June 07 Doing the Right Projects! Doing Projects Right!

Stage-Gate Process Almost 70% of leading U.S. product developers now use some type of Stage-Gate process. Sound research, best practices, used world- wide.

Benefits Accelerates speed-to-market Increases likelihood of product success Introduces discipline into an ordinarily chaotic process Reduces re-work and other forms of waste Improves focus via gates where poor projects are killed Achieves efficient and effective allocation of scarce resources Ensures a complete process – no critical steps are omitted

Critical Success Driver #1 The number one success driver is a unique, superior product: a differentiated product that delivers unique benefits and superior value to the customer. But “me-too”, ho-hum, copy-cat, tired products tend to be the rule rather than the exception! Engineers or scientists building a monument to themselves The quest must be for real product advantages

Critical Success Driver #2 A strong market orientation – a market driven and customer focused new product process –Success factors in every study: needs recognition, understanding user needs, constant customer contact, strong market knowledge, market research, quality of execution of marketing activities, up-front marketing activities are all key to success –A strong market orientation is missing in the majority of new projects

Critical Success Driver #3 More pre-development work – the homework or ‘up-front’ activities Screening, market studies, tech feasibility, build business case But little time and effort are spent here: 7% of money and 16% of effort (Japanese and highly successful US firms spend considerably more here) Homework answers key questions before Development begins: –Is the project economically attractive? –Who is the target customer? What positioning? –What should the product be? features, attributes, performance –Can it be developed? At the right cost? How?

Critical Success Driver #4 Sharp and early product & project definition (before Development) This definition includes: 1.Project scope 2.Target market definition 3.Product concept & benefits to be delivered: value proposition 4.Positioning strategy (include price point) 5.Features, attributes, requirements & specs Why so critical? 1.Forces homework to be done up-front (Success Driver #3) 2.Communication tool 3.Provides clear targets for Development

Critical Success Factor #5 An international orientation in product design, development and target market selection is more successful International products aimed at world regional export markets –Global products –“Glocal” products Often missed by North American firms!

Critical Success Driver #6 The right organizational structure & design are keys to new product success A true cross-functional team approach –Responsible for the project, not to their department –On the project end-to-end Team empowerment –Control over project’s resources Team accountability –Responsible for achieving agreed-to goals A clearly defined team leader –Chosen for the right reasons

Most firms have too many projects and too few resources to do them! Why? … A failure to focus We want “funnels”..not “tunnels” Begin with many solid concepts Successively remove the poor ones Must “drown some puppies” Critical Success Driver #7

Critical Success Driver #8 Leveraging core competencies is vital to success Why ? –Resources: are available & at marginal cost –Experience : there are fewer surprises – less goes wrong! Two types of competencies: –Technological – both Development and Manufacturing –Marketing – customer base, channels, sales force, service, etc. Important screening or project selection criteria –Rate the project on technological & marketing leverage

Critical Success Driver #9 The Resources Must Be In Place! “Even the best game plan comes to nothing if the players aren’t on the field!” “Urgent things always take precedence over important things” Best performers are resource rich in New Product Development: Sales people Marketing people Manufacturing or Operations people Technical or R&D people

Critical Success Driver #10 Top management support doesn’t guarantee success, but it sure helps Top management support critical to getting projects to market But top managers tend to drive failures with a higher frequency than average successes! Top management’s role: to set the stage – a behind the scenes facilitator (not so much an actor)

Stage-Gate Product Development A System from Idea to Launch Breaks the New Product Development Process into a series of manageable and simple stages Used by leading corporations world wide Adapted for each situation

Stages in the System Scoping Build Business Case Gate 1 Stage 1 Stage 2Stage 3 Gate 2 Gate 3 Idea ScreenSecond Screen Go To Development Development  Gates = Decision or GO /KILL Points  Gates are the quality control check points in the process

GATES – ensuring only the RIGHT projects move forward Readiness check & quality of execution: –Steps executed –Deliverables in place Business Rationale: –Attractive opportunity? –Strategic project? Action Plans: –Forward Plan good? –Resources available and committed?

Set up an “Idea Capture” System Intake point/s – Innovation Champion Proactive in seeking projects Takes projects or ideas to Gate 1 Gets decision Move forward to Stage 1 OR into Idea Vault or Bank

Gate 1 – Idea Screen The initial GO/KILL Decision First but tentative commitment of resources: a flickering green light Develop a forward plan for Stage 1 Must Meet Criteria for GO: Minimum Market Size, No Show- Stoppers Should Meet Criteria:Strategic Fit, Technical Feasibility, Market Attractiveness, Competitive advantage (Rating 1 to5)

Stage 1 - Scoping A preliminary investigation Within one month Key Tasks –Preliminary Market Assessment –Preliminary Technical Assessment –Preliminary Business Analysis –IP, Regulatory, Safety Gate Deliverables – Prelim Product Def & Bus Case

Gate 2 – Second Screen Second review – Better information Opens the door to a more expensive second stage – Building the Business Case Gatekeepers? Approval of the Forward Plan and Resources Should Meet Criteria:Strategic Fit, Technical Feasibility, Market Attractiveness, Competitive adv, Core Competency, Risk/Reward (Rating 1 to5)

Stage 2 – Build the Business Case Makes or Breaks the Project Detailed Investigation The Business Plan/Feasibility Key Tasks –Market Analysis –Competitive Analysis –Voice of Customer –Concept Test –Technical: Proof of feasibility –Production/operations –Legal –Management –Financial

Gate 3 – Go to Development The “money gate” Opens the door to full scale development & heavy commitment Must have: –Complete plan –Defined product –Full financial review

Stage 3 - Development Implementation of Development Plan –Develop the product as per the Gate 3 Definition –Undertake in-house product testing (lab, alpha) –Conduct limited customer test via “show & tell” –Develop manufacturing (operations) process –Develop detailed Test Plans –Develop Launch Plans Detailed Market Launch Plan Production/Operations & Quality Assurance plans

Gate 4 – Go to Testing Opens the door to Stage 4 – Validation and Testing Review of Financials Review and approval of Test Plans Criteria for Go: –Quality of Activities in Stage 3 –Deliverables and Readiness Check –Consistency Check – prototype consistent with definition –Revisit criteria and business plan

Stage 4 – Testing and Validation The final tests of the product, production and operations & marketing strategy prior to full commercialization Update financial analysis Prepare final Launch Plan

Gate 5 – Go to Launch The final GO/KILL gate in the process Involves: –A critical review of all activities and results –A review of the updated financials –A review & approval of finalized production and market launch plans –Check list that all is commercial-ready

Stage 5 - Launch Key Tasks to Implement: Production/Operations Plan Market Launch Plan Post Launch (monitor & adjust) Product Life Cycle Plan

How Gates Work The project leader drives the project from stage to stage, gate to gate (the proponent) The leader submits the inputs or deliverables to each gate at the completion of a stage The deliverables are pre-set –A visible list of requirements – clear expectations –Based on a standard list or menu Deliverables provide the information needed for the Gate decision

Who are the Gatekeepers? Management Represent different functional areas Resource-owners Authority to approve and support

Gatekeepers and Their Role Discipline – regular meetings and be there Arrive prepared Use the list of criteria – no hidden criteria Ensure all project treated the same Fast same day decisions Provide advice and assistance on projects

Flexible and Scalable Scalable to suit projects of different risk levels The higher the risk the more rigorous the process Risk –Cost –Potential payoff –Strategic impact –Uncertainty – uniqueness, unknowns

Needs vs Features A Focus on Features: Identifies today’s dominant product A Focus on Needs: Leads to tomorrows dominant product

Market Driven Builds in Voice of Customer Loops back to the customer Homework upfront Poker game

Spiral Development: “Build-Test-Feedback-Revise” Loops Build Business Case Gate 2 Stage 2 Stage 3 - Development Stage 4 Gate 3 Gate 4 Testing & Validation VoC User Needs & Wants Full Proposed Concept Test Rapid- proto & Test 1 st -proto & Test Next proto & Test Field Trail Beta Test

Selecting the Right Projects Encourage many ideas Focus on the winners Do your homework Talk to the customers and LISTEN Secure resources One stage at a time Strategic portfolio management

What stage-gate is NOT Not a functional review system Not a rigid system Not a bureaucratic system – streamlined Not the same as project management

Implementing a new process Stage 1 - Defining –Executive buy-in –Task force –Current process audit –Workshop – problem detection –Benchmarking Stage 2 - Designing –Training session –Rounds with feedback –Iterations with management and users

Implementing a new process Stage 3 – Implementation –Training –Internal marketing – buy-in –Bringing Projects into the Process –A process owner –Documentation –IT Support

June 07 Thank-you