Gates and How to Operate Them

by | May 13, 2020 | Blog Post

In the fourth post from our 7-part series exploring Stage and Gate processes, we examine each of the Gates in the Stage / Gate process.

The actual process of making decisions at gates is termed a gate review, or a gate meeting. Gate meetings are a where you decide whether you should proceed with the project. As discussed in the second part of this Blog series exploring Stage / Gate Models, Gate decisions can be any of the following:

  • Go – Proceed to the next stage, with approval to spend or use resources within agreed limits. Typically, part of the Go approval involves an agreement on what deliverables must be produced at the following gate. It is essentially an agreement on the terms of reference for the next stage of work.
  • Kill – If the project doesn’t have enough merit, then kill puts an end to it. Although the principle is straightforward, Kill decisions are frequently avoided even when they should be made. In reality it’s hard to kill a project – people get upset, object, find alternatives, lobby for support. It’s not easy, so we will re-visit this topic in a later post.
  • Hold – This means the project has merit, but for any number of reasons it is not appropriate to continue at this point in time. The reasons to hold may be any of the following – not enough resources, not the right timing, the market is not right at this point in time, not currently a good fit, an interdependence on other projects or technologies that are not yet ready.
  • Rework – Typically this means ‘go back and do some more work’. This could be due to the deliverables presented to the gate not being of sufficient quality or completeness, or it may be a fundamental issue with the project, perhaps involving a change in scope or objectives.

This is generally a formalised process at the gate meeting, with defined criteria on what is required at each gate. The advantage of there being predefined criteria is that you get more consistency and objectivity. Without the predefined criteria, it’s all too easy, and nice human nature, to find reason in most projects to press ahead with optimism and rose-tinted views on why they will “probably” be good products. Hope is a wonderful thing, until it goes wrong! The criteria bring objectivity. They also bring great debate when trying to agree them up front. More on that later, when we discuss implementation.

In summary the gates and the key deliverables required are the following:

Gate 0

Approve the idea and progress to being a project.

Gate 1

Approve the feasibility assessment, and grant resources to build the business case.

Gate 2

Approve the business case, possibly conditional, and grant resources to proceed with development. Typically, this approval is the most significant one, as it opens the door to significant costs and effort of development. Think of it as a project contract, where approval is granted to proceed according to a plan and particular set of milestones. And the expectation to report back to ensure risks and uncertainties prove manageable, and most likely to refine that plan as work proceeds.

Gate 3

Approving the development. Basically, does it match up to expectations and does it look like the revised business case is still viable? At this stage, you ar trying to maximise the value of what has been accomplished. Sunk investment by this point is generally substantial, and remaining costs to commercialise will hopefully be clear and well known. If they are not, then more refinement is probably called for. In rare cases, it may be necessary to take the bold decision to cancel or kill a project. Or perhaps to put it on hold for a while. A complete cancellation should really cause you to reflect on why the signals were not detected earlier. If it is as a result of a complete surprise in the market, maybe a competitor, then simply re-assess from where you are now, looking forwards only.

Gate 4

Proceed to launch. To take this decision you need to be confident that the product has commercial merit and good odds of success. The rollout plan must be clear and realistic. The business plan by this stage should be robust and should stand up to critical financial and commercial scrutiny – and it should show a good level of return.

Gate 5 and ongoing

Post launch review and monitoring. Check progress against the business plan. Are sales proceeding according to projections? What can be done to improve? What are the actual product costs? How are competitors responding?

In our following blog post we will be taking a closer look at the decision-making process and the key areas to consider when making decisions.

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