Carnegie Mellon Qatar © Robert T. Monroe Course IPD Processes: Stage-Gate and Cagan/Vogel Robert Monroe January 23, 2012

Carnegie Mellon Qatar © Robert T. Monroe Course Goals - By The End Of Class Today, You Should: Understand why organizations use a structured method such as Stage-Gate or Cagan/Vogel to direct their innovation investments efficiently and effectively Understand the concept of stages and gates in the Stage- Gate process Be able to use the SET factor analysis to identify, evaluate, and understand how broad Social, Economic, and Technology changes can create Product Opportunity Gaps

Carnegie Mellon Qatar © Robert T. Monroe Course Innovative Product Development Processes

Carnegie Mellon Qatar © Robert T. Monroe Course The Stage-Gate Process

Carnegie Mellon Qatar © Robert T. Monroe Course Launch * The Cagan and Vogel Innovation Process Realize Conceptualize UnderstandIdentify * The launch stage is not part of the Cagan / Vogel process but it is something we will explore

Carnegie Mellon Qatar © Robert T. Monroe Course The Good News: Lots of Ideas Customer Feedback Employee Suggestions Competitive Offerings Technology Breakthroughs Lots of Ideas!

Carnegie Mellon Qatar © Robert T. Monroe Course The Bad News: Limited Resources Organizational Resources NPD Resources Available for Innovative New Product Development

Carnegie Mellon Qatar © Robert T. Monroe Course The Problem: Which Ideas Do We Invest In? Lots of Ideas NPD Resources

Carnegie Mellon Qatar © Robert T. Monroe Course Resource Allocation: The Stage-Gate NPD Process In the early stages of developing new market opportunities and bringing innovative services and products to market, one of the most critical tasks is appropriately backing and funding the most promising opportunities, while eliminating non-promising ideas as quickly and as cheaply as you can determine they are not promising, but no quicker. The Stage Gate process [CE09] provides a rigorous, structured way for organizations to do so

Carnegie Mellon Qatar © Robert T. Monroe Course Overview Of The Stage-Gate Process Stages are steps in the New Product Development (NPD) process where a specific set of work activities are done to produce a specific set of deliverables Gates are decision points that come at the end of each stage. Stage nStage n+1 Gate n+1 Gate n+2

Carnegie Mellon Qatar © Robert T. Monroe Course New Product Development (NPD) Stages Discovery Stage Gate 1 Stage 1: Scoping Gate 2 Stage 2: Biz Case Stage 3: Development Gate 2 Gate 4 Stage 4: Test & Validate Gate 5 Stage 5: Launch Source: [CE09] page 8.

Carnegie Mellon Qatar © Robert T. Monroe Course Gates: Go/No-Go Decision Points Gates are key decision points in the process –Always a cross-functional group of gatekeepers –Gates should force a decision to be effective Possible outcomes from a gate meeting: –Go: move ahead to the next stage, commit appropriate resources –No-Go: the project does not meet the criteria required to move forward. Stop the project and reallocate project resources. –Recycle: the project shows promise but has not yet met the criteria for moving to the next stage. Continue work in the current stage, return with additional information. Resources are allocated as needed to get requested information Decision Criteria Deliverables From Previous Stage Decision, Resources Allocated, Outputs Source: [CE09] page 10.

Carnegie Mellon Qatar © Robert T. Monroe Course Managing Risk With Stage-Gate Level of risk and uncertainty Time (Stages) Resources allocated

Carnegie Mellon Qatar © Robert T. Monroe Course Launch * The Cagan and Vogel Innovation Process Realize Conceptualize UnderstandIdentify * The launch stage is not part of the Cagan / Vogel process but it is something we will explore

Carnegie Mellon Qatar © Robert T. Monroe Course Mapping Stage Gate to Cagan/Vogel Process Source: [CV02] Chapter 5 and [CE09] Launch * Realize Conceptualize UnderstandIdentify Discovery Stage Scoping Stage 1 Business Case Stage 2 Development Stage 3 Stages 4 & 5

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 1: Identify The Opportunity Goals: –Identify and evaluate a set of promising Product Opportunity Gap (POG’s) –Choose the most appropriate POG to move forward with Primary results: –Product opportunity statement (hypothesis) –Initial scenario that illustrates the opportunity Methods –Brainstorming, observing, researching Social, Economic, and Technology (SET) factors –Generating POGs based on SET factors –Evaluating and filtering POG ideas generated –Scenario generation, feedback, and refinement Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 2: Understand The Opportunity Goals: –Much deeper understanding of customer and customer’s Value Opportunities (VO’s), translated into product criteria Results: –In-depth understanding of the customer/user, captured through refined customer scenarios and VOA’s –List of product characteristics and constraints Methods –Primary research: observe, interview, listen, task analysis, stakeholder analysis –Secondary research: human factors, lifestyle reference, dive deeper on SET factor changes Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 3: Conceptualize The Opportunity Goals: –Turn Value Opportunities into product concepts that are perceived as useful, usable, and desirable –Generate many concepts, evaluate, refine, iterate, reduce to a single concept to move to stage 4 Results: –Clearly articulated product concept –Clear market definition –Visual, and/or physical prototypes that can be shown to and evaluated by potential customers –Demonstration or belief that product is technically feasible Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 4: Realize The Opportunity Goals: –Develop product or service – move from prototype to product –Complete marketing plan, financing, initial production, etc. –Product or service is ready to be sold to customers Results: –Production processes defined –Go to market plan completed (marketing, positioning, etc.) –Sales channels lined up –Placement and contracts with distributors, retailers, etc. negotiated Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 5: Launch the Product Goals: –Deliver the product or service to customers –Start generating revenue –Ramp up production –Support organization is up and running Results: –Product or service offering is available to customers –Distribution channels functioning –Sales lead to inbound cash flow Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Managing Risk With Stage-Gate Level of risk and uncertainty Time (Stages) Resources allocated

Carnegie Mellon Qatar © Robert T. Monroe Course SET Factors and Product Opportunity Gaps

Carnegie Mellon Qatar © Robert T. Monroe Course Phase 1: Identify The Opportunity Goals: –Identify and evaluate a set of promising Product Opportunity Gap (POG’s) –Choose the most appropriate POG to move forward with Primary results: –Product opportunity statement (hypothesis) –Initial scenario that illustrates the opportunity Methods –Brainstorming, observing, researching Social, Economic, and Technology (SET) factors –Generating POGs based on SET factors –Evaluating and filtering POG ideas generated –Scenario generation, feedback, and refinement Source: Cagan and Vogel, Creating Breakthrough Products, Chapter 5. Launch * Realize Conceptualize UnderstandIdentify

Carnegie Mellon Qatar © Robert T. Monroe Course Social, Economic, and Technology (SET) Factors Identifying and observing broad Social and Economic changes in a society can help you discover gaps that current products and services are not meeting. Likewise, Technological advances can create opportunities to create products and services that would have been previously technically impossible –Technological advances often also create new (and different) problems for people or societies, which can also be fertile ground for product opportunities In general, you are looking for broad, enduring changes to use as a basis for new product opportunities

Carnegie Mellon Qatar © Robert T. Monroe Course SET Factors Social Social and cultural trends Reviving historic trends Technical Introduction of new technologies Re-evaluating existing technologies Economic State of the economy Change in focus on where to spend money Levels of disposable income Product Opportunity Gap Source: [CV02] page 9

Carnegie Mellon Qatar © Robert T. Monroe Course SET Factor Exercise Divide into three groups (one S, one E, one T) Work as a group to come up with a list of at least 20 broad forces / changes / trends for your assigned topic (S, E, or T) that affect personal transportation in some way Identify trends that are applicable to: –Qatar –The GCC countries –Across Arab League nations –Throughout the world Write them down and be prepared to present them for discussion using the whiteboards around the room.

Carnegie Mellon Qatar © Robert T. Monroe Course SET Factor Discussion Do you see some common themes emerging? Which of these SET factors are mostly the same throughout the GCC nations? Throughout the Arab League nations? Globally? Which of these SET factors vary considerably throughout the GCC nations? Throughout the Arab League nations? Globally?

Carnegie Mellon Qatar © Robert T. Monroe Course Product Opportunity Gaps (POG’s) The next step is to identify Product Opportunity Gaps, or POGs based on your SET factor analysis. A Product Opportunity Gap is the gap between what is currently on the market and the possibility for new, or significantly improved, products that result from emerging trends. –Source: [CV02] page xxxi (glossary) Identifying product opportunity gaps will be the focus of Wednesday’s class…

Carnegie Mellon Qatar © Robert T. Monroe Course So What Conclusions Can We Draw? Take a few minutes to think about what conclusions you can draw from all of the examples and exercises discussed in class today. Write down two conclusions / observations that you are willing to share with the class

Carnegie Mellon Qatar © Robert T. Monroe Course References [CE09] Robert G. Cooper and Scott J. Edgett, Successful Product Innovation, Product Development Institute, Inc., ISBN: [CV02] Jonathan Cagan and Craig M. Vogel, Creating Breakthrough Products, Prentice Hall, 2002, ISBN: