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Applying the Stage Gate Process to Sterling Brands’ Clients. Contents. the value of Stage Gate for Sterling Brands the Stage Gate process. What is Stage Gate and why is it valuable to Sterling Brands?. - PowerPoint PPT Presentation
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Applying the Stage Gate Process to Sterling Brands’ Clients
2
Contents
the value of Stage Gate for Sterling Brands
the Stage Gate process
3
What is Stage Gate and why is it valuable to Sterling Brands?
Stage Gate is a process designed to help companies successfully develop new products and services
it’s about doing “the right projects right”
it’s about mitigating risk
it’s about making tough decisions
it’s about becoming more rigorous in our approach to new product development
ultimately, it’s about helping our clients product great products that sell
on average,
33%of a company’s sales come from
new products
source: Winning at New Products; Robert Cooper
Understanding Stage Gate is relevant for a number of reasons
Everyone in the organization produces products or services
Increasing client requests for innovation projects
Would help Sterling brand strategists better understand the client side
Has the potential to extend duration of project… and secure additional fees
4
What are the main pitfalls to creating successful new products and services?
PREPARATION
Lack of a strong market orientation
Not enough upfront homework
PROCESS
Moving too quickly
No focus, too many projects
The lack of a systematic new product process with discipline
PRODUCT
Poor quality of execution
A lack of product value for the customer
in product failures,
74%reported the
detailed market study was
“poorly done” or not done at all! 16%
of companies cite product problems or defects as the
main cause of failure
lack of external understanding is one of the major needs for improvement >>> this bodes well for Sterling Brands
source: Winning at New Products; Robert Cooper
source: Winning at New Products; Robert Cooper
5
What does success look like?
There are 15 critical success factors in new product development
1. Unique superior product
2. Strong market orientation
3. International opportunities
4. Predevelopment homework
5. Sharp and early product definition
6. Properly executed launch
7. Right organizational structure
8. Support from top management
9. Leveraging core competencies
10.Market attractiveness
11.Tough go/kill decisions are made
12.Quality execution
13.Resources are available
14.Speed - but not at the expense of execution
15.Multistage, disciplined process like Stage Gate
0
10
20
30
40
50
60
70
80
Poor SuperbUp-Front
Market Share
Success Rate
0102030405060708090
100
Me-too TrulySuperior
Market Share
Success Rate
> make it superior > do your homework
moderate moderate
source: Winning at New Products; Robert Coopersource: Winning at New Products; Robert Cooper
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it’s critical to understand the relationship between stages and gates
The Stage Gate process is simply a series of STAGES and GATES
to assure the proper work is done, deliverables created
includes parallel activities performed by cross-functional team
each stage costs more than the proceeding stage
STAGE GATE
to evaluate the work done in each stage and make go/kill decisions
information is brought together - senior management always involved
consists of 1) deliverable 2) criteria 3) outputs
“People fall in love with their own ideas.”“Someone will always hate your decisions.”
David Goldsmith, MetaMatrix Consulting Group
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The Stage Gate process
>>> We are going to use the current Liquor Innovation project to illustrate the value of Stage Gate:
To “age-down” its brand, a leading liquor brand is looking to create a new product aimed at men/women ages 25-34
stage 1
Scoping
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
gate 1
LAUNCH
post launch review
historical Sterling Brands stop point
the opportunity
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project charter specifics
Scope USA is the lead market Initial on-premise distribution (bars, restaurants, clubs) No immediate plans to roll out Globally until proven in North America
AssumptionsPackaging -
Aspirational to the target consumer with cues based on Brand DNA Explore premium bottle/decorations – acid etch, silk screen, metallic inks
Liquid development – Based from Coffee, but distinctive from Base Brand Evaluate higher proof – up to 40% abv
Cost/ Retail Pricing Target retail 750mL pricing at $19.99 Margin will be slimmer than Base Brand
>>> Ship March 2008
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It all starts with DISCOVERY
The goal is to “increase the mouth”
From top-down, bottom-up, or ideally, both
1. First, determine potential platforms
ex: energy, all natural, experiential
2. Techniques for discovery
Look for changes in the alcohol industry
Create best/worst case alternate scenarios
Use voice-of-the-customer research interviews at bars, in liquor stores, focus groups with drinkers (client brand vs. competitors) speak with bartenders to gain different perspective on what customers want
Work with lead or innovative consumers develop a diverse and ongoing panel of outsiders to act as a sounding board
Attend trade shows, read trade publications, consumer magazines
3. Create an idea bank
Accessible to the entire organization
stage 1
Scoping
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
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GATE 1: IDEA SCREEN - decision to commit to the project
Deliverables
a series of fresh product ideas inspired by real consumers and industry trends
Criteria
Does the product “fit with the brand”?
Does the product fit with our strategic direction?
Does it meet our environmental standards?
Is the idea unique? Differentiated? “Ownable”?
Is it relevant to the consumer?
Does it appear to have a sizeable market opportunity?
Is it technically feasible? Does it leverage our production resources?
Outputs
Go/Kill decision - tentative commitment to project
Agreed to key initial criteria that will be used to assess options throughout the process
stage 1
Scoping
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
gatekeepers
director of innovation
brand manager
11
stage 1
Scoping
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
STAGE 1: SCOPING - understanding the merits GATE 2: SECOND SCREEN - evaluate scoping documents
12
stage 1
Scoping
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
STAGE 1: SCOPING - understanding the merits
Preliminary market assessment
internet search, focus groups, quick concept testing
identify points of differentiation and superiority
Preliminary technical assessment
feasibility
timing and cost: identify suppliers
technical, legal, and regulatory risks
Results:
An understanding of the magnitude of opportunity and a technical assessment
GATE 2: SECOND SCREEN - evaluate scoping documents
Deliverables
documents from the scoping stage: market opportunity, technical assessment
Criteria
Is the market opportunity large enough?
Can we produce this drink?
What are the margins? What is the payback period?
What are the implications for sales? Marketing? Legal?
What time is required? What existing / new capabilities would be needed?
Outputs
Go/Kill decision - if granted, begin moving into heavier spending stages
Potential for up to 3 product ideas to be prototyped
gatekeepers
sales, legal, director of marketing, finance
13
stage 1
Scoping
gate 2 stage 2
Build Business Case
stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
STAGE 2: BUILDING THE BUSINESS CASE GATE 3: GO TO DEVELOPMENT
historical Sterling Brands
stop point
gate 3
14
stage 1
Scoping
gate 2 stage 2
Build Business Case
stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
gate 1
STAGE 2: BUILDING THE BUSINESS CASE - doing the critical homework
1. Defining the product offering
target market definition
product benefits, features and value proposition
desired product features attributes, requirements and specifications
2. Competitive analysis
3. Technical appraisal
4. More detailed business and financial analysis
5. Preliminary operations and marketing plan
Results: Clear product definition, project justification, detailed project plan
GATE 3: GO TO DEVELOPMENT - gateway to spending
Deliverables
Descriptions of 3 products, project justification, detailed project plan
Criteria
Was Stage 2 homework completed well?
Were the results positive enough to warrant funding?
Which product option has the best financial outlook for the company?
Outputs
Go/Kill decision - selection of the ONE product that will go into development
A clear product definition
historical Sterling Brands
stop point
gate 3
gatekeepers
CEO, CFO, Operations, Director of Marketing, Director of Sales
15
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
stage 4
Testing & Validation
gate 5 stage 5
Launch
STAGE 3: DEVELOPMENT
stage 1
Scoping
gate 1
gate 4
GATE 4: GO TO TESTING
16
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
stage 4
Testing & Validation
gate 5 stage 5
Launch
STAGE 3: DEVELOPMENT - implementation of plan
Lab testing (continuous)
alpha, in-house, lab tests
consumer feedback leading to iterative prototypes
Parallel processing
operations plans
launch plans - selection of 5 launch markets
updated financial analysis
legal, regulatory and patent issues cleared
Results: A lab-tested prototype that consumers love
stage 1
Scoping
gate 1
gate 4
GATE 4: GO TO TESTING - checking all work thus far
Deliverables
a working prototype
Criteria
Is the quality high enough?
How does it taste? Smell? Look? Sound? Feel?
Does the product meet the definition in Gate 3?
Are the marketing and operations plans clear?
Does the revised financial analysis still meet fiscal goals?
Outputs
Go/Kill decision
Validation plans for next stage evaluated and approved
Marketing and operations plans reviewed for probable future execution
gatekeepers
Operations/QA, Marketing, CFO, Director of Research, Legal
17
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
stage 5
Launch
STAGE 4: TESTING AND VALIDATION -
stage 1
Scoping
gate 1
GATE 5: GO TO LAUNCH
gate 5
18
gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
stage 5
Launch
STAGE 4: TESTING AND VALIDATION - evaluating every aspect
In-house product tests in test kitchens
Consumer taste testing
Pilot production - to improve production process
Test markets - 5 cities being selected, on-premise only, gauge reactions, effectiveness of launch plan, expected market share and revenues
Revised business and financial analysis
TEST RESULTS?
if not satisfactory, rewind to stage 3 and improve the product
stage 1
Scoping
gate 1
GATE 5: GO TO LAUNCH - ensuring validity
Deliverables
most refined marketing, operations and launch plans to date
Criteria: Testing the Testers
How well was the validation performed?
What is the expected financial return?
How smart are the operations and marketing plans?
Outputs
Go/Kill decision - the official green light; also the last chance to kill the idea
gate 5
gatekeepers
CFO, Operations, Marketing, director of research
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gate 2 stage 2
Build Business Case
gate 3 stage 3
Development
gate 4 stage 4
Testing & Validation
gate 5 stage 5
Launch
STAGE 5: LAUNCH - implementation of all plans
Marketing launch plan
Operations / production plan
Results: Roll out of product in 5 markets
stage 1
Scoping
gate 1
POST-LAUNCH REVIEW
evaluate 5 test markets and decide if successful
> go/kill nationwide rollout
6-19 months post-launch
cross-functional project team disbands
product performance review vs. projections (revenues, costs, expenditures, profits, and timing)
post-mortem discussion: what went well, what could be improved
post launch review
20
thanks