redesigning the stage-gate

Copyright 2017 Logic PD, Inc. All Rights Reserved. Confidential.

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Redesigning the stage-gate transition processThe three questions every stage gate review must

answer, the three cognitive biases that stand in your

way, and the three simple changes that can fix it.


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The Product Review Board process:A tale of two meetings

• The “Transition Planning” meeting:

– Regularly fails to address critical issues

– Often lacks complete attendance

– Risks ending without complete alignment

• The “Emergency Review” meeting that follows:

– Raises the critical issues not discussed months

earlier (when they could have been more cost-

effectively addressed)

– Leads to frustration in the gap in expectations for

product functionality and financial performance

– Often ends in damaged internal relationships that

do not bode well for the next product

introduction


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Impacts of poor transitions

Poorly Received Products

Lost Revenue & Market Share

Reduced Market Perception

Damaged Organizational

Culture


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Root cause: PRB fantasy versus reality• The Stage Gate Process In Theory:

– Creates alignment between multiple stakeholders

– Coordinates expertise across the organization

– Provides a “single source of truth” for the product

development process

• The Stage Gate Process In Practice:

– Confuses stakeholders and diffuses accountability

– Encourages the “silo-ing” of expertise into

specific functional groups who “check the boxes”

versus cooperating and coordinating efforts

– Almost never represents truth (people don’t want

to “write it down” and be wrong)


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Focus: There are only three questions

• User desirability:

– Does the product still meet a customer need, or

has the market shifted since we started

development?

• Technical feasibility:

– Is the product still not only technically feasible,

but operationally feasible as well?

• Business profitability/viability:

– Can we still make money doing this?


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If it’s that easy, why aren’t we doing it?

The Sunk Cost Fallacy. The Misconception: You make rational decisions based on the future value of objects, investments and experiences. The Truth: Your decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.

Information bias is a type of cognitive bias, and involves a distorted evaluation of information. An example of information bias is believing that the more information that can be acquired to make a decision, the better, even if that extra information is irrelevant for the decision.

The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain. People tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented.

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PRB Rx, Step 1: Redesign the meetings

• The idea:

– Realign the structure of each stage gate meeting

to formally address each of the three critical

questions

– Every stage gate must answer all three

• In practice:

– Force the categorization of all meeting topics into

one of three categories: Desirability, Feasibility,

or Viability

– The process own checks to ensure all areas are

covered at every stage gate meeting (no

exceptions and no “passes” because it is “just a

technical meeting”)


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Redesigned Process Example:This product is ready for transfer to manufacturing…

• User desirability:

– Do our Hipster Life Hackers still want to do their

own “lawn mower conversion”?

• Technical feasibility:

– Does our near-shore supplier actually have the

welding equipment needed and the expertise to

use it?

• Business profitability:

– Are there enough “hipster life hackers” to make it

profitable to build these?


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PRB Rx, Step 2: Opt-in versus opt-out

• The idea:

– Change PRB meetings from an opt-out to an opt-

in process

– In other words, you must have permission to

continue (not an objection to stop)

• In practice:

– Make the funding contingent on an affirmative

blind vote by all stakeholders


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• The Opt-In Vote Tally:

– Design NO

– Engineering YES

– Manufacturing YES

– Supply Chain NO

– Finance NO

– Sales NO

– Marketing YES

End Result: Preliminary decision, discontinue

development.


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PRB Rx, Step 3: Hire an independent arbitrator

• The idea:

– An outside arbitrator helps your organization

avoid uncomfortable office politics and see

through cognitive biases

• In practice:

– Hire an outside arbitrator with expertise in the

specific transition points in question

– Avoid hiring the same arbitrator throughout

(they will develop their own biases)


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• The arbitrator’s ruling: NO

– Design NO

– Engineering YES

– Manufacturing YES

– Supply Chain NO

– Finance NO

– Sales NO

– Marketing YES

End Result: Discontinued development, but the

Engineering, Manufacturing and Marketing groups felt heard

and validated and are ready for the next project.


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Most products fail.

Don’t make it harder

on yourself!

redesigning the stage-gate

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