
• Begin implementation of longer term Life Cycle
  Plan (product improvements, variants, etc.)

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Post Implementation Review

• New product project terminated (6 to 18 months
  after commercialization?)
• Project team disbanded
• Product a regular product
• Project and products performance reviewed
• Gap/variances between actual/projected
  performance identified, explored
• Postaudit conducted a learning process

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New Product Metrics Post-Process

• Post-process metrics (How well are we doing in
  NPD?)
• Timeliness
• Cycle time, on-time launch, actual v. fastest
  possible
• Development and capital costs
• Financial
• Success rates
• Development projects that succeed, launched
  products that succeed
• sales from new products
• of growth generated by new products

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New Product Metrics In-Process

• In-process metrics (Is our process really
  working?)
• Quality of gate meetings
• Degree of deviation from NP process
• Proportion of projects really in NP process
• Timeliness of projects reaching gates
• On-budget performance

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Summary
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The Stage-Gate Process
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The Stage-Gate Process
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Success Factors Built-In to NPD Process

• More emphasis on homework, predevelopment
  activities
• Multidisciplinary and cross-functional
• Parallel processing
• Strong market orientation
• Product definition step built in
• Emphasis on superior, differentiated product
• More focus gates weed out poor projects early
• Strong focus on quality of execution throughout
• International element can be accommodated
• Process flexible, designed for speed

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Third Generation Stage-Gate Process

• 3rd generation Stage-Gate is a natural evolution
  of the process just described
• After the NPD process has been established and
  used, it may evolve to increase efficiency
• Speed up the process
• More efficiently allocate resources

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Third Generation Stage-Gate Process The
Natural Evolution

• Fundamentals of the 3rd generation process
• Flexibility
• Fuzzy (conditional) gates
• Fluidity
• Focus (project prioritization and project
  management)
• Facilitation
• Forever green (regenerating, improving)
• (But dont change until current process is
  working!)

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Third Generation Stage-Gate Process Flexibility

• Each project routed through the process according
  to its specific risk levels and needs a risk
  management process
• Example categories of projects
• System change requests
• Fast-track projects
• Major projects

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Third Generation Stage-Gate Process Fuzzy Gates

• Fuzzy not just binary
• Go decisions can be conditional on some future
  event occurring
• Decision can be made in the absence of perfect
  information, given a conditional Go
• Absent information reported back to gatekeeper
  when available
• Project gets full Go when information satisfactory

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Third Generation Stage-Gate Process Fluidity

• Process is fluid and adaptable
• Activities not married to specific stages
• Some overlapping of stages
• Project may be in two stages at once

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Third Generation Stage-Gate Process Focus

• Maintains funnel concept
• Poor projects weeded out
• Resources allocated to best projects
• Tough Go/Kill decisions, coupled with effective
  portfolio management
• Gates consider more than just the merits of the
  one project under review

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Third Generation Stage-Gate Process
Facilitation

• Recognizes the need of a designated process
  facilitator
• The gate meister
• Facilitator makes sure the process works
  efficiently and effectively
• Facilitator facilitates every important gate
  meeting to make sure the process works
• Facilitator provides for continuous improvement
  of the process

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Third Generation Stage-Gate Process Forever
Green

• Need to constantly review and energize the NPD
  process
• Audit and overhaul

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The End