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The Stage-Gate Idea to Launch System

Part 5. Product Innovation and Management

  1. Robert G. Cooper

Published Online: 15 DEC 2010

DOI: 10.1002/9781444316568.wiem05014

Wiley International Encyclopedia of Marketing

Wiley International Encyclopedia of Marketing

How to Cite

Cooper, R. G. 2010. The Stage-Gate Idea to Launch System. Wiley International Encyclopedia of Marketing. 5.

Author Information

  1. McMaster University, Hamilton, Ontario, Canada

Publication History

  1. Published Online: 15 DEC 2010

1 An Idea-To-Launch Roadmap

  1. Top of page
  2. An Idea-To-Launch Roadmap
  3. The Structure of Stage-Gate®
  4. A Walk-Through of the Stage-Gate® System
  5. Conclusion
  6. Bibliography

New products are critical to the survival and prosperity of the modern corporation. But product innovation is not so easy: new products fail at an alarming rate (about 1 in 10 new-product concepts succeeds); 44% of new-product projects fail to meet their profit objectives; and 49% are launched late to market (Adams and Boike, 2004; Cooper, 2001; Cooper, Edgett, and Kleinschmidt, 2003; Griffin, 1997).

A Stage-Gate® system is one solution that many leading companies have adopted to drive new-product projects to market quickly and effectively2. Almost every top-performing company has implemented a stage-and-gate system to drive their new-product projects through to commercialization, according to an APQC (American Productivity and Quality Center) benchmarking study into product innovation (Cooper, Edgett, and Kleinschmidt, 2003, 2005). PDMA (Product Development and Management Association) management best practices studies show similar adoption rates (Adams and Boike, 2004; Griffin, 1997).

A Stage-Gate® new-product process is simply a “playbook,” “game plan,” or road map to guide new-product projects from idea to launch. Here, we look at what a Stage-Gate® system is, and then at 10 best practices that top-performing businesses have built into their stage-and-gate methodologies. We also provide an outline of the Stage-Gate® system via a walk-through process.

2 The Structure of Stage-Gate®

  1. Top of page
  2. An Idea-To-Launch Roadmap
  3. The Structure of Stage-Gate®
  4. A Walk-Through of the Stage-Gate® System
  5. Conclusion
  6. Bibliography

The Stage-Gate® method breaks the product innovation process into a predetermined set of stages, each stage consisting of a set of prescribed, cross-functional, and parallel activities (see Figure 1). Gates are the entrance to each stage, and serve as quality-control and Go/Kill check points. This stage-and-gate format leads to the name “Stage-Gate®” process.

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Figure 1. The five-stage Stage-Gate® process is used by many businesses to drive new products from idea to launch.

The Stage-Gate® method is based on the experiences and observations of a large number of managers and firms from research by the author and others in the field. Since Stage-Gate® first appeared in print, it has been implemented in hundreds of leading firms worldwide, many of which have provided an excellent setting to further improve the process (Cooper, 2008).

2.1 The Stages

Stages are where the project team members execute key tasks to gather information needed to advance the project to the next gate. And there is a fairly standard or prescribed list of tasks for each stage. The specified tasks answer the following questions:

  • What does the management need to know at the end of this stage to make an informed decision to move forward?

  • What actions are therefore required to get this information?

For example, in Stage 2, Build the Business Case, a number of key tasks are required to deliver a business case, such as undertaking Voice-of-Customer research (see Voice of the Customer), doing a competitive analysis (see Competitive Advantage), defining the product, and doing a source-of-supply assessment.

Stages are cross functional: There is no R&D or marketing stage, and handoffs from one department to another are not permitted. Rather, Stage-Gate® is an integrated business process, with each stage consisting of a set of parallel tasks undertaken by people from different functional areas within the firm, working together as a team and led by a project team leader (see Integrated Product Development).

To manage risk via a Stage-Gate® method, the parallel tasks in each stage are designed to gather vital information – technical, market, financial, operations – to reduce both the technical and business risks of the project. Each stage costs more than the preceding one, so that the process is based on incremental commitments. As uncertainties decrease, expenditures are allowed to mount, and risk is managed.

The flow of the typical Stage-Gate® model is shown in Figure 1:

  1. Discovery

    prework designed to discover opportunities and to generate new-product ideas (see also Idea Management).

  2. Scoping

    a quick, preliminary investigation, and scoping of the project. This stage provides inexpensive information – based largely on desk research – to enable the list of projects to be narrowed before Stage 2.

  3. Build the Business Case

    a much more detailed investigation involving primary research – both market and technical – leading to a business case. This is where the bulk of the vital homework is done, which results in a business case: the product definition, the project justification, and a project plan (see Concept Testing).

  4. Development

    the detailed design and development of the new product, along with some product testing work (see Product Testing). The deliverable at the end of Stage 3 is an alpha-tested or lab-tested product. Full production and market launch plans are also developed in this potentially lengthy stage.

  5. Testing and Validation

    tests or trials in the marketplace, lab, and plant to validate the proposed new product, and its marketing and production or operations. Tasks include field trails or beta tests; test market or trial sell; and operations trials (see Pretest Market Models).

  6. Launch

    commercialization – beginning of full operations or production, marketing, and selling. Here the market launch, operations, distribution, and postlaunch plans are executed (see Launch Strategies).

2.2 The Gates

Preceding each stage is an entry gate or a Go/Kill decision point. Effective gates are central to the success of a fast-paced, new-product process:

  • Gates serve as quality-control checkpoints, ensuring that the project is executed properly.

  • Gates also serve as Go/Kill and prioritization decisions points: mediocre projects are culled out at each successive gate.

  • Finally, gates are where the action plan for the next stage is agreed, and the resources needed to execute the plan are committed.

Gate meetings are usually staffed by senior managers from different functions – the gatekeepers – who own the resources required by the project team for the next stage.

Gates have a common format:

  1. A Set of Required Deliverables

    what the project team must bring to the gate decision point. These deliverables are visible, are based on a standard menu for each gate, and are decided at the output of the previous gate. Management's expectations for project teams are thus made very clear.

  2. Criteria

    the project is judged against these to make the Go/Kill and prioritization decisions.

  3. Defined Outputs

    for example, a decision (Go, Kill, Hold or Recycle), an approved action plan for the next stage including resource requirements, and a list of deliverables for the next gate.

2.2.1 Types of Gate Criteria

Each gate has it own set of criteria for use by the gatekeepers:

  • Readiness Check

    These are Yes/No questions that check whether the key tasks have been completed, and that all deliverables are in place for that gate. A “No” signals a recycle to the previous stage because the project is not ready to move on.

  • Must Meet

    These are Yes/No or “knock-out” questions that include the minimum business criteria that a project must meet to move forward. A single consensus “No” signals a Kill decision.

  • Should Meet

    These are highly desirable project characteristics that are used to distinguish between superb projects and the minimally acceptable ones. These are typically in a scorecard format (see Portfolio Management) (Cooper, Edgett, and Kleinschmidt, 2002).

2.3 Building in Best Practices

A number of best practices are built into the Stage-Gate® idea-to-launch system to yield superlative results (see Success Factors for New-Product Development):

2.3.1 Tough Gates with Teeth for Sharper Focus, Better Project Prioritization

Most businesses' new-product efforts suffer from a lack of focus: too many projects, and not enough resources to execute them well (Cooper, 2005; Cooper, Edgett, and Kleinschmidt, 2002). Adequate resources is a principal driver of businesses' new-product performance; but a lack of resources plagues too many development efforts (Cooper, Edgett, and Kleinschmidt, 2003).

The need is for a new-product funnel (rather than tunnel) that builds in tough Go/Kill decision-points in the form of gates; poor projects are weeded out and more focus is the result. The expectation is that a significant percentage of projects will be killed at each gate, especially at the earlier gates (Gates 1–3 in Figure 1). The gates thus become the quality-control check points in the new-product process, checking the quality, merit, and progress of the project.

2.3.2 Products with Competitive Advantage – Differentiated Products, Unique Benefits, Superior Value for the Customer

Product superiority is one key to new-product success, yet all too often, when applying a new-product process, there is no attempt to seek truly superior products (see also Competitive Advantage; Value Proposition). An effective Stage-Gate® system builds in the quest for product advantage:

  • Some of the criteria at every gate focus on product superiority. Questions such as “Does the product have at least one element of competitive advantage?” become vital questions to rate projects.

  • Customer-related tasks designed to deliver product superiority are included in each stage of the process. Examples are given in the next section.

  • Project teams are required to deliver evidence of product superiority to gate reviews.

2.3.3 A Strong Market Orientation with Voice-of-Customer Inputs Throughout

A strong market orientation – executing the key marketing activities in a quality fashion – must be built into the new-product process. Six best-practice marketing actions that are incorporated into the stages of a robust Stage-Gate® system include the following:

  • customer-focused ideation to gain insights into customer problems;

  • preliminary market assessment in the very early phases of the new product project;

  • Voice-of-Customer research to identify unmet or unarticulated needs;

  • competitive product analysis to determine their strategy and how to surpass them;

  • value-in-use analysis to gauge the economic value of the product to the customer;

  • concept tests, preference tests, and trial sells to validate the product and the project.

2.3.4 Front-End Loading Projects Leading to Sharp, Early, and Stable Product Definition

New-product success or failure is largely decided in the first third of the project – in those crucial steps and tasks that precede the actual development of the product. The up-front homework defines the product and builds the business case for development. The ideal new-product process ensures that these early stages are carried out and that the product is fully defined before the project is allowed to become a full development project.

The need for solid up-front homework parallels the case for a strong market orientation. Top performer businesses ensure that the new-product process includes solid homework (Stages 1 and 2 in Figure 1) and stable, fact-based product definition. For example, they build in a product-definition check-point at Gate 3; and they halt projects if the homework and product definition are not in place.

2.3.5 A Fast-Paced Game Plan Via Parallel Processing and Simultaneous Execution

New-product teams face a dilemma. They are urged by senior management to compress the cycle time but also to cut down the failure rate – do it right! (see also Accelerated Product Development; Integrated Product Development) Simultaneous execution is one solution to the need for a complete and quality process, yet a process that meets time pressures (Cooper and Edgett, 2005; Morgan, 2005). Traditionally, new-product projects have been managed via a series approach: one task strung out after another, in sequence. Phrases such as “hand off” or even “throwing it over the wall” are common in this relay-race approach.

In contrast, with simultaneous execution, many activities are undertaken in parallel and concurrently rather than in series. The process is far more intense than a relay race, with more work getting done in an elapsed time period. Moreover, there is less chance of a task being skipped because of lack of time, as each task is done in parallel, not in series, and hence does not extend the critical path.

2.3.6 A True Cross-Functional Team Approach

The multifunctional nature of innovation coupled with the desire for simultaneous execution means that a cross-functional team approach is mandatory (see also Cross-Functional Team). The essential ingredients of this approach are

  • a cross-functional project with committed team players from the different functional areas;

  • a defined team leader, driving the entire project beginning to end, and with formal authority (coopting authority from the functional heads);

  • a fluid team structure, with new members being brought in or dropped as work requirements demand;

  • only a small core group of responsible and committed team players from beginning to end;

  • most important, a team that is accountable for the entire project's end results (not just responsible for one part of the project).

2.3.7 Adaptable and Agile Via Spiral Development

Spiral development is one way that fast-paced companies cope with changing or fluid information as the project proceeds (Cooper and Edgett, 2005). Often, a project team charges into development using a product definition based on information that was right at the time. But it was not right, or customer requirements changed, and when the product is ready for testing or market launch (Stage 4 or 5 in Figure 1), it is discovered that the product is not quite right. This traditional linear approach means that the team must then recycle back to the development stage, and make the necessary changes to the product and its design.

By contrast, smart project teams practice spiral development and adapt and adjust their project over time, as in Figure 2. Like the “linear team” above, they do their front-end homework (Voice-of-Customer work, competitive analysis, and concept testing) and define the product based on best-available information. But quickly, the “adaptive-spiral team” creates the first version of the product (often a virtual one) and tests it with the customer, seeking immediate feedback. The team uses this feedback to produce the next, more complete version of the product – a working model or protocept. In this way, these fast-paced teams remove unnecessary rework and quickly move to the finalized product by undertaking a series of these iterative steps or loops: build, test, obtain feedback, and revise.

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Figure 2. Stage-Gate® builds in adaptability and agility via a series of “build–test–feedback–revise” iterations or loops.

2.3.8 Risk-Adjusted and Scalable

When originally conceived, companies typically designed a single stage-and-gate process – “one size fits all projects,” usually designed for the most complex development projects (Cooper, 2008). Most projects, however, were much simpler – modifications and improvements – and so teams simply circumvented the “large process.” The dilemma was that these small projects consumed the bulk of development resources, and so the firm ended up having most of the funds spent on projects that were “outside the system.”

Now there are streamlined versions of Stage-Gate®, including Lite and XPress, designed to handle lower risk, simpler projects. For example, in the model in Figure 3, all proposed development projects enter Gate 1 on the left for an initial screen and routing decision, and depending on the risk level, follow different versions of Stage-Gate®. Additionally, some companies engaged in very innovative developments – for example, advanced technology projects – have adopted quite different development processes to handle these high-risk, longer-term, and highly uncertain projects (Cooper, 2006).

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Figure 3. Stage-Gate® XPress and Lite are used for lower-risk projects. Major new-product projects go through the full five-stage process (top). Moderate-risk projects, including extensions, modification, and improvements, use the XPress version (middle). Sales-force requests (very minor changes) use the Lite process (bottom).

2.3.9 A Lean, Efficient Process with Time Wasters Removed

The idea-to-launch system must be built for speed. This means eliminating all the time wasters and work that add no value in the current new-product process. Using principles borrowed from lean manufacturing, management undertakes “value stream analysis,” reviewing the development process from end to end, scrutinizing every required procedure, meeting, or paperwork that must completed (Kennedy, 2003), and removing any work that does not add value. The end result is that current versions of Stage-Gate® are much leaner and more efficient than previous systems.

2.3.10 Performance Metrics in Place

The idea-to-launch system should feature solid performance metrics, so that senior management can assess how well the development process is working and hold project teams accountable for results. For individual new-product projects, success metrics often include (see also Innovation Metrics) the following:

  • first-year sales (versus the sales forecast in the business case at Gate 3);

  • product profitability versus that forecast in the business case;

  • on-time performance (actual versus promised launch date) (Cooper, Edgett, and Kleinschmidt, 2003, 2005).

Top-performing companies also build in a postlaunch review 12–18 months after launch, where these metrics are used to gauge the ultimate success of the project. Here the project's actual results are assessed versus those results promised when the project was approved at Gate 3. Additionally, sales, profits, and on-time performance results for individual projects can be aggregated or averaged to yield performance metrics for the business's entire new product effort.

3 A Walk-Through of the Stage-Gate® System

  1. Top of page
  2. An Idea-To-Launch Roadmap
  3. The Structure of Stage-Gate®
  4. A Walk-Through of the Stage-Gate® System
  5. Conclusion
  6. Bibliography

Here is a more detailed look at the Stage-Gate® system – of what is involved at each stage and gate in the model outlined in Figure 1 (Cooper, 2001, 2005, 2008).

3.1 Discovery Stage

Ideas are the vital feedstock to the process. Many companies consider ideation so important that they handle this as a formal stage in the process, called Discovery, with many activities built into this stage, such as (Cooper and Edgett, 2008)

  • undertaking fundamental technical research, seeking new technological possibilities (Cooper, 2006);

  • doing Voice-of-Customer research to uncover unmet, unspoken needs (includes ethnography, working with lead users, and depth interview with customers);

  • competitive analysis and reverse brainstorming competitive products;

  • installing an idea suggestion scheme to solicit ideas from the company's own employees;

  • using strategic planning to uncover disruptions, gaps, and opportunities;

  • open innovation – welcoming ideas and solutions from outside the company (see Open Innovation).

3.2 Gate 1: Idea Screen

Idea screening is the first decision to commit resources to the project: If the decision is Go, the project moves into the scoping or preliminary investigation stage. Gate 1 signals a preliminary but tentative commitment to the project, and is a gentle screen that amounts to subjecting the project to a handful of key must-meet and should-meet criteria. Financial criteria are typically not part of this first screen, since relatively little reliable financial data are available here.

3.3 Stage 1: Scoping

This first and inexpensive homework stage determines the project's technical and marketplace merits: a quick scoping of the project, involving only desk research (no primary research). Stage 1 is often done in less than one calendar month's elapsed time, and 5-10 person-days' work effort. The key tasks include

  • a preliminary market assessment whose purpose is to determine market size, market potential, and likely market acceptance, and to begin to shape the product concept;

  • a preliminary technical assessment whose purpose is to assess development and manufacturing routes (or source of supply), technical and operations feasibility, time and cost to execute, and technical, legal, and regulatory risks.

Stage 1 thus provides for the gathering of both market and technical information – inexpensively and quickly – to enable a cursory financial and business analysis as input to Gate 2.

3.4 Gate 2: Second Screen

The project next proceeds to more rigorous screen at Gate 2, where the project is reevaluated with new information obtained in Stage 1. If the decision is Go, the project moves into a heavier spending stage. A checklist and scoring model facilitate this gate decision.

3.5 Stage 2: Build the Business Case

Stage 2 is a detailed investigation stage, which defines the product and verifies the attractiveness of the project prior to heavy spending. It is also the critical homework stage, the one found to be so often weakly handled.

Stage 2 sees Voice-of-Customer research undertaken to exactly determine the customer's needs, wants, and preferences. Competitive analysis is also a part of this stage. Another market activity is concept testing where potential customers' reactions to the concept are gauged.

The detailed technical appraisal at Stage 2 focuses on the technical feasibility of the project. Here, customer needs are translated into a technically and economically feasible solution on paper – preliminary design or laboratory work, but not a full development effort. An operations appraisal is undertaken, where issues of manufacturability, source of supply, costs, and investment required are investigated. And detailed legal, patent, and regulatory assessment work is done to remove risks and map out the required actions (see also Intellectual Property Rights).

Finally, a detailed business and financial analysis is conducted, typically a net-present-value calculation, complete with sensitivity analysis to consider possible risks. The result of Stage 2 is a business case for the project: the product definition is agreed upon; and a thorough project justification and detailed project plan are developed.

3.6 Gate 3: Go to Development

This is the final gate prior to the development stage, the last point at which the project can be killed before entering heavy spending. Once past Gate 3, financial commitments are substantial, thus Gate 3 is usually staffed by senior management.

Gate 3 subjects the project to a rigorous set of readiness-check, must-meet, and should-meet criteria. And because a heavy spending commitment is the outcome of a Go decision, the results of the financial analysis are an important part of this screen.

3.7 Stage 3: Development

Stage 3 sees the implementation of the development plan and the physical development of the product. Lab tests, in-house tests, or alpha tests ensure that the product meets requirements under controlled conditions. Also, the operations or source-of-supply process is mapped out. Extensive in-house tests, alpha tests, or lab tests usually take place in this stage as well. The deliverable at the end of Stage 3 is a lab-tested or alpha prototype of the product.

The emphasis in Stage 3 is on technical work. But marketing and operations activities also proceed in parallel. For example, market-analysis and customer-feedback work continue concurrently with the technical development, with constant customer feedback sought on the product as it takes shape via spiral development. Meanwhile, detailed test plans, market launch plans, and production or operations plans, including operations facilities requirements, are developed. An updated financial analysis is prepared, while regulatory, legal, and patent issues are resolved.

3.8 Gate 4: Go to Testing

This postdevelopment gate is a check on the progress and the continued attractiveness of the project. Development work is reviewed, ensuring that the developed product is indeed consistent with the original definition specified at Gate 3. This gate also revisits the project's economics via a revised financial analysis. The validation plans for the next stage are approved, and the detailed market launch and operations plans are reviewed for future execution.

3.9 Stage 4: Testing and Validation

This stage validates the viability of the project: the product, its production process, customer acceptance, and its economics. The key tasks are

  • In-House Product Tests

    extended lab tests or alpha tests to check on product quality and product performance under controlled or lab conditions.

  • User, Preference, or Field Trials of the Product

    to verify that the product functions under actual use conditions, and also to measure purchase intent.

  • Trial, Limited, or Pilot Operations

    to test, debug, and prove the operations process, and to determine more precise costs and throughputs.

  • Pretest Market, Test Market, or Trial Sell

    to gauge customer reaction, measure the effectiveness of the launch plan, and determine expected market share and revenues.

3.10 Gate 5: Go to Launch

This final gate opens the door to full commercialization: market launch, and operations start-up. Criteria for passing the gate focus largely on the expected financial return, the project's readiness for launch, and the appropriateness of the launch and operations start-up plans.

3.11 Stage 5: Launch

This final stage involves implementation of both the market launch plan and the operations plan. Equipment is acquired, installed, and commissioned (although sometimes this is done earlier in Stage 4, as part of the Stage 4 operations trials); the logistics pipeline is filled; and selling begins.

3.12 Post-Launch Review

Two Post-Launch Reviews are typical. The first, an interim review, occurs about two to four months after launch when initial commercial results are available. Here a retrospective analysis is done, which assesses the project's strengths and weaknesses, and identifies what can be learned from the project. This task builds in continuous improvement.

The final review is held once the project's commercial results are known, typically 12–18 months after launch. Here, the project and product's performance is reviewed: The latest data on the revenues, costs, expenditures, profits, and timing are compared to projections made at Gates 3 and 5 to gauge performance. This final review marks the end of the project.

4 Conclusion

  1. Top of page
  2. An Idea-To-Launch Roadmap
  3. The Structure of Stage-Gate®
  4. A Walk-Through of the Stage-Gate® System
  5. Conclusion
  6. Bibliography

Product innovation is perhaps the most important endeavor of the modern corporation. Without a systematic new-product process, however, often product development suffers. The Stage-Gate® system is an enabler or guide, building in best practices and ensuring that key tasks and decisions are undertaken better and faster. But Stage-Gate® is considerably more complex than the simple diagram in Figure 1 suggests; there are many intricacies in the details – both the “what's” and the “how to's.” And implementing the process is also a major challenge. Many leading companies, however, have adopted a world-class idea-to-launch Stage-Gate® system, and the results have been positive: better, faster, and more profitable new-product developments.

End Notes
  1. 1

    This material is based on several previous publications by the author. See Adams and Boike 2004 and Cooper 2005.

  2. 2

    The term Stage-Gate® was coined by the author, and is a trademark of the Product Development Institute Inc.: www.prod-dev.com.

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  1. Top of page
  2. An Idea-To-Launch Roadmap
  3. The Structure of Stage-Gate®
  4. A Walk-Through of the Stage-Gate® System
  5. Conclusion
  6. Bibliography
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