Question

Explain the “stage-gate” process for managing new product development. And,
specify two benefits of this process and one drawback.

Answer 1

The Stage-Gate Model or Phase-Gate Model is a value-creating business process that, when applied effectively, drives the development and launch of a steady stream of successful new products. It is considered the ‘industry standard’ and is the world’s most widely bench marked, referenced and implemented innovation management model. Its adoption across numerous industries and by companies of all sizes has resulted in one of the world’s largest bodies of product innovation knowledge.

The traditional state-gate process has five phases with four gates. The phases are:

Scoping:- During this step the main goal is to evaluate the product and its corresponding market. The researchers must recognize the strengths and weaknesses of the product and what it is going to offer to the potential consumer. The competition must also be evaluated during this phase. It is important for the researchers to understand who and what is already in the market as well as what can potentially be developed.

Build business case:- Once the new product passes through the gate at the end of the scoping phase, the next phase in the phase-gate process is building the business case and plan. This is the last phase of concept development where it is crucial for companies to perform a solid analysis before they begin developing the product. This phase is generally difficult, complex, and resource-intensive. However, companies must put forth a strong effort in this phase for it is directly related to the success and development of a new product. There are four main steps that comprise this phase: product definition and analysis, building the business case, building the project plan, and feasibility review.

Development:- During the development phase, plans from previous steps are actually executed. The product's design and development is carried out, including some early, simple tests of the product and perhaps some early customer testing. The product's marketing and production plans are also developed. It is important that the company adheres to their overall goal of the project, which is reflected in these production and marketing plans. Doing this will allow them to definitively decide who they will market their product to and how they will get the product to that target audience. The development team maps out a realistic timeline with specific milestones that are described as SMART: specific, measurable, actionable, realistic, and time-bound.

Testing and validation:- This phase provides validation for the entire project. Areas that will be evaluated include: the product itself, the production/manufacturing process, customer acceptance, and the financial merit of the project. This phase includes three types of testing: near testing, field testing, and market testing.

Launch:- The product launch is the culmination of the product having passed all previous gates. The producer must come up with a marketing strategy to generate customer demand for the product. The producer must also decide how large they anticipate the market for a new product to be and thus determine the size of their starting volume production.

Benefits of Using a Stage-Gate Model for New Product Development:-

• Better in-market success (new product sales and profits)
• Better in-company project success (project speed, scoping, and budget)
• Greater portfolio visibility enabling better governance agility
• Improved in-company cross-functional team collaboration
• Improved collaboration with external development partners

One problem with the state-gate process is the potential for structural organization to interfere with creativity and innovation, as overly structured processes may cause creativity to be reduced in importance and to hinder the largely iterative process of innovation.

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