Re-thinking stage-gate innovation

8 areas for succeeding in using stage-gate processes for innovation.

We often hear leaders tell their employees to “be innovative” and to have an ”innovative mindset”. For instance, the 2020 C-Suite Challenge Report, published by the Conference Board, listed ‘Building an innovative culture’ among the top three most pressing internal concerns of 740 CEOs surveyed globally. But to be honest, corporations continue to fail at building an innovative culture. Historically, as businesses grow they begin to build waterfall processes that make innovation impossible. But this does not have to be the case.

So what does it mean to be innovative?

Innovation does not have to be sexy to work. Partly, innovation is to become obsessed with your customer, understand their unmet needs, and design a solution that meets those needs. The issue with corporate innovation is that organizations design solutions for their customers in a silo – without bringing in a test-and-learn approach. Organizations often fund large scale projects and incentivise their employees to build a product or service without incentivising learning, testing, and pivoting along the way. According to MIT Slogan, over $100 billion is wasted on innovation spend every year. One key reason for that waste is not having the right systems in place to enable innovation within a corporation. A foundational piece to corporate innovation is having an effective Stage-Gate Process.

Stage-Gate: 8 focus areas for success

A stage-gate process implements strategic meetings across the product development lifecycle. These strategic meetings allow organizations to make go or no go decisions based on market data, learnings, and experimentation. Depending on the stage of the project investment, decisions are made within the stage-gate process; new products are given less investment to explore the problem area, test with customers, and define product/market fit, and products farther along the product development lifecycle are given the investment needed to scale.

During each stage-gate meeting, a cross functional board of decision makers, who act like venture capitalists, come together to make three specific decisions. Pivot. Preserve. Parish. 

Here are our 8 focus areas for success.

1. Think like a venture capitalist, not a manager

The members of the stage-gate committee should think and act like venture capitalists, who are willing to take risks and invest in the potential of a project, rather than focusing on historical data and performance. It is crucial that these committee members receive the right training and coaching to think like a corporate venture capitalist. The purpose of the stage-gate committee is to have organizational alignment within the meeting itself, and not table decisions for an additional meeting.

2. Time is your most valuable asset

In line with the focus on thinking and acting like a venture capitalist, the project team should perceive the stage-gate meetings as, much needed, investment rounds to keep the project running. Make sure you set up the stage-gate meeting cadence similarly to in the startup world, to ensure the most productive use of your time.

3. Don’t have a meeting, just for the sake of it - every stage-gate meeting should have an outcome

We often see stage-gate meetings being held to check a box, without having an impact or decision made. We’ve seen success in making the stage-gate meeting mandatory for all committee members and having decisions made directly in the meeting – no decision is tabled and/or kicked down the line in regards to the health of the portfolio. 

4. Don’t think detailed processes are better

Stage-gate should not be complicated. It should be a simple process that both committee members and project teams are excited to be part of. Every organization is different, but below is a sample funnel of a simple stage-gate process. Each gate should have a standard set of questions, which are asked by the committee members and participants should be given the right tools/ frameworks to answer these questions.

5. Forget about the vanity metrics

Having the right metrics to measure and present to the stage-gate committee is key to success. Project teams often present vanity metrics that do not track customer behavior change. For instance, if you are developing a new technology application it is important to measure how many people downloaded the app – but it is more important to understand why they downloaded the app and how many active users are on the app. We often fund projects because of the number of downloads – but just like it is easy to download an app, it is also easy to delete it. 

6. Put your money where your mouth is

We often see large organizations fund projects with the goal of bringing a new product to market, without focusing on the outcomes they are looking to achieve. We have seen success when our partners fund outcomes, and identify the business and customer outcomes they are looking to achieve early in the product development lifecycle.

7. Having the A-team is more important than a good idea

Just like a venture capitalist would take a look at the project team before making an investment decision, members of the committee should be doing the same. We often see projects getting funded in siloed business units, while we’ve seen success in the investment within cross-functional teams. As organizations begin to invest in new products, they have the opportunity to invest in building cross-functional teams, which will break organizational silos and enable innovative thinking.

8. Make the stage-gate a brand

Practice what you preach, and think about your end-user, which in this case are your intrapreneurs. Make the stage-gate process enjoyable, by creating a brand and interactive platform (e.g. a social space for interaction between intrapreneurs), and organize (virtual) meet-ups. This will help you build a community of innovators.

These criteria are not exhaustive, but are meant to serve as a source of inspiration when you are evaluating innovation agencies. We tried to stay away from the most obvious ones since there are a number of factors that will play a role in finding the right innovation partner to work with. 

We are also very interested in hearing from your experiences what assessment criteria work(ed) best for your organisation. 

Thanks for reading!

I’m Aman Shah, Product & Innovation Strategist. Spreading innovation culture is in our DNA – if you liked the read, contribute to our mission by sharing this article.

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