15.6 Tools: The Stage-Gate ® Process

Great companies generate a lot of new product ideas. Unfortunately, few product concepts ever make it to market. Even fewer succeed. Did you know that almost half of a company's NPD investment is dedicated to projects that fail? 1 The longer a concept is being evaluated, the more scarce resources it consumes. To preserve resources and strengthen your overall development efforts, you need to identify the weak concepts and remove them from the development pipeline as soon as possible. How do you do this? Answer: You put "stage gates" in place. Developed by the Product Development Institute, the stage-gate process is used by leading companies worldwide. 2 Many companies, however, lack the discipline to effectively employ the stage-gate process.

Figure 15.9 depicts the NPD process with gates. Each stage gate is more than a product review; it is a decision point. Your goal: Discuss the brutal facts and make the tough go/kill decisions on each product concept. You may be wondering, "What role do suppliers play in the stage-gate process?" As members of your NPD team, suppliers share technical insight regarding both products and processes to help you fill out a stage-gate scorecard like the one shown in Table 15.10. Using stage-gate scorecards can help you evaluate individual concepts and prioritize them within your portfolio. To help you get the most out of the stage-gate process, the Product Development Institute has developed a Top 10 list of best practices (see Table 15.11). 3 Some of these may sound familiar. As you read through the list, ask yourself, "Where could suppliers help you achieve higher levels of performance?"

Figure 15-9: The NPD Process with Stage Gates
Table 15-10
A Simplified Sample Stage Gate Scorecard
Must Meet Criteria Evaluation Decision Rule
• Fits product strategy Yes No If no, kill
• Technical feasibility Yes No If no, kill
• Positive return-to-risk ratio Yes No If no, kill
Should Meet Criteria Evaluation Decision Rule
• Product Advantage 1 2 3 4 5 6 7 8 9 10
• Market Attractiveness
    •Market Size 1 2 3 4 5 6 7 8 9 10
    •Market Growth 1 2 3 4 5 6 7 8 9 10
• Synergies
    •Marketing Portfolio Effects 1 2 3 4 5 6 7 8 9 10
    •Manufacturing Economies 1 2 3 4 5 6 7 8 9 10
• Financial Considerations
    •Expected Profitability (NPV) 1 2 3 4 5 6 7 8 9 10
    •Certainty of return 1 2 3 4 5 6 7 8 9 10
Total Score Possible: 7-70 Compare to other concepts to prioritize investment
Table 15-11
Stage-Gate Best Practices: A Top 10 List
Practice Description
Design a Robust Process Spend time up front to build a rigorous process. GIGO (garbage in, garbage out) applies, especially with respect to your scorecard.
Obtain Management Support If managers—at all levels—don't support your process, you won't achieve success.
Dedicate Sufficient Resources Don't underestimate resource requirements, especially the amount of time team members will need to dedicate to evaluating products.
Define Roles You need input from key stakeholders to evaluate product concepts. They need to know exactly what their roles and responsibilities are.
Communicate Effectively Don't assume people are on board—or even understand what is going on. Follow a 3Cs communication strategy: Clear, Concise, and Continuous. People need to know how the project affects them.
Track Performance If you want results, you need measures that communicate expectations and motivate desired behaviors.
Recruit an Executive Sponsor You need a champion with clout to provide guidance and push for results.
Evaluate Company Culture Evaluate past initiatives to see how company culture played a role in success or failure. Take the lessons learned to heart.
Create Early Wins Create and communicate early wins to help replace resistance with enthusiasm.
Celebrate Successes Celebrate your successes. Give people who contributed to the success the opportunity to stand in the spotlight.

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