What is the Stage-Gate System?

The Stage-Gate System is a conceptual and operational road map for moving a new-product project from idea to launch. It is a new management tool developed by “Dr. Robert G. Cooper and Dr. Scott J. Edgett of the Product Development Institute Inc,”:http://www.prod-dev.com/about.shtml pioneers in innovation management and portfolio management in the new product development (NPD) space. Today top corporates around the world are increasingly adopting this tool while developing and launching new products. This article provides a brief overview of this new management tool.

The need for lean, rapid and profitable new product development has never been greater than it is today. Product life cycles are shorter, competition is more intense and customers are more demanding. Companies that fail to innovate face a grim future. The problem is that winning with new products is not easy. An estimated 46% of the resources that companies devote to the conception, development and launch of new products go to projects that don’t succeed – they fail in the marketplace or never make it to market.

Leading companies have overhauled their new product processes, incorporating the critical success factors discovered through best practice research, in the form of a Stage-Gate new product process. According to a Product Development & Management Association (PDMA) best-practices study, almost 70% of leading US product developers now use some type of Stage-Gate process.
A Stage-Gate System is a conceptual and operational road map for moving a new-product project from idea to launch. Stage-Gate divides the effort into distinct stages separated by management decision gates. Cross-functional teams must successfully complete a prescribed set of related cross-functional tasks in each stage prior to obtaining management approval to proceed to the next stage of product development.

Product innovation begins with an idea and ends with the successful launch of a new product. The steps between these points can be viewed as a dynamic process. Stage-Gate divides this process into a series of activities (stages) and decision points (gates).

Stages are where the action occurs. The players on the project team undertake key tasks to gather information needed to advance the project to the next gate or decision point. Stages are cross-functional (there is no research and development or marketing stage) and each activity is undertaken in parallel to enhance speed to market. To manage risk, the parallel activities in a certain stage must be designed to gather vital information – technical, market, financial, operations – in order to drive down the technical and business risks. Each stage costs more than the preceding one, resulting in incremental commitments. As uncertainties decrease, expenditures are allowed to rise and risk is managed.

Following idea generation, there are five key stages:

*Stage 1:*
Scoping: A quick and inexpensive assessment of the technical merits of the project and its market prospects.

*Stage 2:*
Build Business Case: This is the critical homework stage – the one that makes or breaks the project. Technical marketing and business feasibility are accessed resulting in a business case which has three main components: product and project definition; project justification; and project plan.

*Stage 3:*
Development: Business case plans are translated into concrete deliverables. The product development activities occur, the manufacturing or operations plan is mapped out, the marketing launch and operating plans are developed, and the test plans for the next stage are defined.

*Stage 4:*
Testing and Validation: The purpose of this stage is to provide validation of the entire project: the product itself, the production process, customer acceptance, and the economics of the project.

*Stage 5:*
Launch: Full commercialization of the product – the beginning of full production and commercial launch.

Preceding each stage is a decision point or gate which serves as a Go/Kill and prioritization decision point. Gates are where mediocre projects are culled out and resources are allocated to the best projects. Gates deal with three quality issues: quality of execution; business rationale; and the quality of the action plan.


The structure of each gate is similar:

*Deliverables:* Inputs into the gate review – what the project leader and team deliver to the meeting. These are defined in advance and are the results of actions from the preceding stage. A standard menu of deliverables is specified for each gate.

*Criteria:* What the project is judged against in order to make the go/kill and prioritization decisions. These criteria are usually organized into a scorecard and include both financial and qualitative criteria.

*Outputs:* Results of the gate review. Gates must have clearly articulated outputs including: a decision (go/kill/hold/recycle) and a path forward (approved project plan, date and deliverables for the next gate agreed upon).

The Stage-Gate Product Innovation system has been referred to as the single most important discovery in product innovation – empowering almost 80% of all North American companies to achieve improved returns on their product development dollars and to achieve new growth.

When implemented properly, Stage-Gate delivers tremendous impact:
* Accelerates speed-to-market
* Increases likelihood of product success
* Introduces discipline into an ordinarily chaotic process
* Reduces re-work and other forms of waste
* Improves focus via gates where poor projects are killed
* Achieves efficient and effective allocation of scarce resources
* Ensures a complete process – no critical steps are omitted

The results: A more effective, efficient, faster process that improves your product innovation results.
This is just an overview. There are many books on the subject as well as a lot of resources on the Internet. For more information please visit the website of “Product Development Institute Inc.”:http://www.prod-dev.com/about.shtml
(Source: Product Development Institute Inc)