Throughout the many years of designing and implementing phased and gated systems for our clients, we have continuously sought to improve upon this approach. Improvements we have successfully implemented include—but are not limited to—the incorporation of concurrent activities; lean and agile methods; early-staged prototyping; and “kill quickly” methods.
One of the most successful improvements we have incorporated includes the integration of risks/assumptions during the entire new product development process. Acquiring and maintaining a razor sharp focus on commercial and technical risks has been a successful approach for helping our clients chose the right projects, and gain project momentum. However, when pursuing this new approach, it turns out that the structure of the traditional phased and gated process can get in the way…
“In fact, we have determined that there are three attributes of a phased and gated systems that tend to inhibit project momentum and risk identification:”
1) a focus on process activities
2) the control of risk at gates
3) process activities lacking focus on the most important project uncertainties
Let’s address each of these in turn:
1) A focus on process activities
A phased and gated system specifies what activities are to be performed in each phase, regardless of the nature of the project. Unfortunately, the timing of particular activities can be suboptimal for a specific project.
For example, we sometimes encounter situations where a team is planning to use a technology that is uncertain and new to the company. It is fairly unusual to see the team address the uncertainties of working with a new technology early in the phased and gated process. When the team actually starts working with the new technology within the phased and gated system, typically the ‘development’ phase, they inevitably encounter unexpected problems and delays as they learn to work with the new technology.
Unexpected and unrecognized risks can be a major source of delay and product failure. Anticipating and dealing with important uncertainties (e.g. technology) as early as possible within the process, prior to the ‘development’ phase, will inevitably improve project cycle time and success.
2) The control of risk at gates
The most important mechanism by which phased and gated systems address risk involves the use of gates. At each gate, the project team presents a specific deliverable to the gatekeepers (a management committee). The gatekeepers evaluate the project status and determine whether to: a) let the project continue; b) kill it; or c) put it on hold. Generally, the more complex the project becomes, the bigger the investment; the greater the risk; and the more gates the project will have to pass through.
Inevitably, this means that risk management occurs at discrete intervals, which can be measured in months, depending on the length of the project. In between gates, however, risks are not being evaluated. Meanwhile, resources and time may be wasted on unattractive projects.
A process that is focused on driving down uncertainties would allow more timely assessment and management of risk.
3) Process activities lacking focus on the most important project uncertainties
To make sure nothing is overlooked, the phased and gated process typically requires evaluation of the project through different lenses: financial, technical, value proposition, market, competition, legal, regulatory, manufacturing, supply chain, sales, customer service, etc. The phase activities usually require this broad analysis at a macro level in the first phase and the analysis becomes more detailed at each subsequent phase.
For example, the first phase of a market analysis may require an estimate of the total market size in terms of sales. If that estimate is attractive, the second phase may require determining an appropriate segmentation system and parsing the market size estimates by segments. The third phase may require estimating adoption rates over 5 years by segment.
This approach doesn’t take existing knowledge into account. If we already know the size of the market and how to segment it, and we have identified that the adoption rate is one of our biggest unknowns, why wait until phase three to tackle this risk? Instead, we should advance the ‘adoption rate’ activity to an earlier part of the project, in order to determine if it really is a viable product.
What do you think?
We would love to hear your input on how the phased and gated process is working for your organization, or if you are looking for a better way to develop products.
Need a quick refresher on the traditional phased and gated process, please go to this NPDbyte video to learn more: https://www.strategy2market.com/phase-gate/