Keynote speaker and coach Peter is the author of the number 1 bestselling project management book ‘The Lazy Project Manager,’ along with many other books. He has built and led some of the largest PMOs in the world with organizations such as Siemens, IBM, UKG, and now Dayforce, where he is the VP Global PMO. He has also delivered over 500 lectures worldwide in 26 countries and has been described as ‘perhaps the most entertaining and inspiring speaker in the project management world today.’
Risk is always prevalent, but when you are involved in creating something new, different, and unique – such as a brand-new product – risk is even more of a concern.
We will explore the realities of risk management and overlay the standard of a stage-gate process to alleviate such risks. We will also consider the best approach to deploy such a model for future control and risk management.
What is a Stage Gate Model?
The stage gate model provides a structured approach to managing innovation.
It offers a simple, visible, and logical step-by-step process for assessing development ideas and progress. With good insight, it also allows its users to decide what should progress through the development process and what should not.
The stage gate phrase refers to a sequential set of steps that allows for reporting, review, and, where appropriate, permission to progress to the next step. Therefore, the stage gate process is one of control, discipline, and quality, with only the best ideas progressing. Investment is made where it offers actual value.
The number of gates placed on the path to product release varies, but any product development life cycle should pass through sufficient ‘gates’ to ensure sound management is applied.
This enables early identification of great ideas, facilitates efficient resource investment at each stage (without over- or under-commitments), and increases the likelihood of a successful product development outcome.
The Power of the Stage-Gate Process and Why it is Crucial for Risk Mitigation
Risks often arise when multiple cross-functional teams and resources are utilized in a development program. As a result, the communications model rapidly becomes complex, and miscommunications may occur.
Working with one organization, it quickly became apparent that too many local initiatives were underway without any clear understanding of what was approved and what was not, what was productive and what was duplicated.
Introducing a straightforward stage-gate process allowed each initiative to be correctly placed in the development cycle and allowed the business to assess investment costs (people and time).
The process of wriggling this complicated range of activities was challenging, but we all know the saying, “You can’t manage what you can’t measure.” This was very true in this case.
The business swiftly accepted the concept of stage-gate as checkpoints to assess progress and feasibility, and the product development roadmap slowly became clear to all.
It aided the alignment of all the cross-functional teams and resources and gave the executives an easy-to-consume understanding of investments, progress, and risks.
Identifying and Evaluating Risks during Product Development Stages
There are several benefits to this mechanism for managing risks.
- Pre-emptive risk assessments – the ability to identify potential technical, market, resource, and financial risks at each stage can be built into the process.
- Utilizing standard tools and techniques for evaluating these risks – adding a common standard for cross-product assessment facilitates decision-making.
- Adopting the review and ‘go/no-go’ decisions at each stage gate prevents costly mistakes in later stages and balances investment flow.
The natural order for initiatives is to start, keep going, solve problems as they occur, keep going, and eventually (hopefully) deliver some form of success.
Perhaps with a single product, that might work, but organizations typically run multiple product development paths at varying developmental stages. Therefore, the outcome of a disorganized and uncontrolled state is one of expensive errors and product failures.
Discipline allows for risks to be understood, assessed, mitigated, and resolved, or progress can be halted if the risks are too high.
Implementing Best Practices for a ‘Value Add’ Stage-Gate Process
Assuming you are convinced that a stage gate process for new product development is the right way, how exactly do you proceed?
Start with a simple stage-gate model that you can build on. The key here is to begin with simple things. You can add more detail once the process is fully adopted and you have gained experience.
For your stage gate product development path, perhaps begin with a step process like this one:
- Idea
- Business Case
- Proof of Concept
- Development
- Launch
The idea stage entails gathering all potential thoughts from a broad community. The business case requires a formalized submission of value to the investment. The proof of concept tests the theory in a small but practical way. The development takes the product to the end state, and the launch releases it to the ‘customers.’
At each stage gate, there are several potential outcomes:
- Go
- Stop
- Hold
- Rework
‘Go’ approves the progression to the next stage, ‘stop’ ends the investment, ‘hold’ suspends the investment temporarily, and ‘rework’ requires the current stage to be repeated with corrections and changes.
The key here is a managed pause in the cycle to consider how the product development is progressing and balance the organization’s overall portfolio. This approach ensures that the best ideas make it to fruition cost-effectively
Low-Risk Product Development
Adopting a robust stage gate process can add significant value to a business and significantly reduce risks.
Ensuring stakeholder engagement and regular communication to address issues early on helps make informed decisions at critical development stages and guarantees balanced decision-making.
Developing clear criteria for each stage gate about what constitutes approval to ‘Go’ to the next stage and what constitutes success allows all contributors to think and plan consistently.
Analyzing and reporting data and metrics to support decision-making at each stage aids rapid and better decision-making.
Fundamentally, a stage gate process in product development is about investing in the best and filtering out the lesser ideas to achieve fast benefits for the business.