The following sections describe the decision gates and stage processes shown in the stage gate model. Underlined terms link to appropriate metrics for the gate or process under discussion.
4. Description of the Major Sub-process Divisions in the Innovation Process Model
As noted in the introduction to the process model, the division of the innovation process model is arbitrary, but in general it seeks to approximate reality. The four divisions cover the very early technology or idea exploration phase of innovation (when possibilities are defined), a proof-of- concept phase when the mapping of ideas into the realities of the business world occurs, the development, and finally commercialization. Each of the separate phases, or subprocesses, is covered in the following sections, together with the entry gate which defines conditions for admission to that sub-process. Refer to the stage gate model in the discussions below.
4.1 Process Entry Gate (A) and Exploratory Concept Sub-process (I)
Gate A is the entry not only to Process I but to the entire innovation process. The purpose of Process I is to explore new ideas and concepts and set in motion as many promising “seed” projects as possible. The cost of research and investigation is small here. In companies where exploratory concepts consist of exploring product ideas and concepts, a single worker may have a project or even several in work simultaneously. Where true basic research is involved, it is most often at the University level, with industry participating through grants, contracts, or research agreements. In either case, there are typically many avenues being explored and no valid idea or concept is neglected.
The main consideration at Gate A is whether the idea or concept is strategically appropriate (at this stage, the alignment to corporate business goals may be ephemeral in some cases), and whether the expertise available to address the concept or idea is adequate. Metrics at Gate A should address these issues.
The purpose of Sub-process I is the validation of concepts or physical principles. Metrics for this process should simply address the validity of results and whether or not basic principles are established. Competency metrics may also be valuable to support assessments of required resources to execute projects.
4.2 Conceptualization Gate (B) and Proof-of-Concept Sub process (II)
Gate B primarily tests whether a concept is validated or some physical principle has been established. Entry to Sub-process II depends mainly on appropriate resources being able to establish proof-of-principle in a business context, and whether the concept or idea to be tested has potential application areas within the business goals of the Metrics should test these concerns. The “filtration” function at this gate is fairly strong, since although the cost of research in Sub-process II is still not great, there will be many more candidate ideas than there will be resources to address them.
In Sub-process II, the emphasis is on proof-of-principle in real business applications. Business considerations such as market window and competitive reaction begin to be important, although there will still be concern about options and possible spin-offs of the technology or concept. Project metrics for tracking milestones and execution time become more important, although time frames are still lengthy and product requirements may be vague or broad-brush. Metrics concerning resources and technical capability are also appropriate.
4.3 Technology Development Gate (C) and Product/Process Development Sub-process (III)
The emphasis at Gate C is in suitability for product development. Gate C is also a strong filter; projects that pass this gate will be the few that are highly promising for commercialization and meet all the requirements for profitable business products. Candidate technologies which pass this gate will have forecast long-term corporate benefit, and the projects entering Sub-process III meet all the strategic requirements of fit, alignment, and attractiveness for the business. Metrics for Gate C must address these strategic requirements, as well as the tactical issues of assuring that the candidate projects have successfully completed the requirements of Sub-process II.
In Sub-process III, the emphasis shifts to harder-edge issues, such as timing and execution to assure that market windows are met and product needs are satisfied. There is also emphasis on maintaining and extending technologies to keep a competitive edge in the marketplace. Milestones are important due to cycle time issues, and project funding must be managed more carefully due to budgets which are typically millions of dollars rather than the 100X lower investment that may be typical on a project in Sub-process I. Metrics for Sub-process III must reflect the concerns of timely, accurate execution and tight budget control.
4.4 Product Launch Gate (D) and Commercialization Sub-process (IV)
Gate D is the last test prior to full product launch in most cases. Where concerns — and associated metrics — at the first three gates will have been primarily strategic (fit with corporate goals and competencies, strategic timing, alignment with business need), the test at Gate D is primarily whether execution in Sub-process III was timely and efficient. Concerns for entering full commercialization are about whether all major technical hurdles are cleared, and whether commercialization costs allow for profitable entry into the marketplace. Some strategic questions must still be addressed, including market need and timing, and metrics utilized here must address both the strategic and tactical issues.
Sub-process IV is obviously market-oriented, with careful management of commercialization and product costs, timing, and execution the key issues. Since budgets of hundreds of millions of dollars may be at stake, program and resource management are paramount, and metrics appropriate to the concerns will be chosen.
4.5 Gate Efficiency
A key concern at each gate is that decisions be as efficient as possible. That is, that projects passed through each gate be good candidates to benefit the business, providing the subsequent Sub-process are navigated successfully. Since the “filtration” function of the decision process at each gate will be partially imposed by the economic constraints of a business (only so much total funding is available for the projects in each stage), even some “fit” projects will simply “miss the cut” at each gate. However, those projects which pass the fitness criteria, whether actually entering the next stage or not, represent a measure of the efficiency of the previous gate decision process. A metric (discussed in the section on stage gate metrics) may be developed in terms of the percent of successful projects in the next stage for the previous gate.
The above Stage Gate metrics can also be applied to the Agile / Lean model of sprints around the cycle. The metrics used correspond irrespective of process.