Can you see the role of human factors in a gate review?
Really? In spite of a well-defined stage-gate process for managing innovation, projects that deserve to be discontinued (fail-fast) pass through the gates and fail-late, causing huge losses and sometimes the entire business. After all gate-keepers are human, and subject to emotional interference.
Suggest reading part-1 at Managing Risk in an Innovation Project
What Makes a Stage-Gate Process Interesting?
Like any organizational system, the gated process does not always work as intended. It is a highly emotional event, irrespective of objectivity designed in the process. Let us look at some of the issues that make it interesting.
One must ask a question if a given project is right for stage-gate process or not? Sethi and Iqbal argue that Stage-Gate controls have the potential of restricting learning in a new product development project and thus hurting the performance of novel new products. They specifically observed through data, that control on new product development exercised through rigorous gate review criteria, increases project inflexibility, which in turn leads to increased failure to learn.
Sometimes, the management chooses a metric around increasing the first pass yield of gated reviews. That is not a good practice. It drives many wrong behaviors: (a) a tendency to pick low-risk ideas/projects to begin with, (b) to keep working to perfection, and (c) the review team’s bias towards a ‘GO’ outcome. That is all counter to innovation and the purpose of a gated review. You want to fail fast and learn fast. It is OK to track, but do not set a goal for yield.
Schedule pressure creates a tendency at compromise marginal situations, sometimes take decision with insufficient data or under-estimate the risk. And if there is a sense of urgency or a need to meet a certain specific performance metric, the entire interpretation of the data gets skewed.
Decision making at the gate review gets effected by bias from various directions. The reviewers can get emotionally vested with the idea and progress based on watching it evolve with their input at previous gates. Experience creates an anchor bias to previous success stories and traditional ways of doing things. Trying to keep the big boss happy, can sway decisions in one direction. Opinions of certain well recognized individuals carries more weight than data-based evidence.
Individual biases also play a role in team dynamics, if the review team chair is not able to handle conflict.
Continuous engagement of review team with the project, even when limited to reviews, leads to a 2-way entanglement. The project team learns how the review team thinks and develops ways to influence the outcome of the gate review. The review team gets empathically attached to the project (& team) and bias towards their earlier feedback. Since the gate committee is not a machine devoid of emotions and biases (yet), they will find it incredibly hard to stop or kill a project in line with the changing PESTEL landscape. It is thus important to bring back a higher authority at later stage gates into the review mix, who were involved in the original approval of the project and can objectively look at the project against the original success criterion.
A gated process often comes across as a threat to career progression or job security. Managers feel uncomfortable at the idea of a No-Go outcome. Management must foster a project team environment of mutual trust and cooperation, an environment that is low on personal conflict, power struggles, surprises, unrealistic demands, and threats to personal and professional integrity. After effects should not include unnecessary inferences to performance appraisals, tight supervision, restriction of personal freedom and autonomy, and overhead requirements.
The stage-gate process is designed to minimize cost and risk of innovation project through synergy and alignment of expectations. The well-defined process (a) Identifies the makeup of a review team and lays out the decision criteria upfront, (b) Provides a forum and timing to discuss and approve any scope changes, (c) Clarifies and adapts the roles & responsibilities during execution, (d) Facilitates informed decision making for the continuation of the project based on the availability of resources, business case, and risk analysis, (e) Identifies intellectual property and other business protection needs. However, for the process to deliver to its promise effectively, the organization must deliberately create an environment of healthy conflict at the Gate reviews. The review team must be
- Competent to make the right decisions, despite the emotional attachment with concept,
- Empowered to judge and stop or redirect a project, despite business pressures, and
- Objective to minimize bias and emotional interference.
Good gate reviews are a work of art and science.
If you like this blog post, you will like my book – “Inspiring Next Innovation Value Chain” available on Amazon.
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 Stage-Gate Controls, Learning Failure, and Adverse Effect on Novel New Products, Rajesh Sethi and Zafar Iqbal, Journal of Marketing, Vol. 72, No. 1 (Jan., 2008), pp. 118-134 (17 pages)
Out-Of-The-Box ideation still needs a well-boxed upfront planning, an expert facilitator, and a disciplined approach to post processing.
While you need out-of-the-box thinking during the ideation session, you need a fairly well-defined box when it comes to defining the challenge problem or the objective of the session. These objectives can be at any level – purpose, strategic, tactical, operational, project subject matter, etc. The objectives are typically focused on how and/or what; and occasionally on discovering the purpose (why). Some examples include …
- How can we save corals and marine life from chemical waste (purpose)?
- How do we use Industry 4.0 for the development of a special child (purpose)?
- How to go through digital transformation in the next 3 years (strategic)?
- What will be the impact of industry 4.0 on our business (strategic)?
- How to grow the business by 5X in 5Years (strategic)?
- How to expand the market in the Asia Pacific region (tactical)?
- How can we design a compact high temp storage box (technical)?
- How to reduce the component weight by 22% (technical)?
- How to recover from schedule variance (operational)?
- What can we do to help the customer accelerate production (tactical)?
- What set of technologies can we develop for a smart home market (technical/strategic)?
If the objective is too large or broad, then I suggest a series of sessions, structured hierarchically. A theme (from a cluster of ideas) at the strategic level becomes an objective at the tactical level. For example, the executive team gets together for an ideation session with the objective ‘How to grow the business by 5X over the next 5 years?’ The outcome is a set of 6 idea themes, and 4 of them become follow-up ideation objectives.
- Objective: How to grow the business by 5X in 5Years (strategic)?
- Sub-objective 1: Adapt Industry 4.0?
- Launch an Artificial Intelligence enabled service.
- Offer augmented reality-based training.
- Sub-objective 2: Expand the business into the Asia Pacific region.
- Set up a partnership with a university in Singapore.
- Acquire and turnaround a struggling small business in India.
- Sub-objective 3: Scout & acquire training company on ISO9001.
- Sub-objective 4: How will Amazon/Google impact our business.
- Sub-objective 5/6: Not worth pursuing.
- Sub-objective 1: Adapt Industry 4.0?
Every objective statement should have a unique topic-owner. The facilitator and the topic owner should be empowered to modify the problem statement within a narrow boundary.
Given that we are in the middle of the 4th industrial revolution, every company today should run ideation sessions with these types of objectives.
- What are the opportunities or threats from industry 4.0 technologies?
- What company values will drive our socio-economic development?
- What ideas or industry 4.0 technologies can help us create value for the society; or perhaps help in progress towards UN’s SDGs?
- What new skills do we need to thrive through this transformation?
- What new business models may bring us additional value or stability?
Companies such as Amazon, Apple, Facebook, and Google, are on a roll to change the world. Their moves can suddenly disrupt your business, and ideation around those is important, just like you plan your house for storms, well in advance.
As we emerge out of the Coronavirus pandemic, some plausible ideation objectives could be …
- How will consumer behavior change in the next 3 to 5 years?
- What is the impact of unemployment surge to long-term demand for your products and services?
- Which markets will disappear for you and which ones will expand rapidly?
Ideation objectives have a strong linkage with the innovation profile.
Agile Followers define ideation objectives based on VOC or RFP. Smart Forecasters defined their objectives based on anticipated needs. Visionary Trendsetters pick up a social or professional white space and often take a moon shot.
Identification of funding sources can be a part of the ideation exercise. Care should be taken not to use that as an excuse to pre-screen some good ideas.
I normally prefer to keep funding conversation as a follow-on topic.
The most important member in an ideation session is the facilitator. A good facilitator has some knowledge of the subject matter without bias in favor of any outcome, is a good communicator, is assertive in managing the group dynamics, is respectful of group diversity, can scribe inputs and engage with individuals at the same time, and has a sense of humor. Most importantly a competent facilitator understands multiple ideation techniques and tricks to continuously trigger fresh ideas.
Innovation coaches often make good ideation facilitators, unlike innovation management consultants. A consultant solves the problem, whereas a coach helps build your competency to solve the problem. An ideation session facilitated by a coach provides the team with techniques to generate and refine ideas, which are useful after the session is over.
Sometimes, you may feel that you can generate ideas faster when you work alone. However, if you want creativity, resist that temptation. Do it as a group, preferably a diverse group. Diversity of skills and roles is a key design element. There is no ‘right size’ for the group, but in my experience 5-15 people is the sweet spot. There is no perfect composition of the group. I typically start with a core group of product/service developers and business development personnel who will have to later execute. I always suggest bringing in an IT person (it is the digital age after all) and a student/intern (who can have wild thoughts). Sometimes, I add a finance person to put some reality into the solutions. Diversity in thinking is required, and often comes with diverse demographics and past experiences.
It is also important to keep a few elements out of the session. I try to keep idea-killers, naysayers, and heavyweight executives out of the session, whose presence may intimidate participants. If a particular senior staff member insists on participating, then it is an indicator to exclude them (!). A smart facilitator may compensate for such undesirable engagement, but I do not count on it.
There are several ideation techniques, and research on the topic is producing new methods and tricks all the time. Bryan Mattimore has compiled over 20 of these in his book, which I would say is a must-read for all ideation facilitators. My preferred ones are ‘I Wish’, ‘Visual Triggers’, and ‘Brain Walking’.
Based on the objective and participants, the facilitator should select a primary and couple of supplementary ideation techniques for the session, and plan on training the participants on the techniques. The choice of technique depends upon group size, facilitator understanding of the technique and the objective as well.
It is best to conduct an ideation session in a new setting, preferably a stimulating ambiance, with articles that can provide visual triggers, such as unconventional furniture, lighting, toys. Keep an ample amount of wall space to display growing content. And of course, an unlimited supply of water, coffee, and fresh fruits or preferred refreshments. It is important to be relaxed and not distracted by smartphones. I have seen some superb ideas hit the happy hour table once the formal sessions are closed out. There is no reason to exclude that additional input.
Again, there is no single answer to how long should this be scheduled. I typically plan for 2-4 hours for a fairly well-defined objective, depending upon the group size. Sometimes, a full-day is warranted, anything beyond that is likely to produce diminishing results and calls for a hierarchical session set.
With current social distance restrictions, some of the ideation techniques have become even more powerful with online or virtual engagements. Tools such as SessionLab, Stormboard, IdeaFlip, Sprintbase, InVision, Mural, Miro, and others have found useful applications. If you do not have any of these traditional Excel over Zoom with whiteboard also works well. Over the last year, we have also successfully worked through multiple sessions in lieu of full day offsite to avoid ‘zoom fatigue’ and use the time in between to gather meaningful data.
Ideation is more than brainstorming. Multiple factors need to be considered in upfront planning to extract the best out of participating brains. The leadership should define the objective and pick the facilitator and let the facilitator pick the participants, platform, and techniques.
If you wish to engage with me in a conversation, on this topic, please register for an online session on Feb 25, 2021 at 9AM ET co-hosted by Nerac.
Do you know how to conduct a robust gate review?
One of the reasons projects fail miserably is because, we choose to ignore warning signs in early-stage gates and keep pushing it through until it is too late and too big to handle.
Having worked at a major aerospace manufacturer, I had the good fortune of being a part of several reviews at various levels and disciplines – design, technology, component, system, product, manufacturing, process, program, and so on. That process was so mature, that I did not realize what a poor process feels like until I was assigned to develop suppliers. Now having coached over 2 dozen product innovation companies on this topic, I can confidently say that the value of review gates comes from a competent and empowered review team. The review team must be competent to make the right decisions and mentor the team. It must be empowered to judge and stop/redirect a project, despite business pressures.
A quick story to illustrate the point. After a nasty accident at an intersection, city authorities asked “Why do we not have a STOP sign here?” Reply came back as “People were complaining about seconds lost due to “stop and go” on an intersection with virtually no traffic. Since we have not had an accident here in a long time, we took the sign off, just yesterday.” There is a reason for a 4-way stop sign. Stop and look for what is coming from the side?
For Business Leaders: Annual or quarterly strategic reviews serve this purpose, to pause and look for where the competitor might be coming from. All it takes is a little time with the Board of Directors to properly re-position for success.
For Innovation Managers: A review gate with a pre-defined success criterion is a recognized best practice. All it takes is a little time with a group of experts to mitigate risk and quality concerns and redirect for success.
Gates: Generically speaking, qualified concepts that proceed to become projects may go through these gates:
- Proof of Concept.
- Product/service design and development.
- Performance verification and validation.
- Pilot users and customers.
- Scale-up and capture market share.
Depending upon complexity, confidence, and risk assessment, the project may have more or fewer gates. A simple study project may have an interim content review and final report and review. Complex product design may have a hierarchical gate structure such as component design gate(s) to support a system-level design gate. A very popular example of a gated process is the Technology Readiness Levels used by DoD/NASA and many other commercial organizations. A similar one called Manufacturing Readiness Levels is used by many organizations.
The phase-gate process is to minimize cost and risk of innovation project through synergy and alignment of expectations. The process …
- Defines the review team and lays out the GO/NO-GO criteria upfront.
- Provides a forum and timing to discuss and approve any scope changes.
- Clarifies and adapts the roles & responsibilities during execution.
- Facilitates informed decision making for the continuation of the project based on the availability of resources, business case, and risk analysis.
The outcome of each review gate could be categorized under various classes:
- GO with comments or recommendations for the next phase.
- Conditional GO with specific actions by a date for it to be a GO.
- NO-GO – RE-DO with required actions and return for review.
- NO-GO – HOLD with specific unmet criteria, or changed context, and a temporary hold of the project, for a specific period.
A project should only move forward to the next review gate, when both the product/service development and business development feel that the concept still qualifies; and all the previous gated criteria have been successfully met. Any exception to the review gate or waiver of criteria/ expectations should require a review team approval. The higher the uncertainty, the lower the first pass yield.
With some of my clients, I notice a management metric around increasing the first pass yield of gated reviews. That is not a good practice. It drives many wrong behaviors: (a) a tendency to pick low-risk ideas/projects, (b) to keep working to perfection, and (c) the review team’s bias towards a ‘GO’ outcome. That is all counter to innovation and the purpose of a gated review. We want to fail fast and learn fast. It is OK to track, but do not set a goal for yield.
Review Gate Team
The suggested participation for the project review team under phase-gate process includes these …
- Funding sponsors, who are accountable for profit & loss.
- Product/service line heads, who will eventually own this innovation.
- New Business Development, which must generate revenue from this.
- The project team, to defend the progress and learn from gate experience.
- Chiefs or subject experts, who are responsible for technical excellence.
- Optional invitees, such as retirees, Consultants, or Customers, for wisdom.
The team needs to maintain a healthy level of conflict and collaboration at the same time amongst various roles/disciplines. For example:
- The marketing and development folks should collaborate throughout to work toward the same innovation and timeline.
- Talent development manager and innovation chief should collaborate for proper talent acquisition and development.
- Program manager and Subject Matter Experts could have a conflict all the time for product excellence and project cost/schedule performance.
- Market domain experts and Subject Matter Experts have a conflict or collaborative depending upon customer push and pull for innovation.
Having seen so many reviews with passionate debates, leading to some exciting outcomes, I say “conflict at the review gate is a good thing.” How we choose to resolve that conflict during the review or afterward as an action item, defines the review gate experience and employee engagement with innovation. The team ought to go into the gate review with an open mind, focused on the purpose, objectives, ethics, and educating each other. In the end, both the project and the review teams are all on the same side, fighting uncertainty.
False Calls at the Review Gate
The purpose of a review gate is to reduce the risk, by ensuring continuation if the concept still qualifies. The review team is susceptible to human errors, misjudgment, and decision making with limited information, cost and schedule constraints, or sometimes external pressures.
A true positive (GO when it should have been a GO) ensures progress, confidence, and team buy in.
A true negative (RE-DO when it should have been a RE-DO) improves learning, saves failure later reducing losses, builds stronger teams, and drives humility.
A false negative (RE-DO when it should have been a GO) leads to some unnecessary rework, schedule delays, and a demoralized team when they are confident. The positive that comes out is improved communication.
A false positive (GO when it should have been a RE-DO or a NO-GO) will continue to accumulate losses and even an escape of a poor design to the market leading to liabilities. They usually make good learning stories, which drive process improvements, policies, and even regulations. Both Space Shuttle disasters were calls made under schedule pressure. The case of Boeing 737 Max software shortfall is a review process failure, which is supposed to look at every aspect of “continued operation”.
Create an environment of healthy conflict at the Gate reviews, deliberately. If needed split the review teams into and play it like a mock court with defense and prosecutor to bring out hidden nuggets.
If you wish to engage with me in a conversation, on this topic, please register for an online session on Feb 25, 2021 at 9AM ET co-hosted by Nerac.