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Applying the Stage Gate Process to Sterling Brands’ Clients.

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Presentation on theme: "Applying the Stage Gate Process to Sterling Brands’ Clients."— Presentation transcript:

1 Applying the Stage Gate Process to Sterling Brands’ Clients

2 2 Contents the value of Stage Gate for Sterling Brands the Stage Gate process

3 3 What is Stage Gate and why is it valuable to Sterling Brands? Stage Gate is a process designed to help companies successfully develop new products and services it’s about doing “the right projects right” it’s about mitigating risk it’s about making tough decisions it’s about becoming more rigorous in our approach to new product development ultimately, it’s about helping our clients product great products that sell on average, 33% of a company’s sales come from new products source: Winning at New Products; Robert Cooper Understanding Stage Gate is relevant for a number of reasons Everyone in the organization produces products or services Increasing client requests for innovation projects Would help Sterling brand strategists better understand the client side Has the potential to extend duration of project… and secure additional fees

4 4 What are the main pitfalls to creating successful new products and services? PREPARATION Lack of a strong market orientation Not enough upfront homework PROCESS Moving too quickly No focus, too many projects The lack of a systematic new product process with discipline PRODUCT Poor quality of execution A lack of product value for the customer in product failures, 74% reported the detailed market study was “poorly done” or not done at all! 16% of companies cite product problems or defects as the main cause of failure lack of external understanding is one of the major needs for improvement >>> this bodes well for Sterling Brands source: Winning at New Products; Robert Cooper

5 5 What does success look like? There are 15 critical success factors in new product development 1. Unique superior product 2. Strong market orientation 3. International opportunities 4. Predevelopment homework 5. Sharp and early product definition 6. Properly executed launch 7. Right organizational structure 8. Support from top management 9. Leveraging core competencies 10. Market attractiveness 11. Tough go/kill decisions are made 12. Quality execution 13. Resources are available 14. Speed - but not at the expense of execution 15. Multistage, disciplined process like Stage Gate > make it superior > do your homework moderate source: Winning at New Products; Robert Cooper

6 6 it’s critical to understand the relationship between stages and gates The Stage Gate process is simply a series of STAGES and GATES to assure the proper work is done, deliverables created includes parallel activities performed by cross-functional team each stage costs more than the proceeding stage STAGE GATE to evaluate the work done in each stage and make go/kill decisions information is brought together - senior management always involved consists of 1) deliverable 2) criteria 3) outputs “People fall in love with their own ideas.” “Someone will always hate your decisions.” David Goldsmith, MetaMatrix Consulting Group

7 7 The Stage Gate process >>> We are going to use the current Liquor Innovation project to illustrate the value of Stage Gate: To “age-down” its brand, a leading liquor brand is looking to create a new product aimed at men/women ages stage 1 Scoping gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 gate 1 LAUNCH post launch review historical Sterling Brands stop point the opportunity

8 8 project charter specifics Scope  USA is the lead market  Initial on-premise distribution (bars, restaurants, clubs)  No immediate plans to roll out Globally until proven in North America Assumptions Packaging - Aspirational to the target consumer with cues based on Brand DNA Explore premium bottle/decorations – acid etch, silk screen, metallic inks Liquid development – Based from Coffee, but distinctive from Base Brand Evaluate higher proof – up to 40% abv Cost/ Retail Pricing  Target retail 750mL pricing at $19.99  Margin will be slimmer than Base Brand >>> Ship March 2008

9 9 It all starts with DISCOVERY The goal is to “increase the mouth” From top-down, bottom-up, or ideally, both 1. First, determine potential platforms ex: energy, all natural, experiential 2. Techniques for discovery Look for changes in the alcohol industry Create best/worst case alternate scenarios Use voice-of-the-customer research  interviews at bars, in liquor stores, focus groups with drinkers (client brand vs. competitors)  speak with bartenders to gain different perspective on what customers want Work with lead or innovative consumers  develop a diverse and ongoing panel of outsiders to act as a sounding board Attend trade shows, read trade publications, consumer magazines 3. Create an idea bank Accessible to the entire organization stage 1 Scoping gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1

10 10 GATE 1: IDEA SCREEN - decision to commit to the project Deliverables a series of fresh product ideas inspired by real consumers and industry trends Criteria Does the product “fit with the brand”? Does the product fit with our strategic direction? Does it meet our environmental standards? Is the idea unique? Differentiated? “Ownable”? Is it relevant to the consumer? Does it appear to have a sizeable market opportunity? Is it technically feasible? Does it leverage our production resources? Outputs Go/Kill decision - tentative commitment to project Agreed to key initial criteria that will be used to assess options throughout the process stage 1 Scoping gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1 gatekeepers director of innovation brand manager

11 11 stage 1 Scoping gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1 STAGE 1: SCOPING - understanding the merits GATE 2: SECOND SCREEN - evaluate scoping documents

12 12 stage 1 Scoping gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1 STAGE 1: SCOPING - understanding the merits Preliminary market assessment internet search, focus groups, quick concept testing identify points of differentiation and superiority Preliminary technical assessment feasibility timing and cost: identify suppliers technical, legal, and regulatory risks Results: An understanding of the magnitude of opportunity and a technical assessment GATE 2: SECOND SCREEN - evaluate scoping documents Deliverables documents from the scoping stage: market opportunity, technical assessment Criteria Is the market opportunity large enough? Can we produce this drink? What are the margins? What is the payback period? What are the implications for sales? Marketing? Legal? What time is required? What existing / new capabilities would be needed? Outputs Go/Kill decision - if granted, begin moving into heavier spending stages Potential for up to 3 product ideas to be prototyped gatekeepers sales, legal, director of marketing, finance

13 13 stage 1 Scoping gate 2stage 2 Build Business Case stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1 STAGE 2: BUILDING THE BUSINESS CASE GATE 3: GO TO DEVELOPMENT historical Sterling Brands stop point gate 3

14 14 stage 1 Scoping gate 2stage 2 Build Business Case stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch gate 1 STAGE 2: BUILDING THE BUSINESS CASE - doing the critical homework 1. Defining the product offering target market definition product benefits, features and value proposition desired product features attributes, requirements and specifications 2. Competitive analysis 3. Technical appraisal 4. More detailed business and financial analysis 5. Preliminary operations and marketing plan Results: Clear product definition, project justification, detailed project plan GATE 3: GO TO DEVELOPMENT - gateway to spending Deliverables Descriptions of 3 products, project justification, detailed project plan Criteria Was Stage 2 homework completed well? Were the results positive enough to warrant funding? Which product option has the best financial outlook for the company? Outputs Go/Kill decision - selection of the ONE product that will go into development A clear product definition historical Sterling Brands stop point gate 3 gatekeepers CEO, CFO, Operations, Director of Marketing, Director of Sales

15 15 gate 2stage 2 Build Business Case gate 3stage 3 Development stage 4 Testing & Validation gate 5stage 5 Launch STAGE 3: DEVELOPMENT stage 1 Scoping gate 1 gate 4 GATE 4: GO TO TESTING

16 16 gate 2stage 2 Build Business Case gate 3stage 3 Development stage 4 Testing & Validation gate 5stage 5 Launch STAGE 3: DEVELOPMENT - implementation of plan Lab testing (continuous) alpha, in-house, lab tests consumer feedback leading to iterative prototypes Parallel processing operations plans launch plans - selection of 5 launch markets updated financial analysis legal, regulatory and patent issues cleared Results: A lab-tested prototype that consumers love stage 1 Scoping gate 1 gate 4 GATE 4: GO TO TESTING - checking all work thus far Deliverables a working prototype Criteria Is the quality high enough? How does it taste? Smell? Look? Sound? Feel? Does the product meet the definition in Gate 3? Are the marketing and operations plans clear? Does the revised financial analysis still meet fiscal goals? Outputs Go/Kill decision Validation plans for next stage evaluated and approved Marketing and operations plans reviewed for probable future execution gatekeepers Operations/QA, Marketing, CFO, Director of Research, Legal

17 17 gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation stage 5 Launch STAGE 4: TESTING AND VALIDATION - stage 1 Scoping gate 1 GATE 5: GO TO LAUNCH gate 5

18 18 gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation stage 5 Launch STAGE 4: TESTING AND VALIDATION - evaluating every aspect In-house product tests in test kitchens Consumer taste testing Pilot production - to improve production process Test markets - 5 cities being selected, on- premise only, gauge reactions, effectiveness of launch plan, expected market share and revenues Revised business and financial analysis TEST RESULTS? if not satisfactory, rewind to stage 3 and improve the product stage 1 Scoping gate 1 GATE 5: GO TO LAUNCH - ensuring validity Deliverables most refined marketing, operations and launch plans to date Criteria: Testing the Testers How well was the validation performed? What is the expected financial return? How smart are the operations and marketing plans? Outputs Go/Kill decision - the official green light; also the last chance to kill the idea gate 5 gatekeepers CFO, Operations, Marketing, director of research

19 19 gate 2stage 2 Build Business Case gate 3stage 3 Development gate 4stage 4 Testing & Validation gate 5stage 5 Launch STAGE 5: LAUNCH - implementation of all plans Marketing launch plan Operations / production plan Results: Roll out of product in 5 markets stage 1 Scoping gate 1 POST-LAUNCH REVIEW evaluate 5 test markets and decide if successful > go/kill nationwide rollout 6-19 months post-launch cross-functional project team disbands product performance review vs. projections (revenues, costs, expenditures, profits, and timing) post-mortem discussion: what went well, what could be improved post launch review

20 20 thanks


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