IPD Processes: Stage-Gate and Cagan/Vogel

Carnegie Mellon Qatar ©2006 - 2012 Robert T. Monroe Course 70-446

IPD Processes:Stage-Gate and Cagan/Vogel

Robert MonroeJanuary 23, 2012


Goals - By The End Of Class Today, You Should:

• Understand why organizations use a structured method such as Stage-Gate or Cagan/Vogel to direct their innovation investments efficiently and effectively

• Understand the concept of stages and gates in the Stage-Gate process

• Be able to use the SET factor analysis to identify, evaluate, and understand how broad Social, Economic, and Technology changes can create Product Opportunity Gaps


Innovative Product Development Processes


The Stage-Gate Process


Launch*

The Cagan and Vogel Innovation Process

Realize Conceptualize UnderstandIdentify

* The launch stageis not part of theCagan / Vogel

process but it issomething we will

explore


The Good News: Lots of Ideas

CustomerFeedback

EmployeeSuggestions

CompetitiveOfferings

TechnologyBreakthroughs

Lots of Ideas!


The Bad News: Limited Resources

OrganizationalResources

NPD

ResourcesAvailable forInnovativeNew ProductDevelopment


The Problem: Which Ideas Do We Invest In?

Lots of Ideas

NPDResources


Resource Allocation: The Stage-Gate NPD Process

• In the early stages of developing new market opportunities and bringing innovative services and products to market, one of the most critical tasks is appropriately backing and funding the most promising opportunities, while eliminating non-promising ideas as quickly and as cheaply as you can determine they are not promising, but no quicker.

• The Stage Gate process [CE09] provides a rigorous, structured way for organizations to do so


Overview Of The Stage-Gate Process

• Stages are steps in the New Product Development (NPD) process where a specific set of work activities are done to produce a specific set of deliverables

• Gates are decision points that come at the end of each stage.

Stage n Stage n+1Gaten+1

Gaten+2


New Product Development (NPD) Stages

DiscoveryStage

Gate1

Stage 1:Scoping

Gate2

Stage 2:Biz Case

Stage 3:Development

Gate2

Gate4

Stage 4:Test &

Validate

Gate5

Stage 5:Launch

Source: [CE09] page 8.


Gates: Go/No-Go Decision Points

• Gates are key decision points in the process– Always a cross-functional group of gatekeepers– Gates should force a decision to be effective

• Possible outcomes from a gate meeting:– Go: move ahead to the next stage, commit appropriate resources– No-Go: the project does not meet the criteria required to move forward. Stop the

project and reallocate project resources.– Recycle: the project shows promise but has not yet met the criteria for moving to

the next stage. Continue work in the current stage, return with additional information. Resources are allocated as needed to get requested information

DecisionCriteria

DeliverablesFrom Previous

Stage

Decision,ResourcesAllocated,Outputs

Source: [CE09] page 10.


Managing Risk With Stage-Gate

Level of risk and uncertainty

Time(Stages)

Resourcesallocated


Launch*

The Cagan and Vogel Innovation Process

Realize Conceptualize UnderstandIdentify

* The launch stageis not part of theCagan / Vogel

process but it issomething we will

explore


Mapping Stage Gate to Cagan/Vogel Process

Source: [CV02] Chapter 5 and [CE09]

Launch* Realize Conceptualize UnderstandIdentify

DiscoveryStage Scoping

Stage 1 Business CaseStage 2

DevelopmentStage 3

Stages 4 & 5


Phase 1: Identify The Opportunity

• Goals:– Identify and evaluate a set of promising Product Opportunity Gap (POG’s)– Choose the most appropriate POG to move forward with

• Primary results:– Product opportunity statement (hypothesis)– Initial scenario that illustrates the opportunity

• Methods– Brainstorming, observing, researching Social, Economic, and Technology (SET)

factors– Generating POGs based on SET factors– Evaluating and filtering POG ideas generated– Scenario generation, feedback, and refinement

Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5.



Phase 2: Understand The Opportunity

• Goals:– Much deeper understanding of customer and customer’s Value Opportunities

(VO’s), translated into product criteria

• Results:– In-depth understanding of the customer/user, captured through refined

customer scenarios and VOA’s– List of product characteristics and constraints

• Methods– Primary research: observe, interview, listen, task analysis, stakeholder analysis– Secondary research: human factors, lifestyle reference, dive deeper on SET

factor changes Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5.



Phase 3: Conceptualize The Opportunity

• Goals:– Turn Value Opportunities into product concepts that are perceived as

useful, usable, and desirable– Generate many concepts, evaluate, refine, iterate, reduce to a single

concept to move to stage 4

• Results:– Clearly articulated product concept– Clear market definition– Visual, and/or physical prototypes that can be shown to and evaluated by

potential customers– Demonstration or belief that product is technically feasible




Phase 4: Realize The Opportunity

• Goals:– Develop product or service – move from prototype to product– Complete marketing plan, financing, initial production, etc.– Product or service is ready to be sold to customers

• Results:– Production processes defined– Go to market plan completed (marketing, positioning, etc.)– Sales channels lined up– Placement and contracts with distributors, retailers, etc. negotiated




Phase 5: Launch the Product

• Goals:– Deliver the product or service to customers– Start generating revenue– Ramp up production– Support organization is up and running

• Results:– Product or service offering is available to customers– Distribution channels functioning– Sales lead to inbound cash flow




Managing Risk With Stage-Gate

Level of risk and uncertainty

Time(Stages)

Resourcesallocated


SET Factors and Product Opportunity Gaps


Phase 1: Identify The Opportunity

• Goals:– Identify and evaluate a set of promising Product Opportunity Gap (POG’s)– Choose the most appropriate POG to move forward with

• Primary results:– Product opportunity statement (hypothesis)– Initial scenario that illustrates the opportunity

• Methods– Brainstorming, observing, researching Social, Economic, and Technology (SET)

factors– Generating POGs based on SET factors– Evaluating and filtering POG ideas generated– Scenario generation, feedback, and refinement




Social, Economic, and Technology (SET) Factors

• Identifying and observing broad Social and Economic changes in a society can help you discover gaps that current products and services are not meeting.

• Likewise, Technological advances can create opportunities to create products and services that would have been previously technically impossible – Technological advances often also create new (and different) problems for

people or societies, which can also be fertile ground for product opportunities

• In general, you are looking for broad, enduring changes to use as a basis for new product opportunities


SET Factors

Social• Social and cultural trends• Reviving historic trends

Technical• Introduction of new technologies• Re-evaluating existing technologies

Economic• State of the economy• Change in focus on where to spend money• Levels of disposable income

ProductOpportunity

Gap

Source: [CV02] page 9


SET Factor Exercise

• Divide into three groups (one S, one E, one T)

• Work as a group to come up with a list of at least 20 broad forces / changes / trends for your assigned topic (S, E, or T) that affect personal transportation in some way

• Identify trends that are applicable to:– Qatar– The GCC countries– Across Arab League nations – Throughout the world

• Write them down and be prepared to present them for discussion using the whiteboards around the room.


SET Factor Discussion

• Do you see some common themes emerging?

• Which of these SET factors are mostly the same throughout the GCC nations? Throughout the Arab League nations? Globally?

• Which of these SET factors vary considerably throughout the GCC nations? Throughout the Arab League nations? Globally?


Product Opportunity Gaps (POG’s)

• The next step is to identify Product Opportunity Gaps, or POGs based on your SET factor analysis.

• A Product Opportunity Gap is the gap between what is currently on the market and the possibility for new, or significantly improved, products that result from emerging trends.– Source: [CV02] page xxxi (glossary)

• Identifying product opportunity gaps will be the focus of Wednesday’s class…


So What Conclusions Can We Draw?

• Take a few minutes to think about what conclusions you can draw from all of the examples and exercises discussed in class today.

• Write down two conclusions / observations that you are willing to share with the class


References

[CE09] Robert G. Cooper and Scott J. Edgett, Successful Product Innovation, Product Development Institute, Inc., 2009. ISBN: 978-1-4392-4918-5.

[CV02] Jonathan Cagan and Craig M. Vogel, Creating Breakthrough Products, Prentice Hall, 2002, ISBN: 0-13-969694-6.

Documents

IPD Processes: Stage-Gate and Cagan/Vogel