Managing Technology Development Projects: IEEE Engineering Management Review February 2007
Managing Technology Development Projects: IEEE Engineering Management Review February 2007
Managing Technology Development Projects: IEEE Engineering Management Review February 2007
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Robert Cooper
McMaster University
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Summary: Technology development projects are not the same as product development projects,
nor should they be managed the same way. Cooper outlines a unique gating system designed for
technology development and technology platform projects – including the right criteria to use for
making the Go/Kill decisions.
Citation: This article appeared as: R.G. Cooper, “Managing technology development projects –
Different than traditional development projects,” Research-Technology Management, 49, 6,
Nov-Dec 2006, pp 23-31.
Robert G. Cooper
OVERVIEW: Technology development projects are the new knowledge, new technology, a technical capability,
foundation or platform for new products and new or a technological platform. These projects, which
processes and thus are vital to the prosperity of the include fundamental research projects, science projects,
modern corporation. But these basic research or funda- basic research, and often technology platform projects,
mental knowledge-build projects are often mismanaged often lead to multiple commercial projects—new
because companies employ the wrong process to manage product or new process development.
them or apply inappropriate financial criteria for project
Technology development projects are a special breed:
selection. The result is that technology developments
although they represent a small proportion of effort in the
have become increasingly rare in the typical company’s
typical company’s development portfolio, they are vital
development portfolio. To better manage such projects,
to the company’s long-term growth, prosperity and
leading companies have adopted a unique Stage-Gate威
sometimes even survival. These projects also stand out
process specially tailored to the needs of technology
because they are often mismanaged or mishandled,
development projects. This process consists of three
resulting in few benefits to the company. The chronicles
stages and four gates, and feeds the front end of the
of many, if not most, large corporations are replete with
typical new product process. Scorecards and the use of
horrific stories about huge technology projects that led to
tailored success criteria are used to rate and rank these
nothing after spending millions of dollars, or worse yet,
technology projects, while the “strategic buckets”
were cancelled prematurely, thus forgoing millions in
approach to portfolio management ensures that
potential profits.
dedicated resources are deployed for these higher-risk
projects. This article outlines proven approaches to selecting and
managing such venturesome projects—approaches that
KEY CONCEPTS: technology development, Stage-
recognize that traditional management techniques, such
Gate, scorecard, portfolio management.
as phase-review, Stage-Gate威 or PACE威 with their
elaborate checklists, scorecards, deliverables lists, and
The term “technology development” refers to a special financially-based Go/Kill criteria, are inappropriate for
class of development projects where the deliverable is such projects (1–3).
What’s So Special?
Robert Cooper is professor of marketing at McMaster
Technology development (TD) projects are indeed a
University’s M.G. DeGroote School of Business,
very different type of development project. First, they
Hamilton, Ontario, Canada; ISBM Distinguished
are increasingly rare—the average business’s R&D
Research Fellow at Penn State University’s Smeal
portfolio has shifted dramatically to smaller, shorter-
College of Business Administration; and president of the
term projects such as product updates, modifications and
Product Development Institute. He is the developer of the
fixes over the last 15 years (4). With the exception of a
Stage-Gate® idea-to-launch process, and author of six
handful of best-practice companies, gone are the days
books on product innovation management. He has won two
when portfolios were replete with advanced technology,
Maurice Holland awards for the best paper published in
technology breakthrough and true innovation develop-
Research-Technology Management in 1990 (“New
ment projects (5).
Products: What Distinguishes the Winners?”) and 1994
(“Debunking the Myths of New Product Development”). This dearth of innovative projects is in part due to
www.stage-gate.com management’s preoccupation with the short term and
November—December 2006 23
0895-6308/06/$5.00 © 2006 Industrial Research Institute, Inc.
immediate financial results, which usually precludes
undertaking venturesome development projects (6).
When resources are tight, managers take few chances— Much damage is
they elect the “sure bets,” which are typically the smaller,
closer-to-home projects. Here’s a typical comment (7): done by applying
My business has a limited R&D budget. I can’t afford to risk a major
percentage of that budget on a handful of big projects. I’ve got to
hedge my bets here, and pick the smaller and lower risk ones. If I had
traditional
a larger R&D budget, then I might tackle some more venturesome
projects. . . . Senior R&D executive in a $300 million business unit of management
a major manufacturing conglomerate.
November—December 2006 25
Gate 1: Idea Screen.—This first gate is the idea screen, The Gate 1 gatekeeper or decision-making group is
the initial decision to commit a limited amount of time typically composed of senior R&D people, such as the
and money to the research project. This gate should be a corporate head of technology (VP R&D or CTO), other
gentle screen, which poses the question: Does the idea senior R&D people, along with representatives from
merit expending any effort at all? Criteria for Go are corporate marketing and business development to ensure
largely qualitative, are scored at the gate review by the commercial input.
gatekeepers, and should include such items as:
• Strategic fit and impact. Stage 1: Project Scoping.—The purpose of this Scoping
stage is to build the foundation for the research project,
• Strategic leverage. define the scope of the project, and map the forward plan.
• Likelihood of technical success. The effort is limited, typically to not much more than two
weeks. Stage 1 activities are conceptual and preparation
• Likelihood of commercial success. work (see Figure 2), and include a technical literature
• Reward or the “size of the prize” if successful. search, patent and IP search, competitive alternatives
Figure 1.—The technology development Stage-Gate威 process is specially designed for TD projects—three stages
and four gates up to an Applications Path Gate.
Figure 2.—The TD project moves from the Scoping Stage—a relatively simple stage—through to the Detailed
Investigation Stage, which can entail person-years of experimental work.
Figure 3.—The typical technology development (TD) process spawns multiple “commercial projects” that can feed
the new-product process at Gates 1, 2 or 3.
November—December 2006 27
preparing an implementation business case. Sound keepers are typically the senior corporate R&D people,
project management methods are employed during this corporate marketing or business development, plus the
lengthy stage, including periodic milestone checks and leadership team from the relevant business that will
project reviews. If the TD project veers significantly off assume ownership of the resulting commercial develop-
course, or encounters serious barriers to completion ment projects.
during Stage 3, the project is red-flagged and cycled back
to Gate 3 for another Go/Kill decision. How TD Process Feeds the Traditional Process
Gate 4: The Applications Path Gate.—This is the final The final gate of the TD process is the Applications Path
gate in the TD process and is the “door opener” to one or Gate, which marks the end of the TD project but poten-
more new-product or process development projects (see tially the beginning of multiple commercial projects. It is
Figure 3). Here the results of technical work are reviewed here that the project team presents their conclusions
to determine the applicability, scope and value of the about the commercial prospects for the technology,
technology to the company, and the next steps are based on technical work to date and several quick com-
decided. Note that this Gate 4 is often combined with an mercial scoping exercises. At this point, multiple new-
early gate in the usual product development process (for product projects could be initiated and feed the typical
example, with Gate 1, 2 or 3 as shown in Figure 3). Gate- new-product process, as shown in Figure 3. The start
November—December 2006 29
Figure 5.—Resources are strategically allocated by project type into strategic buckets by senior management.
Ensuring Resources Are In Place bucket, such as sales and marketing requests. If they did,
in the short term, simple and inexpensive projects would
How does one ensure that resources will be available to always win out, as they do in many businesses. Instead,
undertake TD projects, especially with today’s emphasis strategic buckets build firewalls between buckets. Thus,
on short-term projects? Managements in a number of by earmarking specific amounts for technology develop-
companies have recognized that significant resources ments, the portfolio becomes much more balanced. Note
have shifted from venturesome projects to small, lower- also that different criteria should be used to rate and
impact efforts. In order to correct this imbalance, they select projects in each bucket. For example the relatively
employ strategic buckets as a tool to ensure the right mix qualitative criteria in Figure 4 work well in order to rank
of projects—short-term versus longer-term or TD projects in the TD bucket, but for modifications and
projects—in their portfolios (10). improvements or sales requests, clearly financial
criteria—profits, savings or expected sales increase—are
Strategic buckets is a portfolio management method that the best way to rank these projects.
defines where management desires the development
dollars to go, broken down by project type, market,
geography, or product area (20). Strategic buckets is Make Your TD Projects Pay Off
based on the notion that strategy becomes real when you
start spending money; thus, translating strategy from Technology developments are the engines of growth for
theory to reality is about making decisions on where the many corporations and industries, providing the
resources should be spent—strategic buckets. In the platforms for the next generation of new products and
example in Figure 5, management begins with the busi- new processes. With most companies facing constrained
ness’s strategy and then makes strategic choices about resources and having a short-term focus, it is imperative
resource allocation: how many resources go to new that such projects be managed more effectively than in
products or to improvements or to technology develop- the past so that they truly do achieve their promised
ments? With resource allocation now firmly established results. Adopting a TD Stage-Gate process, using
and driven by strategy, projects within each bucket are custom-tailored Go/Kill scorecards and success criteria,
then ranked against one another to establish priorities. and employing strategic buckets to ensure resource
availability, are but some of the approaches that leading
Note that projects in one bucket—such as technology companies are adopting to handle these vital TD pro-
developments—do not compete against those in another jects. 䡩
䊱
November—December 2006 31