You also need organizational process to control this funnel process.

So what you see here is that what is called the stage gates on the product development funnel.

You have various gates which are created by the organization, which will be a stop and open situation at each gate.

So what you see here is that the company started with 6 ideas at the idea generation stage, and only 5 ideas went through from gate 1 to gate 2.

So you see that only the 5 ideas which seem to be actually worth following went to gate 2, and that's where the feasibility check happened.

Out of that feasibility check, only 4 ideas went through to the next stage, where they looked at business capability.

Out of those 4 ideas, actually 3 were went into product launch preparation, and finally 1 of them was launched, but it's possible that the other 2 will get launched at a later stage.

So what you see here is that the funnel has narrowed, but it also been controlled by the company, where at each stage, somebody in top management, somebody at senior level is cross-checking on what is being done, where is money being spent, and taking decisions on whether to launch a product or take it forward into prototype or not.

You have the idea generation stage, where the initial market choice is made and the product concept is discussed within the group.

Then you have the feasibility check stage, where the concept is refined.

It is established in terms of customer relevance.

The technical and commercial issues are also cross-checked.

Then the third is the business capability stage, where you check whether you have a proven technology, do you have a finalized mix or product mix, and then you look at whether there is a commercial viability for that product.

And only products which meet all these requirements will go into the launch preparation stage where the commercial production, commercial marketing and sales activities will start happening.

So, over this period, some products will go through, some products will not go through.

So, therefore, the management of these stage gates is very critical.

What is required is that good products go through the process, and products which are unlikely to succeed get stopped in the process so that money is not wasted on those products.

The first thing that you need to do is to ensure that communication of the process happens to all the employees.

What is the stage gate process that the company is employing and how does it work needs to be communicated to everyone.

Second is the transparency in the assessment process at all the gates.

Top management has to be committed to the process and ensure that there is transparency in the assessment process.

There should be periodic reviews against set and agreed standards.

There should be good documentation of the entire process so that it can be reviewed and analyzed.

For example, it is possible that you stopped a project which was allowed by some competitor.

You may want to re-look at why did we stop the project that the competitor decided to launch and make a success of.

Then you have crossed functional teams with project champions, who will lead the project, and it is also made clear that not all projects would get fully funded.

There is also a need for flexibility in the product development process and flexibility is an important alternative to better market technology research given high uncertainty.

So if the market is very uncertain, you may want to make some late design changes, but late design changes may be very expensive.

So if you can include some flexibility in the whole process, you may be able to make late design changes without incurring too much of cost.

So flexibility entails both benefits and costs.

You can do some efficient late design changes using a flexible technology.

You can benefit from adapting the product line over time, but the counter side of it is that there are overheads and poorer products with flexibility approaches.

So what we need to do is to view these economic trade-offs and choose the best most flexible approach in each case.

But if you use flexibility, then it gives you some significant benefits, especially when the market is very uncertain.

So how can you increase development flexibility?

You can do so by adopting flexible technologies that allow for fast and low cost design iterations.

You can structure the design tasks in such a way that it allows for progressive commitment.

You can also progressively lock down requirements and not lock down requirements in the beginning and keep viable backup options and revisit the trade-offs involved in the process.

You can also use what is called modular architecture and modular product structures.

These reduce the coupling between the modules and isolate the volatility in the design to enable easy replacements.


Speaker 0: You also need organizational process to control this funnel process. So what you see here is that what is called the stage gates on the product development funnel. You have various gates which are created by the organization, which will be a stop and open situation at each gate. So what you see here is that the company started with 6 ideas at the idea generation stage, and only 5 ideas went through from gate 1 to gate 2. So you see that only the 5 ideas which seem to be actually worth following went to gate 2, and that's where the feasibility check happened.

Out of that feasibility check, only 4 ideas went through to the next stage, where they looked at business capability. Out of those 4 ideas, actually 3 were went into product launch preparation, and finally 1 of them was launched, but it's possible that the other 2 will get launched at a later stage. So what you see here is that the funnel has narrowed, but it also been controlled by the company, where at each stage, somebody in top management, somebody at senior level is cross-checking on what is being done, where is money being spent, and taking decisions on whether to launch a product or take it forward into prototype or not. So What happens at each of these stages? You have the idea generation stage, where the initial market choice is made and the product concept is discussed within the group.

Then you have the feasibility check stage, where the concept is refined. It is established in terms of customer relevance. The technical and commercial issues are also cross-checked. Then the third is the business capability stage, where you check whether you have a proven technology, do you have a finalized mix or product mix, and then you look at whether there is a commercial viability for that product. And only products which meet all these requirements will go into the launch preparation stage where the commercial production, commercial marketing and sales activities will start happening.

So, over this period, some products will go through, some products will not go through. So, therefore, the management of these stage gates is very critical. What is required is that good products go through the process, and products which are unlikely to succeed get stopped in the process so that money is not wasted on those products. The first thing that you need to do is to ensure that communication of the process happens to all the employees. What is the stage gate process that the company is employing and how does it work needs to be communicated to everyone.

Second is the transparency in the assessment process at all the gates. Top management has to be committed to the process and ensure that there is transparency in the assessment process. There should be periodic reviews against set and agreed standards. There should be good documentation of the entire process so that it can be reviewed and analyzed. For example, it is possible that you stopped a project which was allowed by some competitor.

You may want to re-look at why did we stop the project that the competitor decided to launch and make a success of. Then you have crossed functional teams with project champions, who will lead the project, and it is also made clear that not all projects would get fully funded. There is also a need for flexibility in the product development process and flexibility is an important alternative to better market technology research given high uncertainty. So if the market is very uncertain, you may want to make some late design changes, but late design changes may be very expensive. So if you can include some flexibility in the whole process, you may be able to make late design changes without incurring too much of cost.

So flexibility entails both benefits and costs. You can do some efficient late design changes using a flexible technology. You can benefit from adapting the product line over time, but the counter side of it is that there are overheads and poorer products with flexibility approaches. So what we need to do is to view these economic trade-offs and choose the best most flexible approach in each case. But if you use flexibility, then it gives you some significant benefits, especially when the market is very uncertain.

So how can you increase development flexibility? You can do so by adopting flexible technologies that allow for fast and low cost design iterations. You can structure the design tasks in such a way that it allows for progressive commitment. You can also progressively lock down requirements and not lock down requirements in the beginning and keep viable backup options and revisit the trade-offs involved in the process. You can also use what is called modular architecture and modular product structures.

These reduce the coupling between the modules and isolate the volatility in the design to enable easy replacements.

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Week 1-Stage Gates Management