What Leading Companies are to Reinvent their NPD Processes

1 What Leading Companies are Doing to Reinvent their NPD Processes By Robert G. Cooper This article first appeared as the cover story in PDMA Visions Magazine, September 2008, pp 6-10. 2008 Stage Gate International Stage Gate is a registered trademark of Stage Gate Inc. Innovation Performance Framework is a trademark of Stage Gate Inc. Cover Story What Leading Companies are doing to re-invent their NPD Processes Robert G. Cooper, developer of Stage-Gage Robert G. Cooper Today, many Companies are redesigning their idea-to-launch process to be leaner and more agile and at the same time incorporate better governance and portfolio management practices.

2 Some firms have even developed open innovation versions of their phase Processes or have moved to fully automated new product development (NPD) systems. In this article, NPD guru Robert Cooper, an originator of Stage- Gate (see box on this page), explains what many of these firms are doing and makes recommendations on how to upgrade or tailor your idea-to-launch process. See the June 2008 issue of Visions for another viewpoint on this topic by Lee Schaeffer and Michael I. n recent years, a number of Companies have reinvented their tions helped to elevate an already-proficient process to the next idea-to-launch, or Stage-Gate , Processes .

3 Take the example level Emerson's NPD to yield even greater productivity of Emerson Electric: Several years ago, the company's senior from research and development (R&D) spending. management team set a goal of a faster and more productive new The point is that if your NPD process is more than five years old product development (NPD) process to deal with the realities or if your idea-to-launch system does not build in best practices, of the 21st century. The company had been effective in NPD by then it's probably time to redesign your process, as Emerson Elec- tric did.

4 The original design of Stage-Gate was based on results of . employing their traditional process for many years. studies of successful NPD project teams how they drove their If your NPD process is more (Emerson's phase-gate projects to market quickly and The system consists of system was adapted from a series of stages, with each stage building in a set of best-practice than five years old then it's the Stage-Gate approach.) activities whose goal is to improve the quality and outcome of probably time to redesign. Emerson describes its the project.

5 Preceding each stage is a gate, where management Stage-Gate process as be- ing based on large-scale studies of product devel- Setting the Record Straight: opment practices by hundreds of international Companies . The The Many Generations of Stage-Gate process provides a structured pathway of gates' from idea creation to product launch and follow-up. 2 The concept of an idea-to-launch system is not new. Back in the 1960s, NASA developed its phase-review process, an elabo- How Emerson Electric reinvented Stage-Gate rate development system for working with contractors.

6 The The phase-gate process plays to Emerson's traditional strengths military and many suppliers subsequently adopted the system. of excellent execution and process, says Randall Ledford, Senior But this first-generation process was engineering oriented, Vice President and Chief Technology Officer, Emerson. It's no missed many best practices in NPD, and did not have go/kill surprise that we have learned so much from it so quickly. 2 decision points, or gates. Acting on an internal benchmarking study involving hundreds Stage-Gate was developed in the 1980s as a second-gener- of NPD employees in 22 Emerson Companies , Emerson identi- ation NPD process and is different from phase-review because fied three vital areas where major productivity improvements it is a business process (not just R&D or engineering), built in could be realized.

7 They then formed three task forces to Reinvent best practices uncovered from studying exemplary NPD projects, their already effective NPD process and raise it to the next level. and incorporated tough go/kill gates. Stage-Gate was ultimately Some of the actions that were taken include building continu- trademarked by Robert Cooper and the Product Development ous improvement into the process by incorporating an effective Institute in the United States. A number of variants of Stage-Gate post-launch review. Here, some months after launch, actual project were developed by a range of consulting firms and users but em- results are compared to promised results, gaps are identified, and a ployed different names, such as phase-gate process or gating.

8 Thorough analysis of causes results in corrective actions. Another process. Now Companies are moving toward next generation, or key move was to integrate voice-of-customer more effectively third generation, Processes . This generation, however, may not into the system by incorporating more robust actions in the first be as new as it sounds, especially when you consider the article three stages of its NPD process. Making the right project choices that appeared almost 15 years ago in PDMA's Journal of Product is another area where significant gains could be made, and thus Innovation Management (JPIM) titled Third Generation New portfolio management methods were carefully designed, based Product Processes .

9 The evolution and improvement of phase on best practices both inside and outside the company, and then Processes in NPD goes on. Robert Cooper integrated into the Emerson NPD process. These and other ac- 2008 Stage Gate International Stage Gate is a registered trademark of Stage Gate Inc. 6 PDMA Visions Magazine members (the gatekeepers) make the key go/kill and investment handle lower-risk, simpler projects. For example, in the model decisions and commit the necessary resources to the projects in in Exhibit 1, all proposed development projects enter Gate 1 (on order to move them forward.)

10 Therefore, Stage-Gate is much like the left) for an initial screen; the idea-screening decision is made a football playbook or a cookbook, constructed by watching the here, as is the routing decision what type of project this is and best football teams or the best chefs in the world. therefore what version of Stage-Gate it should be in. The higher Today, Leading Companies are now reinventing their innovation the risk, the more one adheres to the full five-stage process shown Processes , making them faster, leaner, and more effective, and at at the top of Exhibit 1.