1. Stage Gate - Lecture 31 Stage Gate – Lecture 3 Cultural Issues © 2009 ~ Mark Polczynski

2. Stage Gate - Lecture 32 Strategic Technology Planning Scenario Planning Voice of the Customer Intellectual Property Generation Ideation Technology Roadmapping Strategic Technology Planning Scenario Planning Voice of the Customer Intellectual Property Generation Ideation Technology Roadmapping Strategic Technology Development Stage Gate Development Stage Gate Review Strategic Technology Development Stage Gate Development Stage Gate Review This Course: Strategic Technology Management

3. Stage Gate - Lecture 33 Stage Gate Process: 1.What problem are we trying to solve? 2.Stage gate development process. 3.Stage gate review process. 4.Review process cultural issues.

4. Stage Gate - Lecture 34 Technology Development Stage Gate Process Stage gate reviews Where projects get killed! Stage gate reviews Where projects get killed!

5. Stage Gate - Lecture 35 Impact on Morale So, Stage Gate review is about killing off projects. You start with many small projects and end up with few big projects. This means that you kill off many projects. This can lower the morale of the engineers. You are killing off their great ideas!

6. Stage Gate - Lecture 36 Hey! Wait a minute! I didn’t come here to have some guy tell me how to kill off my projects! Well… You are much better off helping kill off your own bad projects before they get out of control… Than to have someone else kill off your good projects because they ran out of money. It’s your choice!

7. Stage Gate - Lecture 37 The Six Realities of Stage Gate Reviews: Even when you try to do everything correctly, some things will go wrong. Here are six different things to worry about. These tend to be related to: Organizational culture, Human behavior.

8. Stage Gate - Lecture 38 Example: Three-Stage Technology Development Project Number of Projects Average COST Per Project Early Project LifeLate StageNumberCost Per Project ($K) Total Cost ($K) A60503,000 B152003,000 C410004,000 $10,000 < 4:1 Attrition How to spend a $10M budget A B C

9. Stage Gate - Lecture 39 Your boss thinks he is spending all his money on Stage C. But actually, you must balance spending across all three stages. Even though most of the projects will be killed! This takes significant managerial courage. StageProjectsKilledCost PerTotal CostCost of Killed A6045$50K$3M$2.25M B1511$200K$3M$2.20M C41$1M$4M$1M $10M~$5M

10. Stage Gate - Lecture 310 Number of Projects Kill projects at ~ 4:1 attrition rate. From the preceding example… Early Project Life Late 60 15 4

11. Stage Gate - Lecture 311 You never kill as many as you intend, so… Number of Projects Early Project Life Late Goal You always have more Stage B and C projects than you can support, so… You never have enough money or people to start as many Stage A projects as you intend. Reality

12. Stage Gate - Lecture 312 Reality: You never kill as many as you intend, So you never start as many as you intend. Management Perception: Poor Stage Gate Review Process, and/or Incompetent reviewers. But Also: Educational system trains us to never raise our hand unless we have the right answer. There is significant unconscious pre-process screening by project initiators. Many of the small projects at the front end are really pretty good. Bottom Line: You will have to discipline yourself to kill relatively good projects.

13. Stage Gate - Lecture 313 You want to have a good balance among the various Stage Gate Review decisions. You do not want the system clogged up with projects on Hold. Here’s a possible example of stage gate targets… DispositionTarget Continue25% Kill65% Redirect5% Hold5% < 4:1 attrition target

14. Stage Gate - Lecture 314 Excessive number of projects put on hold due to lack of resources. This clogs up system with things that you will probably never get around to anyway! This is “lottery ticket management”. DispositionTargetReality Continue25%10% Kill65% Redirect5% Hold5%20% At some point, you must kill these!

15. Stage Gate - Lecture 315 Lottery Ticket Management: Hey! You never know! This this lottery ticket (or project) might be worth $100,000,000! But it probably isn’t, So kill it already! If you want to play lottery ticket project management, Then use your product development funds to buy lottery tickets, The odds are better!

16. Stage Gate - Lecture 316 G1G1 A1A1 A2A2 A3A3 G2G2 I1I1 I2I2 O2O2 O1O1 Stage Gate Development Process Stage Gate Review Process Always use the Stage Gate process for every project..

17. Stage Gate - Lecture 317 Stage Gate Reviews will slow projects down! Reviews are sequential events scheduled at specific times and attended by particular individuals, usually very busy individuals. Reviews usually grouped in bunches to accommodate reviewers. There may be significant project delays while waiting for the project’s next gate review. This does slow things down. But killing bad projects earlier in the project ultimately frees up resources that would have been wasted on weak projects. So, projects slow down, but overall throughput increases. If you don’t believe this, read The Goal, by Eli. Goldratt.

18. Stage Gate - Lecture 318 Reality 4 Long-Term Impact… If you are going to do Stage Gate, Then everyone has to play by the rules. If people start going around the system for personal advantage, The system will collapse. Some projects will suffer, But in the long run everyone benefits.

19. Stage Gate - Lecture 319 In Stage Gate, you provide exactly the information that you need exactly when you need it. Whole idea is to spend as little money and time as possible to make a good (not perfect) decision. Goal: Never spend one penny more than what you need to get through the gate. Never spend one second more than you need. This is the “survive and advance” mentality. You only need one more goal than your opponent to win.

20. Stage Gate - Lecture 320 Big mental shift: This goes against human nature, Especially for engineers, who are taught to be highly risk-adverse. Tendency on part of engineers is to overwhelm decision-makers with too much information to justify continuing with the project. But here, you provide exactly the information that you need exactly when you need it. This takes courage on the part of the project team!

21. Stage Gate - Lecture 321 Goal: Most projects are killed – best are preserved Number of Projects Average COST Per Project Early Project LifeLate StageNumberCost Per Project ($K) Total Cost ($K) A60503,000 B152003,000 C410004,000 < 4:1 Attrition A B C

22. Stage Gate - Lecture 322 The vast majority of projects will be killed. People will see this as: Personal failure – My project was killed, I must be a bad engineer, Disruptive and unsatisfying - Constantly starting new projects – never “finishing” anything. Threat at performance review time – - What am I being judged on? - What is “success”? What is “failure”? - What is “excellence”? Threat to job security – Constantly killing projects implies an insecure position. This is the ultimate cultural challenge of Stage Gate!

23. Stage Gate - Lecture 323 The Six Realities of Stage Gate Reviews: 1.You allow resources migrate to last-stage projects, So you can’t start new projects. 2.You don’t kill as many projects as you need to, So you can’t start new projects. 3.You put too many projects on hold due to lack of resources, So your new product pipeline clogs. 4.Stage gate processes slow individual projects down, So people abandon the system. 5.Project teams overwhelm system with info to support project continuation, So excess resources are consumed needlessly. 6.Culture can’t tolerate “failure-driven system”, So project teams refuse to participate. Final note: There are no magic solutions to these problems!