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Innovating Under Uncertainty: Introducing Agile into the Stage Gate Process

Arij van Berkel, Ph.D., Research Director
June 11, 2020

Amid the COVID-19 crisis, many innovative companies are working hard to continue their innovation momentum. As a way to cope with the uncertain market environment, some are turning to the Agile concept for their technology innovation efforts.

Agile is an innovation project management approach that stresses the iterative aspects of innovation. Its origins are in software development, but some manufacturing firms have begun to use Agile elements in their traditional stage gate-based processes.

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These companies discovered that Agile led to improved project speed, decision-making, and communication. The key features of Agile – block-by-block management, empowered teams, iteration – drive valuable innovation best practices, some of which are particularly useful correctives for a slow and bureaucratic stage-gate process.

Why is it that there is an increased interest in merging the Agile and stage-gate process now?

There are four reasons:

  • Speed is more important today.

  • New digital tools have sped up innovation.

  • The lessons of stage-gate have been learned.

  • Companies are looking to make their innovation process faster and less rigid.

What is the issue with the stage-gate process? It has been long recognized that the bureaucracy of stage-gate can impede speed and agility. It is also only as good as the gate criteria, which include strategic fit, market size, market growth rate, prospective margin, market and technology risk, the cost price of product, required investment and others. These criteria tend to be fairly easy to set in the original context of the stage-gate process, which is new product development.

However, if the objective is entirely different, or if the market is behaving somewhat differently (such as in the current COVID-19 crisis), these criteria are less easy to establish. One needs to take into account the fluid nature of the market environment - perhaps the strategy needs revision, the markets have changed, policies and society have evolved, and so on.

To overcome this challenge, building agility into the stage-gate process can be beneficial. This approach helps to reduce the number of gates, and add several “sprint blocks” that can be iterative or progressive.

With sprint blocks, the team members have a short and well-defined time path. They are given a short period – for example, four weeks – and the necessary budget to go as far as possible in the general direction, after which their work is assessed.

Such an agile approach leads to several advantages. It is more flexible as the team is not on a set roadmap but is going in a particular, if more general, direction. The team becomes more empowered and can take shortcuts to get better results in less time. Focus also improves as it concentrates effort on one single project rather than a number. During the post-sprint evaluation, the team can turn their focus to other projects.

This does not mean that teams only work in sprints. Tactical planning is still necessary, as is prioritization and the setting of targets and performance objectives etc. 

Agile can, therefore, be a useful addition to the innovation process. It can help a company increase speed and decision quality by empowering project teams and removing internal roadblocks. However, it’s not a cure for everything; it’s not a replacement tool but something that can be valuable in times of uncertainty. Sprints work best when they are kept simple and are given a very clear direction for the team.

Key takeaways:

  • The stage-gate process depends on the criteria, but these are more difficult to set in very volatile markets when a more flexible approach is needed.

  • Sprints empower teams to make as much progress as possible while still maintaining a level of control.

  • Agile works to combat uncertainty, but it has its limits. The stage-gate process is a tried and tested methodology when the goals and criteria are clear and stable.
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