Robert G. Cooper; Cambridge, Massachusetts: Perseus Books, 2001, 425 + xiii pages, US$27.50
This title has been a mainstay of the product development literature for fifteen years. The 1986 First Edition summarized Cooper’s initial studies of product development process factors that distinguish between successful and unsuccessful new products. The Second Edition, which appeared in 1993, expanded these studies and introduced his popular Stage-GateTM product development process. This 2001 edition adds still more studies, integrates Cooper’s more recent project selection and portfolio management processes into Stage-Gate, and offers valuable advice on implementing a product development process.
Although Winning is written by an academic, is based on countless research studies, and generally follows an academic style, the market for this book is clearly the product development manager. Cooper started his career as a chemical engineer, but this material applies to all types of new products and even to the development of new services.
For over 25 years, Professor Cooper has focused on identifying the factors that distinguish winning new products from losers. His research covers over 2000 new products from about 450 companies. He notes that 46 percent of product development resources are spent on losers, but this drops to only 20 percent for the best companies. Cooper’s aim is to establish product development processes that allow any company using them to operate at this desirable level.
Chapters 2 and 3 summarize his research, as well as the research of many others, on this theme of winners versus losers. In fact, he presents so many findings from so many sources that I found it somewhat bewildering. There are lists of “main causes of new product failure,” “important deficiencies,” “drivers of performance,” and “critical success factors” that exhibit little correlation with each other. One process weakness that shows up often is “lack of up-front homework,” but Figure 2.5 indicates that successful companies actually devote less effort to the front end of the project and more to later stages.
Cooper proposes a Stage-Gate development process to overcome deficiencies suggested by his research, and such processes have become very popular in recent years (68 percent of companies use them, according to Cooper). The heart of Winning— Chapters 5–7, 9, and 10—covers Stage-Gate in considerable detail.
New to this edition is an initial stage, the Discovery Stage, to which Chapter 6 is devoted. This chapter provides valuable information on various tools that can be used here, such as Voice of the Customer and lead-user research. Cooper also clarifies an apparent contradiction connected with the Discovery Stage. Most companies have more new-product ideas than they can develop, and this typically leads to the serious problem of project overload or multitasking. Thus, it would seem that companies should not be trying to find still more product ideas but should instead concentrate on narrowing the ones they have. However, Cooper emphasizes that a major driver of product success is a unique superior product. Thus, extra front-end effort is warranted to discover such products, but, in tandem, management must have effective ways of discarding mediocre ones.
Curiously, the Discovery Stage is not fully integrated into Stage-Gate yet. It does not have a stage number, nor does it appear on the Stage-Gate chart appearing on the endpaper or on most of the other process diagrams in this book.
Cooper calls the current Stage-Gate a third-generation process. He describes the first-generation process as the sequential, functional one existing before he adopted the term Stage-Gate. Thus, his Stage-Gate was the second generation. New to this edition is a third-generation process, which incorporates what he calls the six Fs:
- flexibility,
- fuzzy,
- fluidity,
- focus,
- facilitation,
- forever green.
The first three Fs relate to rendering the process less rigid, enabling it to be scaled to various size projects and enabling stages to be overlapped and approved conditionally. “Focus” means that the process is tied to a strategy that provides a focused vision. “Facilitation” connotes a specific role for a gate meister or process keeper, who ensures that the process is followed properly. Finally, “forever green” suggests that the process should be improved continuously. Overall, these six Fs allow a more sophisticated process, but they also invite more abuse of the process. Consequently, Cooper advises that newcomers start with a second-generation process and work into the third generation only after institutionalizing the basic process.
This book’s subtitle is Accelerating the Process from Idea to Launch. The six Fs are aimed at speeding up the process, although the second edition carried the same subtitle and lacked the six Fs. In addition, pages 258–63 offer some general approaches for accelerating the process, such as “do it right the first time,” “prioritize and focus,” “use flow-charting,” and “worship the time line.” These pages also carry a warning about “the dark side of accelerated product development.” Overall, the book’s acceleration theme appears more to be one of not delaying the process by committing mistakes than of explicitly accelerating it. Acceleration topics such as calculating your cost of delay, aligning the product’s architecture for speed, or redesigning the development process for speed [see 3] are not mentioned. Another way of looking at this distinction, suggested by Don Becker, Vice President of Xerox Engineering Systems, is whether management regards themselves as traffic cops or a police escort.
Chapter 8 covers project selection and portfolio management, which is an outgrowth of Cooper’s Portfolio Management for New Products [1]. Winning integrates portfolio management with Stage-Gate nicely for the first time. He illustrates that you have two alternatives when combining Stage-Gate with portfolio management: either Stage-Gate can dominate, with portfolio management taking a secondary role, or vice versa. He shows how each approach can be implemented and lists the pros and cons of each.
An important point that Cooper emphasizes in this chapter is the fallacy of relying on financial measures to select and assess projects in early stages. Such financial criteria are used primarily—often solely—by the poorest performing companies in his research. The difficulty with applying financial tools early in the process is that the data going into them are highly uncertain, leading to poor decisions. The best performing firms use a variety of assessment techniques, on average 2.4 different methods.
Cooper also provides an illuminating discussion of discounted cash flow (DCF) methods, showing that they discriminate unfairly against new projects, because they overstate the costs and undervalue the benefits. As an alternative, he suggests options pricing theory (OPT). OPT fits product development better than DCF, because the latter assumes that the whole investment is committed at once, as required for a factory or a truck, for example. In contrast, new product investments are progressive, with the early stages being relatively cheap. OPT fits such progressive investments. Furthermore, Stage-Gate processes dovetail with OPT, because the gates are ideal points to consider the next phase of investment.
Such progressive commitments are considered a major advantage of Stage-Gate processes. In principle, management remakes a decision to continue the project at each gate, and if a project’s prospects are a net negative at a gate, it is simply terminated there. In practice, seldom is a termination decision this easy. Moreover, I have found that there are difficulties with viewing projects in this progressive way that Stage-Gate allows and OPT further encourages:
- It encourages developers to focus myopically on simply providing the current stage deliverables, rather than satisfying the customer.
- It discourages making a personal commitment to the project, since the current phase is all that is certain.
- It divides projects into distinct phases, making it difficult to accelerate them by overlapping phases.
- It promotes reactive thinking (fire fighting) about the project, rather than proactively planning ahead for problems and opportunities in future phases [2]
The difference between viewing projects progressively rather than holistically is fundamental. For example, on page 236, Cooper suggests that gatekeepers for early phases could be a few lower level managers, because investments in early stages are small. In contrast, others suggest that these early stages are where senior management has their greatest strategic leverage [4].
For anyone who is planning to implement a Stage-Gate process or improve an existing one, Chapter 11 is perhaps the most valuable one in the book. In contrast to the Second Edition, Stage-Gate is a mature process in this edition, and Cooper takes full advantage of this to share his experience in implementing the process. He describes the importance of senior management commitment, communicating to gain buy-in, training staff, providing clear documentation, having a process manager, and establishing metrics, and he offers suggestions for these activities. For those who learn in other ways, he restates this advice as a list of “ten ways to fail.”
This is a book that should be on every serious product developer’s ready-reference shelf. You cannot afford to be unaware of this material. While I have expressed some differences of opinion with a few of Cooper’s approaches, such distinctions are possible to elucidate only because of the clarity that Cooper’s work has brought to product development methodology.
Preston G. Smith, CMC
New Product Dynamics
References
1. Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio Management for New Products. 2nd ed. Cambridge, Massachusetts: Perseus Publishing, 2001.
2. Smith PG, Merritt GM. Proactive Risk Management. New York: Productivity Press, 2002.
3. Smith PG, Reinertsen DG. Developing Products in Half the Time. New York: John Wiley, 1998.
4. Wheelwright SC, Clark KB. Leading Product Development. New York: The Free Press, 1995.
(Reviewed in the Journal of Product Innovation Management, July 2002, pp. 324-326.)
(c) Copyright 2013 Preston G. Smith. All Rights Reserved.