3. Overall Description of the Stage Gate Model for the Innovation Process Used in this Metrics Guide
There are a number of possible representations of the corporate innovation process. One simple yet fairly effective representation is the so-called “stage gate model”.
The model in Stage Gate divides the overall innovation process into four stages, as shown in the “Stage Gate” figure, from concept exploration or “ideation” to the process of commercialization. This division into four sections is arbitrary. An argument can be made for a three-stage model, or a more complex model of multiple sections and sub-sections. The four-stage model is chosen primarily for convenience, and to match a number of corporate models and those defined by scholars in the area of business processes. The shape of the model recognizes several realities of modern business.
For example, the process funnel narrows as the process proceeds from exploratory research or concept exploration through proof-of-concept to technology development and commercialization, illustrating pictorially the selective filtration that occurs in the process. There are typically many more ideas and concepts that are explored than are developed into significant technology capabilities in a business, and fewer still that emerge finally into finished products. In each stage of the process, the candidates dwindle, until only the most promising are brought to full production.
Similarly, the four gates, labeled A, B, C, and D, stand for the tests or decision-making activities that are exercised between the stages in the innovation process. Economic reality imposes a limit on the total level of technology and product development that each company can support. A second reality is that as each decision gate is passed, the resources and funding required to carry a given project to the next stage increases dramatically; a good rule of thumb is a 10X expenditure increase at each gate. These corporate “facts of life” impose a stringent set of conditions on the suitability of R&D programs which approach a gate. Each gate requires a set of metrics which ensure that only those programs most suitable to meet corporate business needs pass into the next sub-process.