A phased-and-gated system creates multiple batches that slows down the overall speed of a product development project. The group of phased activities is a batch that has to be completed in order to produce a set of deliverables, which is another batch for review and decision at a gate.
Reinertsen indicates the problem is that the batch is held up until the longest activity in the batch is done. The bigger the batch, the more likely it is that work will be held up waiting for the batch to complete .
For example, a capital equipment request is held up until the justifications have been collected for every item on the request. If you could split the capital request into two groups, the items that are quickly justified can be approved and acquired while the remaining requests are dealt with.
Dealing with risks and uncertainties in small batches increases speed in several ways:
- Quick experimentation and iteration allow you to quickly identify and concentrate effort on the most important risks and uncertainties. Time is not wasted on unimportant ones.
- Fast learning also lets you find out quickly when an assumption is wrong. Time is not wasted on development based on a faulty assumption.
- Small batches enable teams to make more fact-based decisions on their own. There is no delay in escalating decisions to senior management if needed.
To better understand how this works, queuing theory tells us that batch size is proportional to queue size. The bigger the batch, the bigger the queue, and the longer batches have to wait for attention (service). Thus, smaller batch sizes have some great benefits for product development:
- Faster feedback: The sooner a batch is completed, the sooner we gather learnings that help us determine next steps. This quick feedback helps us avoid wasting resources.
- Faster cycle times: Typically, each item in a batch stays in service and cannot advance to the next step until the longest activity in the batch is completed. Breaking up batches into smaller pieces allows some activities to move forward without waiting for the longest activity to complete.
- Shorter queues: The less time a new-product development project is waiting in queues for someone’s attention, the faster it gets to market and starts producing revenue. Delays are costs in the form of lost revenue and delayed revenue.
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 Donald G. Reinertsen, The Principles of Product Development FLOW (Redondo Beach, CA: Celeritas Publishing, 2009), Chapter 5.