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This article is sent to you compliments of Dr Robert G. Cooper[email protected]www.bobcooper.caPlease respect the copyright laws (do not copy or distribute, or post on your webpage)Winner of the 2018 Best Article of the YearMaurice Holland Award, best article in Research-Technology ManagementIRI: Innovation Research Interchange, Arlington VA, USAAgile–Stage-Gate for ManufacturersChanging the Way New Products Are DevelopedIntegrating Agile project management methods into a Stage-Gate system offers both opportunities and challengesRobert G. Cooper and Anita F. SommersEarly adopter manufacturing companies are finding significant benefits by combiningAgile and Stage-Gate® for new-product development , but also new challenges. Solutions are being found.Based on 6 case study firms.Summary: Agile development methods borrowed from the software industry are now being used by a handful ofmanufacturing firms for the development of physical products. This article presents six case studies from major firmsexperimenting with Agile–Stage- Gate hybrids. These results show that early outcomes are positive, with firms reportingsignificant improvements in time to market and development productivity, also faster responses to changing marketconditions and customer needs and higher project team morale. However, they also identified many challenges inimplementing Agile–Stage-Gate hybrids. Based on case firms’ experiences, recommendations for implementing a hybridproduct development system are provided.Citation: R.G. Cooper and A. F. Sommer (2018). Agile–Stage-Gate for Manufacturers – Changing the Way New Products Are Developed,Research-Technology Management, 61:2, Mar-Apr, 17-26.© Cooper & SommerFEATURE ARTICLEAgile–Stage-Gate for ManufacturersChanging the Way New Products Are DevelopedIntegrating Agile project management methods into a Stage-Gate system offers both opportunities and challenges.Robert G. Cooper and Anita Friis SommerOVERVIEW: Agile development methods borrowed from the software industry are now being used by a handful ofmanufacturing firms for the development of physical products. Agile methods, which include time-boxed sprints,daily stand-up meetings, and early demos and retrospectives, are typically embedded within some or all of the stages ofan existing Stage-Gate system. This article presents six case studies from major firms experimenting with Agile–StageGate hybrids. These results show that early outcomes of these efforts are quite positive; some firms report significantimprovements in both time to market and development productivity, as well as faster responses to changing marketconditions and customer needs and higher project team morale. However, they also identified many challenges inimplementing Agile–Stage-Gate hybrids, including addressing management skepticism, finding the needed resources tofield dedicated teams, and dealing with fluid product definitions and development plans. Based on case firms’ experiences,we provide recommendations for implementing a hybrid product development system.KEYWORDS: New product development, Agile–Stage-Gate hybrid, Agile, Stage-GateThe pace of change in many markets and technologies hasreached a critical point—product cycles have accelerated tothe point where traditional new-product developmentmethods no longer work. Today’s gating processes are toolinear and rigid, inhibiting proactive response to changeduring the development process. As a result, a handful ofleading manufacturers in North America and in Europe,among them Honeywell, LEGO Group, Tetra Pak, GE,Chamberlain, and Danfoss, have begun to experiment withintegrating elements of Agile development processes intotheir existing gating systems. The result is a hybridmodel—Agile–Stage-Gate—that promises to yield the bestof both systems. This new model has the advantage ofproviding the company’s existing stage-and-gate system,which provides focus, structure, and control, with thebenefits of an Agile approach and mindset, namely speed,agility, and productivity.The benefits of Agile development methods in thesoftware world—flexibility, productivity, speed—have beenwidely studied and documented (see, for example, Begeland Nagappan 2007). Software development firms werethe first to combine Agile with Stage-Gate, beginning inthe early 2000s (Boehm and Turner 2004; Karlstrom andRuneson 2005). Those successes attracted the attention ofphysical product manufacturers seeking ways to acceleratetheir product development processes; Sommer andcolleagues (2015) describe the new model and some early,mostly positive experiments with it.These early adopters now have sufficient experience tooffer some insights, not only on the results that might beachieved but also—and perhaps most importantly—onthe challenges that must be addressed in integrating Agileinto a Stage-Gate system. A case study looking at theexperience of six major firms provides perspective onhow the Agile-Stage-Gate model works, what challengesand opportunities it presents, and how others mightproceed in adopting (or adapting) the model.none definedRobert G. Cooper is president of the Product Development Institute, ISBMDistinguished Research Fellow at Penn State University’s Smeal Collegeof Business Administration, and a Crawford Fellow of the Product Development and Management Association. A thought leader in the field of productinnovation management and developer of the Stage-Gate new productdevelopment system, he has published 11 books and more than 120articles; two of those articles have received Maurice Holland Awards fromIRI. He received his PhD in business administration and MBA from theUniversity of Western Ontario and Bachelor’s and Master’s degrees inchemical engineering from McGill University. [email protected]Anita Friis Sommer is a senior manager and transformation lead at LEGOGroup, currently responsible for an Agile transformation of two majortechnology departments. She completed a post-doctorate on processmodeling at the University of Cambridge and holds a PhD in productdevelopment management and a Master’s in engineering managementfrom Aalborg University, Denmark. She is a recipient of the 2016 MauriceHolland Award for an article she coauthored on the integration of Agileprinciples into product development. [email protected]DOI: 10.1080/08956308.2018.1421380Copyright © 2018, Innovation Research Interchange.Published by Taylor & Francis. All rights reserved.Research-Technology Management . March—April 2018 j 17Evolving from Stage-Gate to Agile–Stage-GateStage-Gate describes a system in which the productdevelopment process—from idea generation to marketlaunch—is broken into discrete stages, each with definedtasks and prescribed deliverables (Cooper 1988, 2017).Gates that precede each stage mark Go/Kill or investmentdecision points. The method has been widely adopted bymanufacturing firms to drive new-product projects to market.Traditional gating systems, however, are no longer suitable for many of today’s businesses—from food to construction equipment (Cooper 2014; Ettlie and Elsenbach 2007;Karlstrom and Runeson 2005; Lenfle and Loch 2010; Leon,Farris, and Letens 2013). In traditional Stage-Gate systems,when a project is approved to begin heavy developmentwork, the proposed product is clearly defined and a planof action with associated costs is approved. But in manyprojects, important elements of that product definitionand action plan change as development work proceeds:customers’ needs evolve, market requirements change,and plans must change with them. The traditional gatingmodel does not allow for this change—the productdefinition and development plan are locked in—creatingchange management issues downstream. Gating systemsare simply too linear and too rigid to adapt effectively tothe unstable and rapidly changing markets and customerneeds that drive today’s new products.To address the need for a more fluid, adaptable system,some leading-edge manufacturing companies are lookingto Agile, a development process that emerged from thesoftware industry, where it has delivered positive resultssince the 1990s (Rigby, Sutherland, and Takeuchi 2016).The Agile Manifesto, the impetus for Agile productdevelopment practices, calls for a development processthat values collaboration, response to change, and aworking product (Beck et al. 2001). Agile developmentaddresses these values by supporting adaptive planningand evolutionary delivery through a time-boxed, iterativeapproach that emphasizes rapid delivery of incrementalcomponents of a product and frequent communicationamong team members and with stakeholders (see “AgileBasics,” right). The result is a system that is adaptive andflexible and thrives on change; its core element is acontinually evolving product definition that emergesthrough short-term, dynamic planning.These attributes are the basis of Agile’s appeal to productmanufacturers; another impetus is the growing rolesoftware is playing in physical products. For instance,for a manufacturer of construction vehicles, productdevelopment has traditionally meant new engines, newtransmissions, and new articulation systems—largelyelectrical and mechanical engineering work. But today’snew vehicles incorporate a whole range of software—toolsto maximize productivity, minimize waiting times at jobsites, and monitor maintenance and repair needs.Along with the promise it offers, Agile also brings challenges for manufacturers. It is not strategic enough andmay be too short-term focused for many manufacturers.Agile BasicsAgile, specifically the Scrum version, is a set of softwaredevelopment methodologies that breaks the developmentprocess into a series of short, iterative, incremental sprints,each typically one to four weeks long (Beck at al. 2001;Schwaber 2004; Scrum Guides 2017). The main componentsof the process are:. Sprint planning meeting—At the beginning of eachsprint, the development team meets to agree on whatit can accomplish in the sprint and creates a task plan.. Daily stand-up meetings—During the sprint, the teammeets every morning to ensure that work is on courseto accomplish the sprint goals, review what has beenaccomplished in the last 24 hours and what shouldbe done in the next 24, and resolve problems; thesemeetings are also sometimes called scrums.. Demo—At the end of each sprint, product increments ornew features developed in the sprint are demonstratedand validated with stakeholders, including bothmanagement and customers.. Retrospective meeting—At the end of each sprint, theteam meets to review how team members workedtogether and how the team can improve.The team then plans and begins the next sprint based oncustomer and management feedback on what needsimproving and what needs to be developed next. Productrequirements and technical solutions, and even the projectplan, thus evolve over the development cycle.There is no traditional project leader or projectmanager in Agile. Rather, the process relies on a set ofdefined roles:. The scrum master, a servant-leader for the team,ensures that the team adheres to Agile theory, practices,and rules.. The product owner, a member of management,represents the product’s stakeholders and the voice ofthe customer and is accountable for ensuring that theteam delivers value to the business.. The development team, a dedicated project team thatdoes the development work; the development team isusually physically collocated.The development team’s work is visible to all, tracked andmonitored via a set of visual scheduling and tracking toolsthat are displayed in the team room:. The Project Backlog displays a list of features to becompleted in the current sprint.. The Kanban Board (also sometimes called the ScrumBoard) organizes sprint tasks in three categories—todo, doing (underway), and done.. The Burndown Chart is a two-dimensional graph thatshows progress versus the plan; the sprint timeperiod is on the x-axis and the sprint task times are onthe y-axis.18 j Research-Technology Management Agile–Stage-Gate for ManufacturersThe sprints that give Agile its adaptability and productivityare excellent for mapping what the development teamshould do each week, but that ultra-short-term focus canmake it difficult to keep the long-term goal in sight. As asenior R&D executive in a major optical equipment firm,participating in a workshop on Agile and Stage-Gate,remarked about a troubled Agile-based project, “They’rein their 39th sprint, and I’m not sure they really knowwhere they’re heading or where the goal line is.” Nor doesAgile deal with the issue of whether the company shouldbe doing the project in the first place; Agile projects arerarely stopped. By contrast, Stage-Gate brings a strategicorientation to product development. The gates allow spacefor management to consider the bigger questions around aproject as it moves forward: Are we doing the project right,and are we doing the right project?A hybrid model that integrates elements of both Agileand Stage-Gate can help companies capitalize on thestrengths of both. Such a model has been described in somedetail (Cooper 2014, 2016; Cooper and Sommer 2016a,2016b; Sommer et al. 2015). Briefly, an Agile–Stage-Gatehybrid embeds the Agile way of working within Stage-Gatestages (Figure 1), replacing traditional project managementtools and approaches, such as Gantt charts, milestones, andcritical path planning, with Agile tools and processes. Thus,each stage is composed of a series of time-boxed sprints,each lasting about two to four weeks (Figure 1, right). Asin pure Agile, each sprint is planned in real time, on thefly, yielding a process that is highly responsive and adaptive. At the end of each sprint, the project team producesa tangible result of some kind—a prototype or otherphysical model that can be demonstrated to stakeholders,including customers, for validation and to identify neededdesign changes. Many firms also conduct tactical planningevery one to three months across all development teamsand with management. Here, teams meet to create a jointA hybrid model that integrateselements of both Agile and Stage-Gatecan help companies capitalize on thestrengths of both.tactical plan, prioritize activities, and allocate limitedresources for the next period (Figure 1, left).This rapid, iterative, and incremental release of concepts,designs, and prototypes provides fast customer feedback,which is integrated into the next sprint to move the productcloser to what customers want and need. Customers, inturn, refine their definitions of their needs through theirparticipation in the process. The voice of the customer thusbecomes a dynamic driver throughout the project. The postsprint retrospective allows the team to determine whetherthe assigned tasks have been completed—whether thesprint is actually “done”—and provides an opportunity toconsider how the team can work better in following sprints.As in Agile for software projects, the project team is ideallydedicated to the one project and collocated in one teamroom and has daily stand-up meetings (also called scrummeetings) to facilitate communication and productivity.Gates and stages remain an important part of this hybridmodel. Gates provide vital go/kill decision points—cullingout weak projects, providing focus in the developmentpipeline, and enabling senior management to reviewprojects at key transition points. Stages provide a high-leveloverview of the project’s main phases and a guide torequired or recommended activities and expecteddeliverables for each stage. The deliverables specified forFIGURE 1. A typical Agile–Stage-Gate hybrid model, with Agile sprints built into stagesAgile–Stage-Gate for Manufacturers March—April 2018 j 19each gate, however, are leaner, less granular, and moreflexible than in the classic gating model, and they are moretangible—product designs or prototypes rather than reportsor slide presentations.A number of leading manufacturers have begun toexperiment with Agile–Stage-Gate hybrid models, someas early as 2013. Often, those experiments began withsoftware developers using Agile to develop the softwarecomponent of a larger project; as groups responsible forthe physical components of these projects observed Agileat work, they decided to try the Agile model themselves.LEGO Education, for example, is a long-time user of traditional Stage-Gate processes. Its hardware developers wereintroduced to Agile in 2015, when the Digital Solutions(software) group was invited onto the struggling Story Tellerproject, a product aimed at teachers of young children. Thesoftware team brought with it its Agile processes; the StoryTeller project immediately experienced a rapid acceleration,and a highly successful product was launched within 12months—after four years of struggle using the classicStage-Gate system. LEGO Education quickly absorbed thatlesson and by 2016, several other major projects were usingan Agile–Stage-Gate hybrid model. Impressed with resultsin that business unit, LEGO is now rolling out the hybridprocess to most technology departments in the company.The results from these early adopters have been quitepositive (Cooper 2016; Cooper and Sommer 2016a,2016b), but most firms are still in a piloting phase; only afew have had the new system in place for more than threeyears. Still, these early results are intriguing. The most comprehensive study, of five major European manufacturingfirms that implemented Agile–Stage-Gate, identifiedmajor benefits in a range of areas (Sommer et al. 2015).The hybrid model, the study found,. increased design flexibility;. improved productivity, communication, and coordination among project team members;. drove better focus on projects, resulting in betterprioritization of time and effort; and. raised team morale.That study also revealed some negatives, includingdifficulties in acquiring team members and keepingproject teams connected to the rest of the organization,mismatches between the requirements of Agile and thecompany’s reward systems, and still too much bureaucracy.These early findings were based on very short experienceswith hybrid models. Now, some firms have been workingwith these processes for three years or more, gainingadditional insight into both opportunities and challenges.Case Studies: Early AdoptersTo find out what early adopters are learning aboutAgile–Stage-Gate models and their strengths andchallenges, we examined the experience of six majorfirms that were early adopters of Agile–Stage-Gate—Chamberlain, Danfoss, GE, Honeywell, LEGO Group, andTetra Pak (see “The Study,” right).All six firms are predominantly manufacturers, althoughsoftware is playing an increasingly important role in theproducts they manufacture (particularly at Honeywell,Chamberlain, and LEGO). They operate in a variety ofindustries, including process controls, packagingequipment, remote control equipment, and even toys.None is in a traditional process industry, such as chemicals,polymers, materials, or pharmaceuticals. Half the firmswere based in North America and half in Europe.Before adopting an Agile–Stage-Gate hybrid, all six firmshad been using a fairly traditional Stage-Gate system, successfully and for many years; they adopted hybrid modelsfor a range of reasons, from a need to resolve internal conflicts to a call for faster, more efficient product development(see “Case Firms,” p. 21). When they moved to the hybridmodel, these firms kept their classic stage-and-gateprocesses and applied Agile within some or all of the stages.The hybrid system is deployed on a minority of development projects in these firms, generally the larger, higherrisk, and more ambiguous or uncertain projects. Most firmsestimated using the hybrid system on about 20 percent ofprojects. While many common Agile–Stage-Gate practices,challenges, and solutions emerged, there remain variations;this is a new model and a new way of working, and adominant model has not yet emerged.Interviewees found it very difficult to quantify theimprovements resulting from the adoption of the hybridmodel; only one of the six firms had installed objectiveThe StudyTo gather more information about what firms are learningabout Agile–Stage-Gate hybrid models, we undertookdetailed case studies in six firms that had been working withAgile–Stage-Gate hybrid product development modelsfor two to three years or longer. These analyses wereundertaken in early adopter firms, which were identified atour workshops and from personal networking.The interviews, which lasted about an hour, were basedon an interview guide developed by the authors; thequestions asked the interviewee to describe the firm’sAgile–Stage-Gate process, explain why the firm opted totry this development approach, and detail the resultsachieved. It then delved into major issues and challengesfaced in implementation and the solutions the companyfound. Typically, we interviewed two or three people in eachfirm; the senior person in charge of the Agile–Stage-Gateimplementation was interviewed, as well as either Agile–Stage-Gate task force members or project team members.Interviews were conducted separately.Interviews were recorded and transcribed; transcriptionswere used to generate a final case outline, which wasreviewed and approved by the firm. We returned to somefirms at several points in time, to gather updates or whereit was agreed that a follow-up interview, after informationon implementation and results had solidified, would beadvisable.20 j Research-Technology Management Agile–Stage-Gate for Manufacturers Case Firms: Variations on the Agile–Stage-Gate JourneyChamberlainHoneywellhousehold devices (for example, garage door openers),moved to its hybrid model, Agile within Stage-Gate, in2013, in order to resolve the conflict between hardwaredevelopers, who used a stage-and-gate process, and software developers, who relied on Agile (Cooper 2016). Agileis employed in the development and testing stages of theStage-Gate system. Each stage is divided into a series ofsprints, each lasting exactly three weeks. Sprints followtypical Agile procedures.programs include both software and hardware; thus, thecompany’s Agile–Stage-Gate approach is designed forboth. The product development system includes threelayers: the leadership layer, focused on business decisions,uses a Stage-Gate model; the lower two levels, which dealwith executing business decisions, use different versionsof Agile, one with two- to four-week sprints and one withlonger iterations of eight to twelve weeks. Teams are freeto choose what system they use and which specific Agilepractices they employ. Some hardware teams operate atthe eight-week iteration level, while teams that are heavilyintegrated with software teams often do short sprints incadence with their software counterparts.Transformation Leader, estimates “a 20–30 percent cycletime reduction because there is much less ‘redo’ in projectsnow” as well as improvements in productivity.Danfossit is premature to claim major improvements, but “touchingthe customer regularly is having a positive impact by changing the culture internally and yielding success in the marketplace with several pilot projects.”began piloting an Agile–Stage-Gate hybrid model for physical products in mid-2015. While the company’s Stage-Gatesystem remains in place and unchanged at the leadershiplevel, an adapted version of Agile-Scrum is used at theproject-team level throughout the entire developmentprocess. Both design developments and customer validationsare executed in two-week sprints. Project teams are dedicated and collocated and use Agile tools and procedures.Program, told interviewers that the hybrid model has“restarted our learning journey . . . now we are finally doingwhat the Stage-Gate prescribes. We ask for early insightsfrom our customers, we adapt to learnings up front, and wekill or significantly change the scope of projects when necessary . . . much earlier than before.” The system has delivered a30 percent reduction in time to market, measured from thepreliminary business case to launch.GEbeen used for the company’s most important strategicproduct development programs for the past three years(Power 2014). The approach merges GE’s Stage-Gatesystem with approaches drawn from Ries’s (2011) LeanStartup, which mixes Agile and Lean principles. Thedevelopment program is governed by Stage-Gate,with teams within the program using Agile methodologywithin stages. The FastWorks model has three main stages:Seed, Launch, and Grow. The Seed and Launch stages useAgile, focusing on producing a minimum viable product andcollaborating closely with customers.aero-engine is tested in flight from three to one and a halfyears.LEGO Groupfor over a decade, but it was not adapted to thedevelopment of manufactured products until 2015.Agile is built into the firm’s Stage-Gate system. Withinstages, teams engage in sprints of one to four weeks;sprints follow typical Agile processes—including sprintplanning meetings and daily stand-up meetings—and usetypical Agile tools.ment believes the hybrid model has been beneficial. Oneinterviewee told us, “Projects actually finish on time andexceed expected market success.”Tetrapakision four years ago; the system is now being piloted acrossthe company. The company retained its traditional StageGate model, replacing the project manager, a core team,and an extended team with a product owner, scrum master,and semi-dedicated project team.approach, which is central to the new mindset. “Theorizingforever will not get you anywhere,” says Pontus Andersson,lead on Agile–Stage-Gate implementation. “We need to failfast, and learn and adapt our approach along the way.” Forexample, the company initially started with four-week sprintsbut realized after a few cycles that this was too short toproduce tangible products. Through feedback sessions(retrospect meetings), the teams decided to try eight-weeksprints instead—and it worked! Chamberlain, a US-based manufacturer of remote-controlledAfter four years using the system, David Schuda, BusinessDanfoss, a producer of valves and fluid-handling equipment,Bo Bay Jørgensen, Senior Director, Product DevelopmentGE’s Agile–Stage-Gate model, called “FastWorks,” hasThe new process has reduced the time before anHoneywell is a process controls firm whose developmentGlobal Technical Director Willem van der Werf notes thatLEGO’s IT departments have experimented with AgileAlthough formal metrics have not been installed, manageTetrapak began using an Agile–Stage-Gate hybrid in one divTetra Pak is implementing Agile using a “learn and adapt”Agile–Stage-Gate for Manufacturers March—April 2018 j 21Just as plans are constantly evolving inAgile, so, too, are product definitions.performance measures for the Agile–Stage-Gate model. Inspite of the lack of hard metrics, however, interviewees inall six firms indicated that they believed they had achievedsignificant benefits with the hybrid model. They estimatedapproximately a 30 percent reduction in time to marketand a 30 percent improvement in productivity. Theseimprovements are consistent with results from other firmsin earlier studies (Cooper 2016). Other frequently citedbenefits include faster response to changing market conditions and customer needs and higher project team morale.Addressing Challenges in PracticeIntegrating the Agile approach into an existing Stage-Gatesystem is not easy. The case study firms identified a numberof issues and challenges they encountered when implementing Agile within Stage-Gate for physical products.Apparent inconsistencies exist between the two systems,such as fluid versus fixed product definitions and short-termversus long-term planning cycles. The case firms alsodescribed a number of other challenges, including management skepticism, a lack of resources to support dedicatedteams, and the difficulty of producing a concrete demonstration product in a two-week sprint. These firms suggested arange of potential solutions; we also discussed these issuesin several workshops and panel discussions (see “AdditionalInputs,” right).Resolving InconsistenciesWhile Agile and Stage-Gate can work well together, eachbalancing the other’s strengths and weaknesses, they can alsoclash. Companies who hope to access the best of both systemsmust find ways to resolve those clashes to create a harmonious process. The potential conflicts become evident in thestruggle to balance short-term fluidity with long-term planning, and Stage-Gate’s need for a concrete product definitionwith Agile’s constantly evolving product definitions.One of the core principles of the Agile Manifesto is“maximizing the amount of work not done” (Beck et al.2001). One outcome of this principle is an absence of longterm plans—long-term plans don’t exist, for the simplereason that they’ll not be valid for long, and so the workof making them will be wasted. But manufacturers tryingto implement an Agile–Stage-Gate hybrid face a dilemma:if the project plan is short term and evolving, how candevelopment times and costs—data needed to support abusiness case and secure project approval—be estimated?This dilemma can be resolved initially by creating aschedule of tasks for each stage based on best estimates atthe time. The schedule is similar to a traditional project planor Gantt chart, but it is very tentative and much higherlevel, providing just enough detail to allow an equallytentative estimate of costs. At the same time, managementmust learn to live with some ambiguity—and be preparedto approve projects when plans, costs, and times are onlyestimates that are likely to change. But, as one intervieweepointed out, “There’s nothing really new here. We’realways approving projects where costs and times change!”The difference here is that the likelihood of change isacknowledged—and embraced—up front.Just as plans are constantly evolving in Agile, so, too, areproduct definitions. In the Agile world, the product isdefined as it emerges through repeated iterations basedon customer feedback. Managers must remember, asPeter Andersen, Senior Director of R&D at Danfoss noted,“Agile–Stage-Gate allows for early and frequent customervalidations of physical and virtual product designs. Themain change is that design specifications are no longer fixedup front, but are continuously adapted through the designiterations: no longer is there a pre-Development designfreeze.” The product backlog—a list of features to beimplemented in the product—is not locked in early in theproject; it varies based on customer feedback and the resultsof sprints, evolving over time as the project progressesand more data becomes available, from experiments andfrom customer feedback. Thus, as in planning and budgeting,Additional InputsThe case study firms provided the core data set for thearticle, but case studies by their nature represent a verylimited sample size. In order to broaden the base ofinformation from which we derived insights, we soughtadditional inputs from a larger sample of firms via twochannels: a set of workshops and panel participation.Workshops. First, we gathered insights from participantsat 14 open workshops held in the United States (fiveworkshops, hosted by ISBM at Penn State University andthe Management Roundtable) and in Europe (four inGermany, three in Denmark, and two in Sweden). Attendeeswere both from other early-adopter companies andfrom companies interested in adopting the new model.Workshop sessions focused on problems with firms’ currentor classic Stage-Gate processes and key issues andchallenges in implementing Agile–Stage-Gate.Panel. Both authors participated, along with some casecompanies, Danfoss and LEGO Group, and other Danishfirms, on the advisory panel for an initiative sponsored bythe Danish government to introduce Agile–Stage-Gate tomid-sized firms in that country. That experience providedadditional insights into what worked and what did not forthese companies.Some of these additional inputs were confirmatory,reiterating what the case data had already revealed. Otherinputs provided new insights, especially regarding possiblesolutions to challenges and issues identified by casecompanies.22 j Research-Technology Management Agile–Stage-Gate for Manufacturersmanufacturers must learn to accommodate more ambiguitythan they might be comfortable with in product definition,moving forward based on a high-level, although againsomewhat tentative, product definition.Addressing Management SkepticismAs Helen Hosang, a marketing director at Honeywell, toldinterviewers, “Implementation involves a major culturaltransformation,” so leadership buy-in is critical. To besuccessful, Hosang said, companies must “ensure that[the] transformation is leadership sponsored and hascross-functional buy-in and support.” That may be a simpletask, but it is not an easy one. Several interviewees, andattendees at our workshops as well, noted skepticism fromthe management team as a hindrance to the adoption ofAgile–Stage-Gate hybrid models. Management resistanceoften arises from common misconceptions: many don’tunderstand that implementing Agile does not meanabandoning Stage-Gate.Case companies mostly sought to overcome thisresistance by designing their hybrid systems aroundmanagers—the leadership team saw only results, not theprocess. At Chamberlain, for instance, where senior leaderswere initially skeptical of the new Agile-Scrum system, theproduct development function simply implemented thechanges at the project level. The senior management teamwas not required to learn Agile because the traditional gatesremained intact. Similarly, Danfoss chose not to change itsStage-Gate system, except to add risk assessment andcustomer insights at an early gate. Here again, most ofthe changes occurred at the project-team level, and projectleaders implemented the Agile approach. Senior leaderssaw only the project’s results at the gate points.Designing the system in this way puts the focus forleaders on results, not process, by measuring performance.Solid, measurable results can go a long way in convincing askeptical leadership team. Many of our case companies aremissing an opportunity in this regard—only one of the sixcase-study firms had implemented formal metrics to gaugeperformance improvements, and that firm did so as amatter of course, not with the aim of managing leadershipskepticism.Finding ResourcesThe main challenge for many manufacturers is finding theresources needed to support an Agile approach—especiallythe dedicated project teams required by a full implementation of the system. Short sprints, daily stand-up meetings,and quick deliverables are much more difficult—perhapseven impossible—when team members are spread acrossseveral other projects or not in regular contact with eachother.Case companies have largely found it untenable to havepeople assigned to only one project at a time, but they haveexperimented with various compromises. At TetraPak, Pontus Andersson, Project Manager and lead onAgile–Stage-Gate implementation, told interviewers, “Firstwe tried teams with people dedicated 50 percent of theirtime, which did not work at all. Then we moved to 70percent dedication, which was better but not optimal.Now, the rule is a maximum of one other project perperson, taking no more than 30 percent of their time. Thisworks, but we might even have to move to 100 percent.”Among both case companies and workshop attendees,we’ve found that most manufacturers do make compromises like Tetra Pak’s, not fully dedicating personnelbut limiting maximum loads. In workshop discussions, anattendee from a major California bio-tech firm describedhow his company handles the dedicated team challengeby creating a single team that works on a cohort of concurrent Agile–Stage-Gate projects—all similar projects andrequiring similar skills. This allows team members to stayin constant contact and keeps them from being divertedto other tasks; daily stand-ups may deal with more thanthat one project. Another solution is to be selective aboutwhich projects use the hybrid model.Defining Sprint DeliverablesIn software, a development team can usually produce something that works—executable software code—by the end ofeach sprint. The notion of a “done sprint” does not apply soneatly to manufactured products. The development of a newengine, medical device, or machine cannot be so easilyincrementalized. Even when it’s possible to create a concreteprototype at a particular stage, it takes time—sometimeslonger than a typical sprint—to physically build it.Our case companies have addressed this problem byredefining “done” for physical product development. Theresult of a done sprint in this context is not necessarily aworking product; it is merely some tangible result of thework completed in that sprint. For example, in earlierstages at the front end, the definition of “done” may be abusiness case, or the results of preliminary experiments ora voice-of-customer study. Beginning in the developmentstage, however, a “done sprint” usually yields somethingphysical that the customer can respond to and managementcan see: design drawings, a computer animation, a virtualproduct, a crude model—in short, a product version somewhere between a concept and a ready-to-trial prototype,sometimes called a protocept or a pretotype.At Honeywell, according to Willem van der Werf, “Forhardware developments, the definition of ‘done’ for a sprintmay be a ‘demo-able’ simulation, or something that is testable or ‘integrate-able’ as opposed to having a shippablesoftware feature.” At Chamberlain, the “somethingtangible” delivered by a sprint could be design drawings oran early prototype, while at GE, the deliverables for a sprintcould be outcomes of virtual experiments conductedthrough simulation modeling. The range of possible deliverables is being extended by new technology: Newer techniques such as computer simulation and 3D printing meanthat traditionally long-lead items (for instance, securingcast components or making electronic circuit boards) aredisappearing from the Development phase (Cooper 2016).Agile–Stage-Gate for Manufacturers March—April 2018 j 23One of the key questions is where tointegrate Agile—both where in theproduct development process and forwhich projects.Getting quick customer feedback at the end of the sprintcan also be a challenge. For software, getting feedbackinvolves sending the new feature to customers, usuallyelectronically, and soliciting feedback by the same channel.But hardware products can’t be e-mailed or downloaded.And some customers don’t want to move so fast orcannot undertake tests so quickly. Case companies haveaddressed this challenge in a number of ways. At LEGOand Danfoss, entire sprints are devoted to seeking customervalidation. GE asks strategic customers to commit to takepart in the development process before the project isinitiated. The advantage for the customer in investingtheir time and efforts is that the final product is fitted toexactly their needs and instantly implementable into theirsystems.Deciding Where to Implement AgileOne of the key questions in implementing an Agile–Stage-Gate hybrid is where to integrate Agile—both wherein the product development process and for which projects.Fitting Agile into the Stage-Gate StructureAgile practices may not work equally well for all stages ofproduct development. The ambiguity that can drive innovation and productivity in early design may not be tolerablein later stages, when precision is needed and planning ismore constrained.Most of our case companies implemented Agile first inthe technical stages, development and testing. Often thetechnical people heard about Agile first, frequently fromtheir own IT people, and decided to try it for the technicalwork. The focus on producing a working or demonstrableprotocept as the sprint outcome suits the technical phasesof a new-product project, which are focused on addressingtechnical and design issues. And technical people are morelikely to be dedicated to a single project, making implementation easier from a resourcing standpoint in these phases.Some companies, including Danfoss and LEGO, havealso found that the hybrid can work well in even earlierphases, such as ideation and concept feasibility (Figure 2).These firms find that Agile’s iterative nature fits well withFIGURE 2. Agile–Stage-Gate at the fuzzy front end (adapted from Kielgast, Vedsmand, and Cooper 2016)24 j Research-Technology Management Agile–Stage-Gate for Manufacturersthe design thinking methods (Brown 2008; Kielgast,Vedsmand, and Cooper 2016) they use to build outconcepts in the front end, before the full-blown productdevelopment process takes hold. Other functional areas, suchas marketers or manufacturing engineers, may find it moredifficult to adapt to the Agile way of working, but, as atLEGO, given solid training, an effective change managementeffort, and proper resource allocation, Agile–Stage-Gate canwork across the entire project development process.Matching Projects to ProcessesAlthough in theory the Agile–Stage-Gate hybrid is suitablefor all development projects, in practice the greatestadvantages may be reaped in more ambiguous anduncertain initiatives. Where markets and customer needsare known and stable, the linear structure of Stage-Gateis not a disadvantage and it may be more efficient. Further,Agile requires significant resources—not least, a fullydedicated or nearly fully dedicated team—that simpleincremental projects may not warrant. Reserving Agile forprojects that truly need it can help make sure resourcesare available for those projects.Our case companies addressed this decision in differentways. Chamberlain employs its hybrid approach only formajor revenue-generating projects—about 20 percentof the projects in its development pipeline. At Danfoss,Agile–Stage-Gate is applied to all innovation projects(more transformational projects) across all divisions anddisciplines, from heating to cooling solutions to development of power drives. And at LEGO, Agile–Stage-Gateso far is reserved for development of LEGO Educationproducts and higher-tech products such as Mindstorms.Implementing Agile–Stage-GateThe potential gains are tempting, but the process ofimplementing a hybrid model can be daunting. Thechallenges can be managed, however, with managementbuy-in and a clear, implementation process that allowsthe company to build on previous learning.Generally, the process begins with a small task force madeup of people from the different functional areas involved inproduct innovation—technical, operations, marketing, andsales—and from different business units and geographies.The task force may employ an outside expert or facilitatoras well. While the task force is getting up to speed on theAgile method, it also dissects the firm’s existing stage-andgate process to produce a current state assessment. The firsttask is often to streamline the current system, using Lean SixSigma methods (Fiore 2005) to make requirements lessonerous. For example, before Danfoss implemented Agile–Stage-Gate, it first employed more traditional techniques tomake its existing innovation process leaner, cutting cycletime in half even before the move to the hybrid model.Once the Stage-Gate system is streamlined, the taskforce then maps the new hybrid model, determiningwhere Agile will work, for which stages and which projects.The task force must also determine how to address thechallenges that arise. In the spirit of Agile, however, theOur case companies offered one pieceof resounding advice: “Just try it!”team should avoid intricate over-planning. Instead, leadersat Danfoss recommend beginning with a pilot project,ensuring that it receives senior management attention andsufficient resources, and watching to see what happens.Most important, the task force must recognize that Agile–Stage-Gate is still new: everyone is still learning how to do itand there is not one right way to proceed. It’s important toremember that this is a new way of working for bothexecutives and project teams. An interviewee at Tetra Pak cautioned that project team members will have an “adjustmenttime”—a period of frustration as they navigate what can be asteep learning curve. Honeywell addressed this learning curveby sponsoring extensive training for pilot teams and bringingin external coaches to provide additional support; trainingand coaching are now ongoing practices for the company.Other case companies recommended adapting the model tosuit the organization and providing for open dialoguethroughout implementation to deal quickly with issues andchallenges as they arise.Whatever approach is taken, however a companydecides to move forward, our case companies offered onepiece of resounding advice: “Just try it!”ConclusionAgile has revolutionized product development in the software industry. Agile–Stage-Gate is now poised to transformhow new products are developed in the manufacturingworld. By combining Agile with the classic Stage-Gatesystem, the new hybrid model promises to yield broadimpact across many industries. There are challenges inreconciling the two approaches and in overcomingorganizational limitations, but most early-adopter firmshave found solutions. The greatest challenges are management skepticism and finding the dedicated resources tomake this new model work. But businesses that embraceAgile–Stage-Gate and commit the necessary resourcesstand to reap benefits in increased R&D productivity, fastertime to market, and stronger new offerings.ReferencesBeck, K., Beedle, M., van Bennekum, A., Cockburn, A.,Cunningham, W., Fowler, M. et al. 2001. Manifesto forAgile Software Development. http://agilemanifesto.org/Begel, A., and Nagappan, N. 2007. Usage and perceptions ofAgile software development in an industrial context: Anexploratory study. 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