How to manage your gate meetings and get to the right project decision
Phased and gated decision making is the lifeline of your project’s bottom line. During new product development, gates are the decision points where we ‘go’, ‘kill’, or ‘recycle’ a project. Gate practices, therefore, have a profound effect on a Gatekeeper’s ability to make the right decisions.
Nobel Laureate Daniel Kahneman, in his book Thinking, Fast and Slow, describes a systems model of the cognitive processes involved in decision making that drive the way we think. System 1 is fast, instinctive and emotional;System 2 is slower, deliberate, and more logical. Central to the book’s theme is that often, ‘going with your gut’ is going down the wrong path. Kahneman cites several decades of academic research showing that System 1 thinking elicits decision making based mainly on subjectivity and bias. Some people, including the author himself, he concedes, give too much credibility to human judgment which tends to improvise understanding in the absence of fact.
In the new product development process, we find that Gatekeepers will commonly make gut-based decisions when they don’t necessarily have the right players or information to make a well-informed decision. In this short paper, we are highlighting 7 important gate practices that will assist the Gatekeeper to make the transition from System 1 to System 2: from gut-based to logic-based decision making.
Have the right players involved in the early phases. Senior management involvement within the early phases of the new product development process is essential. Senior managers have the strategic knowledge and authority to make the right project decisions from the beginning of the process. We are seeing, however, that leadership involvement often enters in the later phases of development when big spend occurs, and killing a project becomes too difficult. As a result, valuable opportunities are likely to be missed because resources get diverted to the wrong projects.
Gatekeeper team should be cross-functional. It seems fairly obvious with all the literature on the importance of working as a cross-functional team, but silos still occur today between marketing and engineering. We commonly hear about engineering being left out of the early phase gate meetings, and perhaps this is due to the culture of seeing marketing and engineering as operating at different ends of the development spectrum. However, sound decisions are based on both commercial acceptance and technological feasibility. We also recommend that you include a sales representative early in the new product development process. We have worked with an organization that developed a very elegant product that disrupted their existing product at a quarter of the price. Consequently, the sales people refused to sell the product, since their commission check was substantially reduced. This very well engineered product was never sold, so it is imperative to get the input from sales early on in the process prior to producing a product that will never be sold. In addition, sales has an excellent pulse on what is currently occurring with their customer base and with the trends in the marketplace.
Keep the cadence going. Although meeting frequency is usually driven by the number of projects in the pipeline, do meet monthly regardless of volume when you initially meet as Gatekeepers. Gate meetings should be ingrained within your organization, and given high priority. Anything less than monthly meetings substantially slows down the process and sends the wrong message about the necessary commitment to new product development. We advocate scheduling your monthly meetings six months out to ensure the proper gatekeeper attendance.
Content, not a dog and pony show. Gate meetings are not where the project teams show off their extraordinary presentation skills with their marketing slicks and hooks. This is a serious investment discussion. We recommend that these presentations occur outside the scheduled gate meetings at quarterly reviews. It is appropriate to have the key project team members in the gate meetings to answer questions, but have them leave the glitzy presentation behind. This is serious business; it is all about content and investment decisions.
Gatekeepers need to do their work too. We understand that Gatekeepers are busy people, but well-informed decisions can’t be based on a 1-pager. A 1-pager can be an extremely biased representation of the project since the project team usually chooses the story they’re going to tell, and this story can represent a lot of bias. This may be an extreme example, but we know of one company where if a project team recommends cancelling a project the team in essence could be out of a job. Consequently, the team has no incentive to cancel a project. Gatekeepers must understand the nuances and details behind a project and, therefore, the proper due diligence needs to occur. Our consulting firm has developed a process to ensure that Gatekeepers review documents timely and proactively, thus improving the efficiency of the gate meeting. We offer tools for Gatekeepers to pre-score projects in advance of the meeting. If the project is scored the same way across the board, there is little need for a long discussion. Most importantly, it keeps the scoring objective and decreases engagement in Groupthink.
Don’t look for a solution early in the process, but look for a need. Sometimes Gatekeepers request a solution early in the process instead of trying to understand the unmet customer need. An overly defined solution on the front end can lead to missed opportunities for a better solution and a misguided product later on. It is the responsibility of the project team to determine the unmet customer need, and the responsibility of the Gatekeepers to temper their gate deliverable expectations.
Don’t expect detailed financials until the product is fairly well defined. This is where Gatekeepers really need to temper their expectations. We worked with a client that expected a detailed financial analysis, including a forecast, prior to the product being clearly defined. This led to a lot of team anxiety and an accurate forecast less than 50% of the time – a lot of unnecessary work providing inaccurate results. We are proponents of estimating financials based on what is ‘known’. In the very early phases, you can expect to ‘know’ market size and the customers’ willingness to buy. As the project moves to the next phase, you can expect a preliminary financial analysis. And, as the product is defined, a fairly detailed analysis is appropriate.
The Gatekeeper meeting is a pivotal forum in your organization. Get away from the emotion, intuition and gut-feelings, and debate the pros and cons of the project based on objectivity and being well-informed. Good Gatekeeping practices make for sound project decisions.
