The Ultimate Guide to the Phase-Gate Process
Jan 27, 2023
While improvisation might bring the zest to a comedy performance or to your Saturday night’s Bolognese sauce, in the world of innovation a systematic approach is the way to go. And the zest here is a fitting and well-thought-through innovation management process.
It has been a hot minute since we last covered the topic. So, for the New Year, we will dust off our knowledge and insights and share updated guides to innovation management techniques.
In this guide, we will take a deep dive into the Phase-Gate process, arguably one of the best-known innovation management techniques.
What is it, and why it might be just the right approach to innovation management for your organization? Let’s jump right into it.
A more linear, sequential approach such as the Phase-Gate process to product innovation and management isn’t all that new.
Already in the mid-20th century, engineering companies were adapting a segmented manufacturing journey with the aim of better allocating their budgets or shutting down projects that are failing to deliver expected results.
However, a refined version of the Phase-Gate process (under the name Stage-Gate© Discovery-to-Launch Process) was offered by Dr. Robert G. Cooper in the 1980s. It was originally introduced as a faster way to manage product innovation.
In short, it is a segmented (do-review) innovation management and New Product Development (NPD) technique. It is used to efficiently manage resources, prioritize initiatives, and lead the project from the early ideation steps, through development and prototyping to launch.
Cooper’s Stage-Gate process has a very specific and rigid structure, and while many use that term to refer to their management techniques, in reality, most organizations tweak the original structure and adapt it to their unique circumstances and ways of developing products.
Thus, any process that has a linear, segmented model with regular assessments and go/no-go decisions is commonly referred to as a Phase-Gate process.
Since day one, the goal of the technique has been to divide a lengthy product development process into several well-defined steps (phases) to ease its evaluation along the way. Such an approach allowed managers to see whether the project is still on track to fulfill the promise of the initial idea or has it missed the perfect time to enter the market.
Just like with anything popular and well-known, the Phase-Gate process attracts a healthy amount of criticism. It is mainly criticized for its rigid structure which can stifle creativity since it is based on extensive research, detailed planning, and continuous double-checking. However, this strict structure and frequent check-ins are also the reason why the Phase-Gate is still popular, decades after its introduction.
Regular review processes allow organizations to identify and address issues early in the development stage. If any shortcomings would be discovered during the regular check-ins (gates), the project would be killed, paused, or sent back for a rework. In return, the elimination of weak projects would allow the organization to save time and money, as well as unlock more value by reallocating resources to more lucrative ideas.
Likewise, a project deemed valuable and promising would be green-lighted and would proceed to the next phase, be it prototyping, testing or launch.
At the end of the day, the Phase-Gate process gives an opportunity for the organization to manage the development of a product systematically and efficiently, minimizing risks, and ensuring that resources get allocated to the most viable projects, thus increasing the chances of the overall innovation portfolio being successful.
The objective of the Phase-Gate process is to minimize risks in product or service development, allocate resources more efficiently, and increase the overall chance of success for the innovation portfolio.
The Phase-Gate process can be a great fit for big organizations where a hefty upfront investment (time /money) is typically needed to deliver a product to the market, or in industries where there are specific regulatory constraints.
For example, complicated projects like developing and manufacturing a new drug, or a smartphone device while difficult and requiring a very diligent, well-coordinated approach, are fundamentally predictable, hence they can be successfully planned out in advance and benefit from the Phase-Gate process.
So, common examples of industries where the process is used include the pharmaceutical sector, construction industry, electronics, manufacturing, and similar. Usually, as the applicable industries indicate, those organizations are quite large.
On the other hand, if you are running a low-risk project or a complex, disruptive initiative, the Phase-Gate process might become burdensome and too time-consuming.
A good example of low-risk cases might be any small incremental improvements to an existing product, a customer pre-ordering or committing to a contract, then part of the risk consideration is the customer's responsibility, and rigorous gatekeeping becomes counterproductive.
Complex projects, on the other hand, such as creating a completely new type of business, a disruptive product, etc. are all unpredictable. It means that you can’t know in advance how changing one thing will affect another, so it’s nearly impossible to plan in advance. For these situations, more iterative and agile methods are likely to win against the Phase-Gate technique.
Thus, it is important to know when to adapt the Phase-Gate process to your own projects and when to green-light small endeavors from the get-go and just see them unfold.
While its roots and main benefits come from and for NPD processes, any complicated and time-consuming project can benefit from a well-structured Phase-Gate approach.
any complicated and time-consuming project can benefit from a well-structured Phase-Gate approach
Even in unpredictable projects, key ideas of the process can be useful, shifting focus on eliminating risks one at a time and granting funding in tiers as the team makes progress, not all at once.
To get a better understanding of what parts of the process could be used and when, let’s take a look at all its elements one by one.
To kick off the Phase-Gate process, you need to have an idea. It can derive from early-stage brainstorming sessions, a fruitful chat over coffee, or maybe even a well-planned ideation process. Either way, this idea-generation period in the Phase-Gate process is called the discovery phase or phase 0.
In an innovation process, the discovery focuses on identifying the right problem or opportunity to address. On top of all the brainstorming and creative thinking, it often includes a lot of field research.
Once you have the idea, you then work toward scoping it (phase 1), ensuring it is feasible (phase 2), developing (phase 3), testing and validating (phase 4), then finally launching it (phase 5). So, in total, the Phase-Gate process consists of six distinct idea development steps: discovery, scoping, feasibility, development, validation, and launch.
The Phase-Gate process consists of six distinct idea development steps: discovery, scoping, feasibility, development, validation, and launch
In addition, there are five continuous and one post-project review point - the so-called gates. Gates are pre-defined checkpoints where decision-makers assess the progress of the process and decide either to cancel the project or grant additional resources to it.
Thus, a review is necessary to harness the full value of your project. The gate review can also act as a short break for a difficult launch, pausing the development or sales process to implement fixes or improvements.
So, in short, the Phase-Gate process might look a little bit like this:
The above is a simplified version of a typical process. However, the Phase-Gate process can be molded to your unique needs, and many organizations indeed choose to do so.
But before we touch on that subject, let’s get a better understanding of each phase and the structure of the most common gates.
First, to kick off the innovation process, you need ideas worth developing. In Phase-Gate, this step is called the discovery phase. Discovery creates a perfect environment for the ideation process, during which you and your team are generating and communicating ideas.
For NPD, where the Phase-Gate process is used the most, the discovery phase focuses on the problem or opportunity. Here, it is crucial to know what your potential customer's needs and wants are. So, for that purpose, an organization can employ a framework such as the Jobs To Be Done theory.
It is worth noting that one should not limit themselves to ideas from their team only. Suggestions can come from outside your organization too, they can be sourced from inter-departmental brainstorming sessions, market research, collecting feedback from customers, suppliers, product teams, etc.
In short, during the discovery, you generate a good idea, and during the Scoping phase, you map out some of the key risks and hypotheses associated with the idea and turn it into a tangible concept that you could start to develop.
During this step, the initial feasibility is considered, and market research is conducted. The Scoping phase is an excellent time to utilize SWOT or PESTEL analysis.
During the Scoping phase, it is crucial to understand the current supply and demand in the market, to determine what can be offered.
However, not every good-sounding idea is worth developing and during the scoping phase, it should be evaluated based on the organization's priorities, not only the market fit.
The Feasibility phase (often referred to as Business Case or Business Viability) is the glue that pulls and holds your project together. In short, it is an important step of the Phase-Gate process, during which an actionable plan for the development of the product/service is created.
If your project gets the green light after this phase, it will move to the development step, thus use this time wisely and consider all “what ifs” in advance to avoid any possible hiccups.
The feasibility phase is complicated and time-consuming, and it is recommended to divide it into the following steps:
The developing phase is meant to work on a “tangible” prototype of the new product or service. Design and development teams should work according to pre-set goals and clear KPIs. The SMART goals approach can be a useful tool to break down the process into actionable steps.
In addition to product/service development and design, it is time to focus on a marketing campaign and plan how to reach your target audience.
Early-stage (alpha- or lab-) testing might take place during the development phase. The ideal goal of this stage is to prepare an early working prototype, ready and set to go into the testing phase.
The goal of the Validation phase is naturally to validate your prototype and for that, testing takes place. It is important to determine whether the prototype delivers any value and did it really meet the needs and objectives defined in the earlier stages. This step is all about polishing the rough edges, testing marketing, and distribution channels, and testing processes around the product.
Early-stage testing took place in the previous phase, but now it is time to see the product in action and gather as much feedback as possible. You do not want to rush a half-operating, half-failing product to the launch phase hoping for the best. You want to be ahead of all the possible issues and during this phase, you should ensure the following tests are taking place:
The validation step gives a chance to make the final tweaks and fixes to the project and if it passes the post-validation review step, it successfully moves to the launch phase.
However, while it sounds simple on paper, the launch phase is the step where all of the departments meet and have to work in perfect sync. Alongside the marketing department working their magic and the knowledgeable sales team, you must ensure the following are in order too: volume of production, methods, and channels for customer acquisition and delivery.
One thing that is important to plan for the launch is customer support. You might exhaust all the means of testing the product pre-launch, yet you will never be able to 100% predict how it will really behave in the market. In case your product gets a lot of attention, be it good or bad, a knowledgeable and dedicated support team will eliminate possible bottlenecks.
With that said, the launch phase is a long journey away from those first, shy ideation steps you take in the discovery phase. Your initial idea will be analyzed and scrutinized under a magnifying glass during the full Phase-Gate cycle and it will have to pass several gates first.
Traditionally, a project managed with the Phase-Gate process will go through 4 control gates (Idea Screening, Second Screening, Go-to-Development, Go-to-Market Test) until reaching the final pre-launch gate – Launch. If during the final gate, the project gets approved and reaches the launch phase, the last thing that should be done is a post-launch Review, which could be considered as the final gate.
However, the Phase-Gate process can be adapted to the individual organization's needs and the number of gates can be increased. Or, if a company is using a simplified process for smaller scale projects – decreased. No matter which path you pick for your project, remember that the quality of your gates can determine the quality of your project.
The quality of the gate review process can determine the quality of the whole project.
Normally, people responsible for reviewing and gatekeeping the project depend on the organization’s size, type, and scope of the product. Usually, it is a cross-functional executive committee or a steering group.
In a nutshell, this group or person is responsible for ensuring that the project gets a green light to move forward or gets stopped. In addition, they provide feedback and guidance to the project development teams to help them identify risks and to avoid unnecessary mistakes.
For the gatekeeper, it is important to understand all practicalities around the project. While there is a budget to keep an eye on, the progress will be doomed if it’s just the numbers that get looked at. The gatekeeper needs to deeply understand the market, technology, and customers, not just compare business cases and pick the one with the bigger numbers.
Whether the organization assigns a committee or a single supervisor for the gate review process, the crucial part is to ensure that the gatekeeper is not directly related to the project (project sponsor, project manager), to avoid biased assessment.
During the gate review, resources, budget, KPIs, and other success criteria get decided for the next project development phase. In addition, each gate review provides the committee with an update on the status of their innovation portfolio. It also gives an opportunity for both sides of the project (the project team and the evaluating committee) to challenge one another or to have a discussion that would put them on the same page.
However, it should not become a battleground, but rather a safe space to focus on learning, and the clearer the goals and KPIs you have set, the easier to manage and more efficient the gate review process will be.
Gate reviews are checkpoints for assessing the potential, risks, and progress of the project, and making the decision on whether or not to allocate additional resources to it. They also provide a great opportunity to share feedback with all teams involved. This review typically includes a few different steps:
The review process must be clear, strict, and simple to leave little to no space for maybes and to make it as easy as possible to weed out weak projects. Usually, it relies on a points-based evaluation system.
There are two groups of criteria for a gate review:
There are 4 possible outcomes for each assessment step.
Quite often the Phase-Gate process is seen in black and white – you either kill or launch a project. For some, the outcome is as clear as that, however, it is not the case for every project. Conditional Go is just as important and crucial an outcome as Go or Kill.
For example, some strategically important projects might be sent back for a rework several times just to make them truly viable and garner their full potential. And while to some working on the project, this back-and-forth might be seen as a challenge, it only means that the Phase-Gate process works as intended.
Remember – the gate process is not just a basic review. It is the decision-making point where the project might be completely rejected and killed and for some people, it might be a breaking point in their careers.
Of course, it is always best to nurture a safe environment at work, where a failed project is not seen as a personal problem or career killer, rather failed project should be seen as an opportunity for everyone to learn from mistakes and just improve upon future projects.
As mentioned before, there are those who swear by the Phase-Gate, and there are those, who argue against it. If you are wondering, which camp should you be joining and whether the Phase-Gate would be the right innovation management technique for you, first consider the challenges and benefits of the process.
In addition, it is important to note that a well-planned and well-structured Phase-Gate process counters some of the challenges that many fear experiencing while implementing it.
If done correctly, the Phase-Gate process can and will:
The Phase-Gate process is an adaptable and scalable approach that can help transform your business by identifying new opportunities and unlocking more innovation. And while on paper it all sounds pretty straightforward, in reality, it requires a dedicated management team to make it work for your organization's unique business environment and culture.
To reach its full potential, consider some of the following:
Lastly, consider your organization’s unique culture. It can take time and sometimes even resistance to introducing a completely new innovation management process.
But patience, planning, clear communication, and internal support will set you on the right track to successfully implementing the Phase-Gate process.
Overall, the Phase-Gate process is a valuable tool for managing the development of new products and services, and it can help your organization to be more efficient, effective, and innovative.
For some, the Phase-Gate process might work great, while other organizations might need something a little different.
The Phase-Gate approach might have the biggest name in the group, but it is not the only innovation management process out there. If after reaching the end of the article you are still not sure whether it is the right fit for your organization, check out our in-depth piece on Innovation Management Processes. Maybe it will help you discover just the thing you've been searching for.
But, if you are curious to proceed with the Phase-Gate process, you can try it on for size via the Viima app. To make your onboarding experience smooth, and your innovation project management easy, we have created a Phase-Gate process template ready to be used just after a few clicks.