Phase Gate is a Discovery-to-Launch Process, and the ‘industry standard’ for managing product innovation, used by companies of all sizes around the world.
The basic idea is simple – divide the project into phases. The early ones deal with the how and the why. The later phases deal with doing – developing and testing according to specification. Most importantly – between the major phases are review gates, to check everything is on track, and to approve starting of the next phase.
The gate review is vital to the decision-making process. The way a project is presented in the gate presentation, the passion and evangelism of a project manager, the information that is put forward, all act as an influence on how decisions are made. So, what does a good gate presentation look like and what should it include?
Identify your Criteria.
Firstly, think about your gate criteria. To make decisions, you must have some agreed basis on which the decision will be made. The criteria are many, and the key is that you should consciously debate and decide what they are, and possibly weight them in importance.
Typical criteria to consider are:
- Technical risk
- Commercial risk
- Market Attractiveness
- Customer Value
- Strategic Alignment
- Competitive Advantage
- Innovation Longevity
- Financial Return
- Resource fit/availability
- Portfolio Impact
The gate criteria will ensure there is consistency in the decision making and thought process. It also exposes the gatekeeping thought process to the project team and will give you a fixed basis by which projects are evaluated.
Information is Key.
The criteria provide the framework. Information is what makes the framework useful. The information you need to make good decisions needs to be included in the gate presentation– if it is not, then reassess the format of your presentation.
Information must be collected, validated, and critically appraised. Just because a project manager believes that there is a big market is not enough. What you need are meaningful supportive pieces of evidence, validation or anything that genuinely adds credibility to an estimate.
In the world of innovation, you are fundamentally making decisions under conditions of uncertainty. This means that all information should really be regarded as qualitative. The fact that a particular analyst rates a market segment as growing and of a substantial size only means that it is a fact that the analyst believes that. It is not necessarily a numerical fact, and the best you can do is critically bring judgement to bear and decide for yourself how all the information you have to hand really relates to the very specific aspects of the innovation project you are assessing. Data and judgement must be used in combination.
How much information should be included?
We can all agree that there is a lot of information that is needed to make a decision. However, we can sometimes over engineer and have too much information, information which may not be vital to decision making. You must find a balance between writing a book that no one will read, and something so concise that it does not include all the information needed. It is imperative to get the information in a format or structure that the decision maker can make the decision but without having to read a 15-page document – which they often never do. Be it a document or a PowerPoint, it needs to cover the full agenda and cover all aspects of a project, providing approvers all the information they need to properly evaluate a project without hidden corners.
Once you have the criteria of evaluation, you will know what information sections need to be covered off in the gate presentation.
On a higher level, the gate presentation or document needs to include:
- Introduction – what is the project trying to do?
- What assumptions have changed since the last gate?
- What has been done within the last stage?
- What is the plan for the next stage? What resources and investment are you asking for to get it through the next stage?
- What is the overall plan for the next stage?
Project teams will often learn exactly how much content they will need to include – and that is partly down to experience. The project team leader needs to know what level of detail is required so that they do not overdetail. Project team members can talk to their bosses to find out what is the right level of information that needs to go into that gate document to help senior executives to make their decisions.
The level of detail required can also vary from gate to gate, and this again comes down to context and experience. The presentation itself does not need to be that big. However, the appendix may need to include details of how certain conclusions have made, who had been consulted and what was the input for that summary.
It is worth investing time and thought into the structure of the gate presentation as it ensures a more efficient and effective process. Be it a PowerPoint presentation, an Excel workbook or Word document – the structure is key for the quality of decision making but also the effectiveness of the process and timing. If you do not have a well thought through gate document, it can lead to sloppy decision making. If information is missing from the gate document, it can delay the project.
Gate decisions are best taken in meetings as meetings imply discussion and that gives everyone a better chance to understand a project and probe a project team before making a decision. Fundamentally, the gate team must be able to be probed on the project so that the gatekeeper is satisfied with the work that they have done to arrive at their assessment.
The gate document can also be used to educate and inform ahead of discussion and decision making. It can help the gatekeeper frame questions that he/she may want to discuss with the team and provide the team with the framework of information that the gatekeeper needs.
Importantly – teams must understand the criteria that the gatekeepers use to make their decisions. If the project team understands on what basis the gate keepers will be making their decision, they can supply them with the information that they need.
Remember, there are two teams involved here – one is the project team which is being asked to assemble the information to enable senior executives to make the decision – and the other team is the senior executives. It is a two-fold objective and requires consensus from all involved, so good communication between all parties involved is key. If a project does fail, it’s as much the responsibility of the gatekeepers as it is the team who are delivering it. Particularly as the gatekeepers are far more experienced than the project team.
Your process and criteria should always be evaluated. This doesn’t always happen and is often overlooked, but it’s so important to review projects to see whether they met their objectives. If they didn’t, then what went wrong? Was anything overlooked? Was more information needed to make the right decision? If the wrong project was approved in a gate meeting, how could the decision-making process be improved so that this doesn’t happen again?
Your process should be reviewed regularly, but this is especially true if you are not producing the right projects. Review and refine the gate document, presentation, gate meeting and approval process. If it’s not delivering the right results, that process needs to be evaluated to see how it can be improved. Your process should be dynamic, not set-in stone. It will evolve over time and that is facilitated by the post project review and the learnings gained from that. At GenSight we always suggest a best practice process to start off with, based on something we know works in other organisations, which is why many choose to use a process like stage gate – and then say, “How can we improve this for your specific business needs?”
In summary, a good gate presentation is key to the decision-making process and choosing the right projects. It is important that your process is consistent so that is it understood by everyone involves, and that everyone fully understands the framework for decision making. The gate presentation will capture and summarise that view in a format that gatekeepers can use to make their decisions. It is also imperative to remember that this process is not set-in stone – getting the right flow of information involves reviewing and refining your process.