Do your initiative stage-gates have teeth?
Quick introduction to stage-gate processes
A stage-gate process is a set of high-level milestones that are consistently applied to initiatives / projects within a given programme. Each milestone has approvers who assess the initiative based on pre-defined criteria (e.g., artifact creation, performance milestones, strategic alignment) and make the decision whether to advance the initiative, keep the initiative in its current stage, or cancel / defer the initiative.
Typically, these milestones align to key decision points in a programme regarding continued investment – e.g., after developing a project plan with cost and benefit estimates does it make sense to proceed to implementation?
However, to fulfil this vision your stage-gates need “teeth” – rather than being a rubber-stamp check of deliverables it truly needs to test the underlying assumptions and logic of the business case, as well as the strategic alignment. Well-designed stage-gates will provide three key benefits:
- Initiative planning, monitoring and control Stage-gates drive conformance to a pre-defined process with a clear set of deliverables and documented approvals.
- Initiative portfolio management Stage-gates provide a means for ongoing portfolio assessment and curation, rather than just focusing on the initial selection of initiatives.
- Programme value tracking – Stage-gates help establish the trustworthiness of forecasts for timing, costs and value capture based on the maturity of initiatives, as business cases are vetted and elaborated throughout their lifecycles.
Defining a stage-gate process with “teeth”
A thoughtfully designed and implemented stage-gate process can provide significant value for a programme delivery team. It helps ensure that teams are continually focused on the right initiatives and executing them in the proper way.
In this section, we discuss three key components of designing and implementing a stage-gate process with the “teeth” to keep your team focused on the right initiatives and delivering effectively:
- Designing the right process
- Asking the right questions
- Leveraging the right tools
Designing the right process
Initiative life cycles and stage-gates come in various shapes and sizes according to the type of initiative, its context and the industry or sector in which the initiative takes place.
A stage-gate process should be fully articulated and documented and applied consistently to all initiatives across a strategic programme or investment portfolio. The process should align with business strategy, critical management decision points, and be proportionate to the initiatives’ scale, complexity, and risk potential. It should also be transparent and easily understood by all involved.
A stage-gate process will normally involve considering key work products and completed activities such as; budgets, expenditure and estimates at completion, investment analysis, solution development, risk management, and benefits realisation management.
Figure 1. Typical initiative life cycle comprising five stages and five stage-gates
The first decision point (Gate 1), sometimes known as the ‘start gate,’ is particularly important and should, if possible, be undertaken independently of the initiative owner. This helps to overcome human biases such as the planning fallacy, where people underestimate the time that it will take to complete an initiative, despite the knowledge that previous initiatives have taken far longer than planned!
This final stage-gate aims to evaluate whether we met initiative’s objectives, how effectively the initiative was run, lessons for the future, and the actions required to maximise the value capture from the initiative.
Strategy Execution Management software, such as Amplify, helps to automate the creation of inputs that are required at each stage-gate, such as cost profiles, scheduled milestones, and benefits realisation plans. They also help standardise, embed, and sustain an effective stage-gate approach; thereby saving time and money, and improving the quality of decision making.
Asking the right questions
All too often, stage-gates are merely seen as rote deliverable reviews where approvers run through a quick checklist to see if documents have been completed. This is a missed opportunity, as a stage-gate represents an opportunity to pause, reflect, and decide on the future of an initiative. A Board may determine that the initiative is unaffordable and/or unachievable or require the initiative manager to carry out additional work prior to resubmission at a later date.
A robust version of the stage-gate decision making is characterised as the ‘Dragons’ Den-approach’ (‘Shark Tank’ for our US audience – Ed.), based on the popular BBC’s TV series. The initiative sponsor is required to present the business case to a panel of gatekeeping experts drawn from the business, including members who can provide strategic, financial, and operational perspectives. The panel scrutinises the initiative by asking questions such as;
- What are the specific deliverables, outcomes, and benefits?
- Does the scale of benefits represent an adequate return for the funds required, and are the estimated costs realistic?
- Are the benefits realizable? In particular – what business and behavioural change will be required?
Such an approach can be useful to test the veracity of a proposition or scheme and make comparisons between competing business cases when money is tight. If the information presented to the ‘Dragons’ is insufficient, or the costs, benefits and risks don’t stack up, it will be rejected!
Whilst quantitative and qualitative data in a business case may appear compelling to the author; it is important to factor in the judgment of an individual or group of gatekeepers. Decision making is likely to be a combination of a logical consideration of evidence (lead with the head) alongside factors such as the confidence, credibility and trustworthiness of the initiative owner making the application. (go with the gut).
Leveraging the right tools
Our Strategy Execution Management solution, Amplify, incorporates a stage-gate process editor that is used to create a pre-defined life cycle process that all initiatives of a particular type must follow. Each stage ends with a decision point with assessment criteria that must be met to proceed to the next stage. The process includes approval workflows customised to reflect organisational governance arrangements.
We can configure workflow such that we capture any commentary on the platform, along with the decision to reject or approve the application procedure, details of who decided and when the decision was made. The workflow can be designed to support self-approval or require an individual approver or multiple approvers identified by name or role and organized in a specific sequence.
Figure 2: Amplify stage-gate process for the CRM initiative at SG4 ‘Execute’ showing deliverables and approvers
Amplify has many built-in dashboards and reporting options for effective decision-making, avoiding the overhead and risk associated with the manual preparation of reports.
The Amplify stage-gate process dashboard shown in the figure below summarizes initiatives from the perspective of a ‘parent’ in the initiative hierarchy, e.g., a workstream or programme. Nine initiatives are shown at various stages of maturity that comprise the ‘ICT’ workstream.
Figure 3: Amplify stage gate process dashboard for ICT workstream and constituent initiatives
The initiatives proceed from left to right through the five stages of ‘Identify, Validate, Plan, Execute and Realise.’ The ‘Total Plan’ label shows the cumulative level of all financial benefits within a particular stage, whilst the ‘Total Budget’ shows cumulative costs. Taken together, they provide a graphical representation of total value by stage.
Besides gaining insights into the status and value of initiatives by their stage in the life cycle, this dashboard helps to identify bottlenecks in initiative execution and stage-gate approvals.
Stages and the stage-gates that lie between them are a core component of an initiative life cycle and fundamental to planning, monitoring, and controlling individual initiatives. Where initiatives are organised into a strategic programme or investment portfolio, stage-gates enable organisations to select, prioritise and re-prioritise those initiatives that are most likely deliver value, optimising the return on their investment in strategic change.
For a stage-gate process to be effective, the principal players need to play their part. At each key decision point, the initiative manager is required to prepare and present sufficient information (ideally supported by a tool such as Amplify) to show that specified assessment criteria have been met, e.g., by reporting on completed activities and submitting next-stage plans, whilst the board needs to be satisfied that this is the case.
Whilst there are variety of stage-gates and stage-gate processes, what they have in common is the fact that they must be capable of either accepting or rejecting an application to proceed to the next stage, and for that they need teeth. Do your initiative stage-gates have them?