Bringing Value to Life
Chief Technology Officer
Paul Heller #NPDSuccess
Gated Process Basics & Beyond
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• How, if executed correctly, gated decision-making can reduce risk and create funnels not tunnels, challenge status quo processes that need to evolve to be more adaptable, and infuse “Lean” processes into innovation planning.
• The importance of optimizing scorecards cross-functionally and how to evaluate them, plus why skipping post-launch reviews is detrimental to capturing learnings for the future.
• How to recognize and avoid a financially-biased motivation to get a product launched.• How the Accolade® enterprise innovation management solution’s easy-to-use tools with
embedded proven best practices enable you to focus on key projects that have the greatest strategic fit and value.
What We’ll Cover Today
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Sustainable Innovation
High Margins
Differentiation
Innovation
Shrinking Profits
Commoditization
Shareholder Value
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12.4 12
7.2
16.5
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All Innovators Americas Europe APAC
% of shareholder return premium for innovative companies compared to industry peers (over three-year period)
Innovative Companies Outperform Industry Peers
Across the globe, more innovative companies outperform their peers by 12% for Shareholder Return.
2010 BCG Senior Executive Innovation Survey
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Barriers to Sustainable Market Differentiation
Innovation Execution
Portfolio “Bad Bets”
Too Few Good Ideas
Lack of Alignment
54%Most companies have gated innovation processes, but only 54% have processes that are ‘really’ used.
Product Development Institute
41%41% of products miss product launch deadlines.
Aberdeen Group
50%Across industries, only 50% of new products are profitable.
40%Across industries, 40% of resources spent are wasted on unsuccessful products.
Product Development Institute
79%79% of top managers say their company doesn’t have enough high-value projects in their portfolio.
Product Development Institute
2xAcross industries, low-performing companies introduce 2x as many incremental products as high performers.
Research & Technology Executive Council
80%80% of executives say they have a gap in alignment between strategy and product development activity.
Gartner Research
27%Most companies identify “areas of strategic focus” for innovation, but only 27% connect those to resource allocation.
Product Development Institute
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• Phases of work followed by formal checkpoints• One that reduces risk• Common Examples
• Stage-Gate• Phase-Gate
What is a Gated Process?
Stage 1Define
Concept
ConceptReview
Go to Dev
Stage 2Build Business
Case
Stage 3Development
Stage 4Test/Validate, Launch Prep
Stage 5Launch Execution
Go to Test/Val
Go To Launch
Stage 1Define
Concept
Initiation DeliveryStartup
PlanningMonitoring
& Controlling
Initiation Closing
Measure AnalyzeDefine Improve Control
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• Other examples• Six Sigma• PRINCE2• PMI PMBOK• Other
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• Decision makers are defined• Expectations are clear
• Purpose of the checkpoint• Responsibility of the decision makers
• Decision criteria are defined and well understood• Outcomes are defined and well understood
What Do We Mean by “Formal Checkpoints”?
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Rules of Governance
• What decisions will be made? • Who will make them?• What decision rules will be
followed?• What criteria will be used for
decisions?• What analyses must be made
available to the decision makers?
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• It is a point in time for a Go/No Go decision to move to the next stage (and only the next stage)
• It is a decision to fund the next stage• Funding = resources: money, people, equipment, etc.• Gate keepers need to be sure to bring their check books (for you Europeans, that means a cheque
book)
• The decision is made by cross-functional representatives from different parts of the business who are responsible for evaluating inputs to the gate from their particular points of view
What is a Gate?
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• A clearly defined segment of work with well-defined outputs (deliverables) that gate keepers can use to evaluate and make a Go/No Go decision to move to the next phase
• Breaks the work in a series of simple, manageable steps• Contains recommended and mandatory actions• Comprises work that is cross-functional• Generates work outputs that are key to good decisions
• Based on best practices
What is a Stage (Phase)?
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Best practice companies succeed where others fail
The Objective is to Create a Funnel
Typical Companies Best Practice CompaniesIdeas In Ideas In
23%
12%
5%
2.5%
Percent of ideas that make it to feasibility
Percent of ideas that make it to development
46%
25%
20%
49%
Overall percent of resources spent on project failures
Percent of revenue from products introduced in the past 5 years
Resource & cost savings
ASK YOURSELF…
Does your company have a Stage-Gate system or a “Flood-Gate” system”?
Source: PDMA, PDI, Cap Gemini
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Challenges are About Idea Quality, Not Just Quantity
Discovery ScopingBuild
BusinessCase
Development Testing &Validation Launch
Gate 0 Gate 1 Gate 2 Gate 3 Gate 4 Gate 5
Idea Development Concept Development Concept-to-Launch
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“We Don’t Have the Courage to
Make a Kill Decision.”
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Common Problems With Gated Process Execution
“Our Process Takes Too Much Time and Keeps Me From my
‘Day Job.’”
“We Fail to Learn From Our
Process Missteps.”
“Our Cross-Functional Silos
Prevent Effective Teamwork.”
“We Never Kill Projects in Gate
Meetings.”
“We Don’t Have Enough Ideas to
Feed the Funnel.” “We’re Not Clear on the Purpose of
the Gate.”
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But Wait, There’s More…There’s one last thing that causes gated processes to break down that is often overlooked
There is too much focus on getting work done and
not enough on making good decisions
• Focus on the gate as well as the stage• This is not a project management problem• Project plans are about doing things, getting work done• Gates are about stopping “bad things” and only progressing with “good things”
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• How many of your organizations reward getting work done?
• Who wants to work on something that gets killed?
• Who wants to admit that money was spent on a bad idea?
A Product Development/Project Management Balancing Act
• How many of your organizations reward killing a bad project?
• Who wants to work on something that should be killed?
• Who wants to invest in losers?
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Make cross-functional teamwork real
Eliminate friction to ensure adoption
Gate decisions with “teeth”
Measure processes for continuous improvement
Four Principles of Effective Gated Processes
1.2.3.4.
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Four Principles of Effective Gated Processes1. Make cross-functional teamwork real
Retire
New Product Strategy
New Product Concept
Idea Campaign
Market Assessment
Discovery
Gate 1 Presentation
Technical Assessment
Product Definition
Business Case &
Scorecard
Scoping
Gate 2 Presentation
Market Assessment
Updated Product
Definition
Business Case &
Scorecard
Business Case
Gate 3 Presentation
Development Project Plan
CAD Design/ Recipe/BOM
Business Case & Scorecard
Development
Gate 4 Presentation
Testing Project Plan
Product Lifecycle Plan
MFG/Supply Chain Plan
Testing
Gate 5 Presentation
Market Launch Project Plan
Updated Volume Forecast
Business Case & Scorecard
Launch
Product Life-Cycle Plan
Post-Launch Review
Actual Sales
Customer Feedback
Post-Launch
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Four Principles of Effective Gated Processes2. Eliminate friction to ensure adoption
Retire
New Product Strategy
New Product Concept
Idea Campaign
Market Assessment
Discovery
Gate 1 Presentation
Technical Assessment
Product Definition
Business Case &
Scorecard
Scoping
Gate 2 Presentation
Market Assessment
Updated Product
Definition
Business Case &
Scorecard
Business Case
Gate 3 Presentation
Development Project Plan
CAD Design/ Recipe/BOM
Business Case & Scorecard
Development
Gate 4 Presentation
Testing Project Plan
Product Lifecycle Plan
MFG/Supply Chain Plan
Testing
Gate 5 Presentation
Market Launch Project Plan
Updated Volume Forecast
Business Case & Scorecard
Launch
Product Life-Cycle Plan
Post-Launch Review
Actual Sales
Customer Feedback
Post-Launch
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Four Principles of Effective Gated Processes
3. Gate meetings with “teeth”Business-Centric Gate Criteria• Does it fit our strategy?• Is the market attractive?• Can we compete?• Is the reward worth the risk?
“Companies with rigid stage gates average 130% more new product revenue than companies with loose processes.”
2010 Nielsen Study
Retire
New Product Strategy
New Product Concept
Idea Campaign
Market Assessment
Discovery
Gate 1 Presentation
Technical Assessment
Product Definition
Business Case &
Scorecard
Scoping
Gate 2 Presentation
Market Assessment
Updated Product
Definition
Business Case &
Scorecard
Business Case
Gate 3 Presentation
Development Project Plan
CAD Design/ Recipe/BOM
Business Case & Scorecard
Development
Gate 4 Presentation
Testing Project Plan
Product Lifecycle Plan
MFG/Supply Chain Plan
Testing
Gate 5 Presentation
Market Launch Project Plan
Updated Volume Forecast
Business Case & Scorecard
Launch
Product Life-Cycle Plan
Post-Launch Review
Actual Sales
Customer Feedback
Post-Launch
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Four Principles of Effective Gated Processes
4. Measure outcomes for continuous improvementProcess Effectiveness Metrics↑ Early-stage project “kill rate”↑ New product success rate↓ Average stage durations↓ Percent of project late to market
“You can’t improve what
you don’t measure”
Business-Centric Gate Criteria• Does it fit our strategy?• Is the market attractive?• Can we compete?• Is the reward worth the risk?
Retire
New Product Strategy
New Product Concept
Idea Campaign
Market Assessment
Discovery
Gate 1 Presentation
Technical Assessment
Product Definition
Business Case &
Scorecard
Scoping
Gate 2 Presentation
Market Assessment
Updated Product
Definition
Business Case &
Scorecard
Business Case
Gate 3 Presentation
Development Project Plan
CAD Design/ Recipe/BOM
Business Case & Scorecard
Development
Gate 4 Presentation
Testing Project Plan
Product Lifecycle Plan
MFG/Supply Chain Plan
Testing
Gate 5 Presentation
Market Launch Project Plan
Updated Volume Forecast
Business Case & Scorecard
Launch
Product Life-Cycle Plan
Post-Launch Review
Actual Sales
Customer Feedback
Post-Launch
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Determined by Corporate Culture
Governance that is Documented and Communicated Provides a Framework for Choice and Behaviors
Internal Governance
Codes of Conduct, Organizational Culture,
Ethics, Principles & Standards
Decision GovernanceStrategy and
Execution Decision Making
Operational Governance
Gate/Decision Meetings, Portfolio Reviews,
Strategy &Planning
External Governance
Industry Standards, Government
Requirements & Regulations
How is decision making managed?
What operational processes are used?
What external requirements must we fulfill?
What behaviors do we expect?
Individuals ProcessesChoices Organization
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How do you vet the financials?• You vet not just revenue, but all aspects of
the project in the gate meetings• Risks and critical success factors• Feasibility• Business case assumptions
• Gatekeepers need to look for bias• Apply business experience and expertise
• A key agenda for the gate meeting should be assessment of the data quality
• Preparation is critical. You can’t just show up…
• What project team does not want to make the financials look great?
• It’s human nature, especially when competing for resources
• Remember the culture aspect
What About Those Financials?
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• What are the assumptions/critical success factors that underpin your financials?
• Do you have an approach for monitoring those assumptions and tracking any changes – good or bad?
• How do you manage the impact of critical success factors changing? • Do you have an escalation management process in place?
Avoid the “Set It and Forget It” Approach
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Companies achieving high alignment between innovation strategy, business strategy & culture enjoy superior financial performance
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Alignment of Business Strategy and Innovation Matters
33% higher
enterprise value growth
17% higherprofit
growth
The Culture of Innovation, Booz & Co., March 2012
Business Strategy
Innovation Strategy
Culture
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Scorecards Reinforce Business Criteria
EXECUTIVES/GATEKEEPERS Review deliverables, evaluate projects, and make go/kill decisions during gate meetings
GATE SCORECARDS Used by decision-makers to ensure assessment of projects on standardized, best-practice criteria.
Benefit: Make better gate decisions, based on consistent, strategic, market-based criteria
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Better use of resourcesLess time spent working on bad ideasKill projects early on
One Goal of a Gated Process is to Increase Velocity
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People in the process know exactly what to do, what is expected of them
• Team members working in the stages• Gate keepers making the decisions
Create Even More Velocity With a CLEARLY DEFINED Gated Process
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You Cannot Improve Performance that You Don’t Measure
15%-30%Reduced
Time to Market
Up to
50%Improvement in
Success Rate
75%-100%Increased New Product Value
10%-20%Increased
Throughput
+Cost
Avoidance/Cost Savings
Improved pipeline throughput via time-
savings for innovation teams and lower R&D costs
Delivering on financial targets (volume, revenue, profit) and increased in-
market sustainability
Optimal resource utilization and reduction
of process delays; first mover advantage
Achieving price premium for higher-value/disruptive
new products; market share expansion
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Disrupters Driving Need for Speed and Business Agility
Power of the Consumer
Global Digitization
InnovationPerformance
Teams
Agility
Speed
Velocity
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Process improvement
Lean
Learnings
Adaptive processes
How to Increase Speed and Effectiveness Even Further?
1.2.3.4.
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Process Improvement
Best-Practice Process Effectiveness Metrics
• Length of time per stage• Percentage of projects late to
market or over budget• Number of “Recycle” decisions
in gate meetings• Average time of gate meetings
• Targeted number of projects per stage (funnel/tunnel)
• “Kill rate” of early-stage projects• Total value of new product portfolio• Accuracy of revenue, budget,
resource forecasts
“Accolade will help us capture the metrics needed to track and evaluate the efficiency and predictability of our process and the business value of the projects that pass through it.”
Roy PhillippsR&D Director
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Are We Reducing Time to Market?
DIRECTOR OF INNOVATIONCorporate leader on point to design, maintain and mature the innovation processes of the business
PROCESS METRICS enable assessment of trends in innovation cycle time.
Benefit: Reduce the effort to assess the value your company is achieving with the process
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Stage 1Define
Concept
ConceptReview
Go to Dev
Stage 2Build Business
Case
Stage 3Development
Stage 4Test/Validate, Launch Prep
Stage 5Launch Execution
Go to Test/Val
Go To Launch
Full Stage-Gate Process
“Just Do It” ProcessStages 2-4
Develop, Test,Launch
Reduce Friction:By Aligning Process to Risk/Reward of Project
Fast-Track ProcessStage 2-3
Business Case & Development
Stage 4Test/Validate, Launch Prep
Stage 5Launch Execution
Go to Intent to Launch
Go toLaunch
Low Risk/Complexity
Moderate Risk/Complexity
High Risk/Complexity
Stage 5Launch Execution
Go toLaunch
Stage 1 Go to Project
Idea Process
Stage 1Define
Concept
Stage 1Discovery
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• Many processes have too much in them• Long lists of required tasks in each stage• Long lists of deliverables with many templates
• Remove non-value added work• What work gets done in the stage?• How is our quality of execution? What goes wrong? Why?• Can we eliminate the work, or streamline it?
• Automate gates, decisions, approvals where possible• Allow team-driven gate decisions for simpler projects
• Identify where allowed• Provide guardrails for the team
Lean
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• Post launch review• Post stage review• Project startup – tapping into legacy successes and failures• Continual
• Identify• What went well and what did not• Assess and identify new best practices
• Perform a lean assessment• What work was done in each stage?• How was our quality of execution? What went wrong? Why? What went well? Why?• Can we eliminate work or streamline it?
Continual Learning
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Adaptive Processes
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Agility Embedded in Gated Process
Definition
Go to Configuration
Go to Validation Go to Deployment
Close
Configuration Validation Deployment
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Dynamic Process
Definition
Go to Configuration
Go to Validation Go to Deployment
Close
Configuration Validation Deployment
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Hybrid Stage-Gate
Definition
Go to Configuration
Go to Validation Go to Deployment
Close
Configuration Validation Deployment
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Interactive Learning
Definition
Go to Configuration
Go to Validation Go to Deployment
Close
Configuration Validation Deployment
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How Software Can Help
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The Accolade® enterprise innovation management solution’s easy-to-use tools with embedded proven best practices enable you to focus on key projects that have the greatest strategic fit and value
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Accolade was built through exclusive partnership with Dr. Robert Cooper• World-renowned authority on product development and portfolio management• Father of the Stage-Gate® process• Author of NPD classic “Winning at New Products”• Co-founder of Product Development Institute
Longstanding Partnership with Dr. Robert Cooper
“… automating your process will provide even greater benefit. Sopheon’s Accolade provides a flexible framework for streamlining the Stage-Gate process. Accolade is the only one I believe in.”
- Dr. Robert CooperProduct Development Institute
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Sopheon scored a perfect 100% score against all criteria in every categoryincluding new category for Innovation Team Agility
Accolade is Certified on Stage-Gate Ready Version 4 Criteria
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1. Single source of truth for cross-functional, data-driven decision making
2. Automated gated processes that evolve
3.“Smart” gate deliverables reduce the prep time from hours to minutes
4. Documents, activities and learnings become assets for re-use
5. Living business cases with Critical Success Factor monitoring
6. Priority-based gate decisions through online scorecarding
7. Best-practice innovation process models and deliverable templates
8. Best-practice process effectiveness metrics and views
Gated Process Execution Differentiators
Thank you for your attentionAny questions?
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