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Managing Technology Development Projects By Robert G. Cooper This article was published by IEEE Engineering Management Review, Vol. 35, No. 1, First Quarter 2007, pp 67-76 ©2007 StageGate International StageGate ® is a registered trademark of StageGate Inc. Innovation Performance Framework™ is a trademark of StageGate Inc.

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Managing Technology Development Projects 

 By Robert G. Cooper 

    

                               

   

     

This article was published by IEEE Engineering Management Review, Vol. 35, No. 1, First Quarter 2007, pp 67-76

 

 ©2007 Stage‐Gate International 

Stage‐Gate® is a registered trademark of Stage‐Gate Inc.  Innovation Performance Framework™ is a trademark of Stage‐Gate Inc. 

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IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 35, NO. 1, FIRST QUARTER 2007 67

Managing Technology DevelopmentProjects

Overview

Technology development projects are the foundation or platform for new products and new processesand thus are vital to the prosperity of the modern corporation. But these basic research or fundamentalknowledge-build projects are often mismanaged because companies employ the wrong process to managethem or apply inappropriate financial criteria for project selection. The result is that technology developmentshave become increasingly rare in the typical company’s development portfolio. To better manage suchprojects, leading companies have adopted a unique Stage-Gate® process specially tailored to the needs oftechnology development projects. This process consists of three stages and four gates, and feeds the frontend of the typical new product process. Scorecards and the use of tailored success criteria are used to rateand rank these technology projects, while the “strategic buckets” approach to portfolio management ensuresthat dedicated resources are deployed for these higher-risk projects.

—ROBERT G. COOPER

RESEARCH TECHNOLOGYMANAGEMENT by ROBERT G. COOPER.Copyright © 2006 by INDUSTRIALRESEARCH INSTITUTE INC. Reproducedwith permission of INDUSTRIALRESEARCH INSTITUTE INC. in the formatMagazine via Copyright Clearance Center.

Key Concepts: Technology development, Stage-Gate, scorecard,portfolio management.

THE term “technologydevelopment” refers to a specialclass of development projectswhere the deliverable is newknowledge, new technology,a technical capability, ora technological platform.These projects, which includefundamental research projects,science projects, basic research,and often technology platformprojects, often lead to multiplecommercial projects—newproduct or new processdevelopment.

Technology development projectsare a special breed: although theyrepresent a small proportion ofeffort in the typical company’sdevelopment portfolio, they arevital to the company’s long-termgrowth, prosperity and sometimeseven survival. These projects alsostand out because they are oftenmismanaged or mishandled,resulting in few benefits to thecompany. The chronicles of many,if not most, large corporationsare replete with horrific storiesabout huge technology projectsthat led to nothing after spending

millions of dollars, or worse yet,were cancelled prematurely, thusforgoing millions in potentialprofits.

This article outlines provenapproaches to selecting andmanaging such venturesomeprojects—approaches thatrecognize that traditionalmanagement techniques,such as phase-review,Stage-Gate® or PACE® withtheir elaborate checklists,scorecards, deliverables lists,and financially-based Go/Killcriteria, are inappropriate forsuch projects (1–3).

WHAT’S SO SPECIAL?Technology development (TD)projects are indeed a verydifferent type of developmentproject. First, they areincreasingly rare—the averagebusiness’s R&D portfolio hasshifted dramatically to smaller,shorter-term projects such asproduct updates, modificationsand fixes over the last 15years (4). With the exception

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68 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 35, NO. 1, FIRST QUARTER 2007

of a handful of best-practicecompanies, gone are the dayswhen portfolios were repletewith advanced technology,technology breakthroughand true innovationdevelopment projects (5).

Because these growthengines provide theplatforms for thenext generation ofproducts and processes,companies have tomanage them better!

This dearth of innovative projectsis in part due to management’spreoccupation with the shortterm and immediate financialresults, which usually precludesundertaking venturesomedevelopment projects (6). Whenresources are tight, managerstake few chances—they elect the“sure bets,” which are typicallythe smaller, closer-to-homeprojects. Here’s a typicalcomment (7):

My business has a limitedR&D budget. I can’t affordto risk a major percentage ofthat budget on a handful ofbig projects. I’ve got to hedgemy bets here, and pick thesmaller and lower risk ones.If I had a larger R&D budget,then I might tackle somemore venturesome projects.

Senior R&D executive ina $300 million business unitof a major manufacturingconglomerate.

Additionally, the business’sinability to handle these projectseffectively also contributes to areluctance to undertake moreof them. In short, becausethese projects are mismanaged,the results are often negative,

which creates a real fear ofever undertaking such a projectagain! Management becomes riskaverse.

A second factor that makes theseTD projects so special is thatthey are often the foundation orplatform for a new product lineor an entirely new business. Inshort, TD projects are importantto profitability in that theyhelp to de-commoditize thebusiness’s product offerings.They are the breakthroughs,disruptive technologies andradical innovations that createthe huge growth opportunitiesand superlative profits (8).

Exxon Chemical’s Metalloceneproject is a classic example.Here, a fundamental researchstudy into a new polymerizationcatalyst yielded some early“interesting research results,”namely polyolefin materials withunusual technical properties.What started out as a early-stageresearch project in the 1980sultimately resulted in an entirelynew class of polymers withengineering properties and abillion-dollar business for ExxonChemical.

DON’T USE TRADITIONALMETHODS FOR

NON-TRADITIONAL PROJECTS

A final reason that TD projectsare so special is that they arefragile. If one applies traditionalmanagement techniques tonon-traditional projects, muchdamage is done. For example,force-fitting a TD project throughyour normal new-productsystem will create considerablefrustration on the part of theproject team, will result inunnecessary or irrelevant work,

and could even kill an otherwisehigh-profit-potential initiative.

Exxon Chemical was one ofthe first companies in theUnited States to recognize thatsuch research or technologydevelopment projects requiredspecial treatment, and thatramming them through theirtraditional management processeswould do much harm. Thus, bythe 1990s, Exxon Chemical haddesigned and implemented aspecial methodology based onstage-and-gate techniques tohandle such high-risk technologyprojects (9).

Much damage is doneby applying traditionalmanagement techniquesto non-traditionalprojects.

The fact is that traditionalsystems simply do not workfor these special TD projects.Why? Traditional new-productprocesses are designedfor fairly well-defined andpredictable projects; technologydevelopments, however, are bytheir nature high-risk projectswith many unknowns and greattechnical uncertainties. Forexample, early in the life ofsuch projects, the likelihoodof technical success may bequite low, and a probabletechnical solution often cannotbe envisioned. It may takemonths or years of lab work tosee a technical solution and togain confidence in a positivetechnical outcome.

Similarly, the traditionalnew-product process requiresa full business case andfinancial analysis before heavycommitments are made. But ina TD project, the commercialprospects for the new technology

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MANAGING TECHNOLOGY DEVELOPMENT PROJECTS 69

are often unclear, especially nearthe beginning of the project whenthese commitment decisions arerequired.

In the Exxon Chemical Metalloceneproject, for example, whenexperimental work first began,it wasn’t clear whether thiswould lead to a new plastic, orperhaps a new fuel additive—allthe researchers had in the earlydays was “some gummy stuffwith interesting properties”: theprecise direction of the projectwould not become clear until theresearchers had done more workat considerable expense. This isnot exactly the reassurance thata short-term, financially-drivenexecutive wants to hear!

Many of the activities requiredof most companies’ new-productprocesses simply don’t fitthe TD project. Review anycompany’s new-product processand invariably there is alist of required tasks suchas “undertake a competitiveanalysis,” “do voice of customerwork” and “define the productbenefits to the user.” That’sfine when one knows whatthe market and product are.But how does one undertakesuch mandatory activities whenthe market is unknown andthe product not even defined?Moreover, most companies newproduct processes require a listof deliverables at the completionof each stage, deliverablessuch as “a business case” or a“commercialization plan.” Again,these are relatively meaninglessconcepts when the product andmarket have not yet been defined.As one frustrated project leaderput it:

How can I be expected todo a market analysis whenI haven’t even defined theproduct, let alone the market

yet. I’m not even sure whatthis technology is capable of interms of delivering improvedtechnical performance.

Finally, the Go/Kill criteriaused to rate and prioritizedevelopment projects asfound in most company’sstage-and-gate developmentprocesses again assume projectsthat are fairly well-defined. Forexample, an Industrial ResearchInstitute study revealed that78 percent of businesses relyheavily on financial criteria toselect projects: criteria such asprojected annual profits, NPV (netpresent value) and expected sales(10). When qualitative criteriaare employed, according to thesame study, the most popularare leveraging core competencies(for example, the project’s fit withthe plant, and fit with the firm’sbase technology), the expectedpayoff, and the perceived risklevel. These quantitative andqualitative criteria are fine for themajority of development projects,but not so good for technologydevelopments. A seasoned R&Dexecutive in a major corporationsummarized the situation thisway:

Using traditional Go/Killcriteria—NPV. KOI (return oninvestment) and the like—willalmost guarantee that newtechnology projects are killedin our company simplybecause of the unknowns,uncertainties, risks andthe step-out nature of suchprojects. Our selection rulesare very risk averse andgeared towards short-termprojects.

USE A PROCESS DESIGNED FORTD PROJECTS

For some years, leading productdevelopers have relied on

idea-to-launch processes,such as Stage-Gate®, to drivenew-product projects to market(11). The conclusion at aconference of the ProductDevelopment ManagementAssociation (PDMA) that focusedon technology developmentsand fuzzy front-end projectswas that “many companieshave dramatically improveddevelopment cycle time andefficiency by implementing formalStage-Gate™ “systems” but thatthe front end remained a mystery(12). The consensus is that sometype of rigorous stage-and-gateprocess is desirable for TDprojects, but the process must becustom designed for these typesof projects (13).

Some type of rigorousstage-and-gate processis desirable but it mustbe custom-designed.

Figure 1 illustrates a typicalTD process, which has beenadopted in leading companiesthat undertake fundamentalresearch projects; it consists ofthree stages and four gates (14).

• The stages are shown asboxes in Figure 1. Eachstage consists of a set ofbest-practice activities to beundertaken by the projectteam. These activities aredesigned to acquire vitalinformation and therebyreduce the unknowns andhence the risk of the projectfrom stage to stage. Theoutcome of each stage is aspecified set of deliverables.

• The gates, designated bydiamonds, are the Go/Killdecision points. Here,management meets withthe project team to decidewhether the project meritsadditional funding and

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70 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 35, NO. 1, FIRST QUARTER 2007

resources to move to the nextstage. If Go, resources arecommitted at the gate andthe project and team moveforward.

Here is a quick walk through thetypical TD process (see Figures 1and 2):Discovery.—The trigger for theprocess is the first stage, involvingdiscovery or idea generation.Quality ideas are essential to asuccessful technology programand thus technology ideas frommultiple sources must be soughtfor consideration at Gate 1. Whileidea generation is often done byscientists or technical people, itcan also be the result of otheractivities, such as:

• A strategic planning exercise,where strategic arenas areidentified, and possibleTD research directions aremapped.

• Technology forecasting andtechnology roadmapping.

• Brainstorming or groupcreativity sessions focusingon what might be.

• Scenario generationabout future market andtechnological possibilities.

• Customer visitation programsand voice-of-customerinitiatives.

• Active idea solicitationcampaigns within theorganization.

Gate 1 Idea Screen—This firstgate is the idea screen, the initial

decision to commit a limitedamount of time and money tothe research project. This gateshould be a gentle screen, whichposes the question: Does theidea merit expending any effortat all? Criteria for Go are largelyqualitative, are scored at the gatereview by the gatekeepers, andshould include such items as:

• Strategic fit and impact.• Strategic leverage.• Likelihood of technical

success.• Likelihood of commercial

success.• Reward or the “size of the

prize” if successful.The Gate 1 gatekeeper ordecision-making group istypically composed of senior R&D

Figure 1. The technology development Stage-Gate® process is specially designed for TD projects—three stages andfour gates up to an Applications Path Gate.

Discovery

Decision:Go to

TechnicalAssessment

InitialScreen

Decision:Go to

DetailedInvestigation

Decision:Applications

Path

To NPD Process

To ProcessDevelopment

To JV, LicensingDetailed

InvestigationTechnical

Assessment

ProjectScoping

Gate1

Stage1

Gate2

Stage2

Gate3

Stage3

Gate4

Figure 2. The TD project moves from the Scoping Stage—a relatively simple stage—through to the DetailedInvestigation Stage, which can entail person-years of experimental work.

ProjectScoping

Gate1

Stage1

Gate2

Stage2

Gate3

Stage3

ApplicationsPath Gate

Gate4

Discovery

TechnicalAssessment

DetailedInvestigation

• Lays out the foundation for the project• Defines the scope of the project• Maps out the forward plan• Several weeks

• Demonstrates the lab or technical feasibility under ideal conditions• Initial or preliminary experimental work• 3-4 months

• Implements full experimental plan• Technology feasibility is proven• Scope of technology and value to company is defined• Plan developed for the utilization of results• Potentially years of work

To OtherProcess

(e.g. NPP)

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MANAGING TECHNOLOGY DEVELOPMENT PROJECTS 71

people, such as the corporatehead of technology (VP R&D orCTO), other senior R&D people,along with representativesfrom corporate marketing andbusiness development to ensurecommercial input.

Stage 1 Project Scoping—Thepurpose of this Scoping stageis to build the foundation forthe research project, definethe scope of the project, andmap the forward plan. Theeffort is limited, typically to notmuch more than two weeks.Stage 1 activities are conceptualand preparation work (seeFigure 2), and include a technicalliterature search, patent and IPsearch, competitive alternativesassessment, resource gapsidentification, and a preliminarytechnical assessment.

Gate 2 Go To TechnicalAssessment—This second screenis the decision to begin limitedexperimental or technical workin Stage 2. Like Gate 1, thisgate is also a relatively gentlescreen, and poses the question:Does the idea merit undertakinglimited experimental work? Gate2 is again largely qualitative,and does not require financialanalysis (because the resultingproduct, process or impact of TDare still largely unknown). Thegatekeepers are the same as atGate 1.

Stage 2 TechnicalAssessment.—The purposeof Stage 2 is to demonstrate thetechnical or laboratory feasibilityof the idea under ideal conditions.This stage entails initial orpreliminary experimental work,but should not take morethan 1–2 person-months,and last no longer than 3–4months. Activities here typicallyinclude undertaking a thoroughconceptual technologicalanalysis, executing feasibility

experiments, developing apartnership network, identifyingresource needs and solutions toresource gaps, and assessing thepotential impact of the technologyon the company.

Gate 3 Go to Detailed TechnicalInvestigation.—Gate 3 is thedecision to deploy resourcesbeyond 1–2 person-months,and opens the door to amore extensive and expensiveinvestigation, Stage 3. This gatedecision is thus a more rigorousevaluation than at Gate 2, and isbased on new information fromStage 2. Gate criteria resemblethose listed for Gate 1 previously,but with more and toughersub-questions, and answeredwith benefit of better data.

The Gate 3 gatekeepers usuallyinclude the corporate head oftechnology (VP R&D or CTO),other senior technology or R&Dpeople, corporate marketing orbusiness development, and theheads of the involved businesses(e.g., general managers). BecauseGate 3 is a heavy commitmentgate, senior managers of thebusiness units that will takeownership of the resultingtechnology should be the Gate 3gatekeepers. Their insights intothe commercial viability of theproject are essential at Gate 3;further, more early engagementensures a smoother transitionto the business unit once thecommercial phase of the projectgets underway.

Stage 3 Detailed Investigation.—The purpose of Stage 3 is toimplement the full experimentalplan, to prove technologicalfeasibility, and to define the scopeof the technology and its value tothe company. This stage couldentail significant expenditures,potentially person-years of work.Besides the extensive technicalwork, other activities focus on

defining commercial product orprocess possibilities, undertakingmarket, manufacturing andimpact assessments on thesepossibilities, and preparing animplementation business case.Sound project managementmethods are employed duringthis lengthy stage, includingperiodic milestone checks andproject reviews. If the TD projectveers significantly off course,or encounters serious barriersto completion during Stage 3,the project is red-flagged andcycled back to Gate 3 for anotherGo/Kill decision.

Gate 4 The Applications PathGate.—This is the final gatein the TD process and isthe “door opener” to one ormore new-product or processdevelopment projects (seeFigure 3). Here the results oftechnical work are reviewed todetermine the applicability, scopeand value of the technology to thecompany, and the next steps aredecided. Note that this Gate 4 isoften combined with an early gatein the usual product developmentprocess (for example, with Gate1, 2 or 3 as shown in Figure 3).Gate-keepers are typically thesenior corporate R&D people,corporate marketing or businessdevelopment, plus the leadershipteam from the relevant businessthat will assume ownershipof the resulting commercialdevelopment projects.

HOW TD PROCESS FEEDS THETRADITIONAL PROCESSThe final gate of the TD processis the Applications Path Gate,which marks the end of theTD project but potentially thebeginning of multiple commercialprojects. It is here that the projectteam presents their conclusionsabout the commercial prospectsfor the technology, based on

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72 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 35, NO. 1, FIRST QUARTER 2007

technical work to date andseveral quick commercial scopingexercises. At this point, multiplenew-product projects could beinitiated and feed the typicalnew-product process, as shownin Figure 3. The start points areusually Gates 1, 2 or 3 of thenew-product process, dependingon how well defined the proposednew projects are. Alternatively,if the commercial result is anew or improved productionprocess, then the appropriateprocess-development projectsare defined here and routedaccordingly.

The TD project may also resultin a licensing opportunity orperhaps even a joint venture withanother corporation. The pointis that the Applications PathGate determines the directionfor the commercialization ofthe technology from this pointonward.

PICKING THE RIGHT PROJECTS

Making the resource commitmentdecisions for TD projects,especially in the early stages, isproblematic for many companies.Clearly, traditional tools, suchas financial analysis and profitcriteria, are not too useful. In TDprojects with much undefined,the level of uncertainty is sogreat that numerical estimates ofexpected sales, costs, investment,and profits are likely to begrossly in error. There exist manyuncertainties in the typical TDproject, but the one thing youcan be certain about is thatyour numbers are always wrong.Indeed there is considerableevidence that businesses thatrely strictly on financial toolsand criteria to select projectsend up with the lowest-valuedevelopment portfolios (15). Asone executive declared, in notingthe deficiencies of his company’ssophisticated financial-analysismethods for project selection:

It’s like trying to measure a softbanana with a micrometer! Ourevaluation tools assume a level ofprecision far beyond the quality ofthe data available!

Not surprisingly, this executive’sfinancial evaluation tooltended to favor predictableand close-to-home projectsat the expense of technologydevelopment projects.

Best performers adopt acombination of evaluationtechniques and criteria formaking Go/Kill decisions onTD projects (16). The researchsuggests that no one methodworks best across the board andcan do it all! First consider usinga scorecard approach, which looksat multiple facets of TD projects,from strategic to technical issues.Note that this TD scorecard isdifferent than the one that shouldbe used for new product projects;a best-practice model for Gate

Figure 3. The typical technology development (TD) process spawns multiple “commercial projects” that can feed thenew-product process at Gates 1, 2, or 3.

ProjectScoping

Gate1

Stage1

Gate2

Stage2

Gate3

Stage3

Gate4

Discovery

TechnicalAssessment

DetailedInvestigation

The 3-Stage TD Process

The Standard 5-Stage, 5-Gate Stage-Gate® New Product Process

Stage 2:Business

Case

Stage 3:Development

Stage 4:Testing

Stage 5:Launch

Stage 1:Scoping

Project enters the NP Process at Gate 2 (sometimes Gates 1 or 3).

ApplicationsPath Gate

Gate1

Gate2

Gate3

Gate4

Gate5

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MANAGING TECHNOLOGY DEVELOPMENT PROJECTS 73

3 for TD projects is shown inFigure 4 (17). Scorecards arehighly rated by users as a soliddecision-making method, andtend to yield more efficient andmore effective Go/Kill choices,higher-value projects and aportfolio of strategically alignedprojects (18).

In the scorecard approach, theproject in question is presentedby the project team at each

gate meeting in Figure 1, anda thorough and facilitated gatediscussion ensues. Next, thegatekeepers score the project onzero-to-ten scales, as in Figure 4.The resulting scores are thencombined to yield an overallproject attractiveness score.This scoring exercise and finalscore become key inputs to theGo/Kill decision (although manyusers of this approach claimthat it is the process—a senior

decision-making group goingthrough a set of key questions,debating their scores, andreaching closure on each—thatprovides the real value, and notso much the final score itself).Although the sample scorecardin Figure 4 is for Gate 3, notethat most businesses use thesame high-level criteria fromgate to gate for consistency, withthe detailed or sub-questions

Figure 4. Use a scorecard (0–10 scale) to rate and prioritize TD projects.

Score = Zero Score = Ten Out of Ten

1 . B u s i n e s s S t r a t e g y F i tCongruence Only peripheral fit with our businesss’ Strong fit with several key elements of

strategy. strategy.Impact Minimal impact; no noticable harm The business’s future depends on this project.

if project is dropped. project.

2 . S t r a t e g i c L e v e r a g eProprietay position Easily copied; no protection. Position protected through patents,

trade secrets, raw material access, etc.Platform for growth Dead end; one-of-a-kind; one-off. Opens up many new product possibilities.Durability (technical and marketing) No distinctive advantage; Long life cycle with opportunity for

quickly leapfrogged by others. incremental spin-offs.Synergy with corporate units Limited to a single business unit. Could be applied widely across the

corporation.

3 . P r o b a b i l i t y o f Te c h n i c a l S u c c e s sTechnical gap Large gap between solution and current Incremental improvement; easy to do;

practice; must invent new science. existing science.Project Complexity Difficult to envision the solution; Can already see a solution;

many hurdles along the way. straightforward to do.Technology skill base Technology new to company; Technology widely practiced

almost no skill internally. withing the company.Availability of people and facilities Must hire and build. people and facilities immediately

available.

4 . P r o b a b l i l i t y o f C o m m e r c i a l S u c c e s s(in the case of a TD project withpotential for new products)

Market need Extensive market development required; Product immediately responsive to ano apparent market exists at present. customer need; a large market exists.

Market maturity Declining markets. Rapid-growth markets.Competitive intensity High; many tough competitors in this field. Low; few competitors; week competition.Commercial applications New to company; we have no/few Commercial applications skills anddevelopment skills commercial applications skills here; people already in place in the

must develop. company.Commercial assumptions Low probablility of occuring; Highly predictable assumptions;

very speculative assumptions. high probablility of occuring.Regulatory and political impact Negative. Positive imoact on a high-profile issue.

5 . R e w a r dContribution to profitability Rough estimate: less than $10M Rough estimate: more than $250M.

cumulative over 5 years.Payback period Rough estimate: greater than 10 years. Rough estimate: less than 3 years.Time to commerical start-up Greater than 7 years. Less than 1 year.

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74 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 35, NO. 1, FIRST QUARTER 2007

becoming progressively tougherat successive gates.

Businesses that relystrictly on financialtools end up withthe lowest-valuedevelopment portfolios.

In addition to a gate scorecard,consider the use of successcriteria as employed at Proctor& Gamble (19). Here the projectteam declares what they hope toachieve in order for the projectto be considered “a success.”Success criteria for TD projectsinclude the achievement ofcertain technical results (e.g.,positive lab test results) by a givendate, attaining a certain technicalperformance improvement (e.g.,a certain level of absorption ina new fiber technology), or theexpected sales potential to begenerated by the new technology(e.g., the size of the marketthat this technology might seepotential in, if successful).

Success criteria are declaredrelatively early in the project,and on this basis, gatekeepersapprove the project at the earlygates. These criteria are reviewedand updated at each successivegate; if the project falls shortof these success criteria at thenext gate, it may be killed—forexample, if certain technicalresults were not achieved by agiven date or gate. The use ofsuccess criteria allows the projectteam to develop customizedcriteria to suit their project;it forces the team to submitrealistic rather than grandioseexpectations, and it createsaccountability for the projectteam—something to measure theteam against.

ENSURING RESOURCESARE IN PLACEHow does one ensure thatresources will be availableto undertake TD projects,especially with today’s emphasison short-term projects?Managements in a numberof companies have recognized

that significant resources haveshifted from venturesome projectsto small, lower-impact efforts. Inorder to correct this imbalance,they employ strategic bucketsas a tool to ensure the right mixof projects—short-term versuslonger-term or TD projects—intheir portfolios (10).

Strategic buckets is a portfoliomanagement method that defineswhere management desires thedevelopment dollars to go, brokendown by project type, market,geography, or product area (20).Strategic buckets is based on thenotion that strategy becomes realwhen you start spending money;thus, translating strategy fromtheory to reality is about makingdecisions on where the resourcesshould be spent—strategicbuckets. In the example inFigure 5, management beginswith the business’s strategy andthen makes strategic choicesabout resource allocation: howmany resources go to newproducts or to improvements orto technology developments’?With resource allocation now

Figure 5. Resources are strategically allocated by project type into strategic buckets by senior management.

TD Bucket

$2M

Project Project GateScore

Jeanie

Monty

Kool-Flow

Pop-Up

Regatta

Slow-Brew

Widget-4

1 88

2 85

3 80

4 77

5 75

6 70

7 69

The Business’s strategydetermines the resource split

into the 4 buckets.

4 buckets or sub-portfolios:20% deployed to TD projects

Buckets are fire-walled.

TechnologyDevelopments

=$2M

NewProducts=$2M

Improvements& Modifications

=$3M

Marketing/SalesRequests = $3M

Rank projects until out ofresources in each bucket.

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MANAGING TECHNOLOGY DEVELOPMENT PROJECTS 75

firmly established and drivenby strategy, projects withineach bucket are then rankedagainst one another to establishpriorities.

Note that projects in onebucket—such as technologydevelopments—do not competeagainst those in another bucket,such as sales and marketingrequests. If they did, in the shortterm, simple and inexpensiveprojects would always win out,as they do in many businesses.Instead, strategic buckets buildfirewalls between buckets. Thus,by earmarking specific amountsfor technology developments,the portfolio becomes much

more balanced. Note also thatdifferent criteria should be usedto rate and select projects ineach bucket. For example therelatively qualitative criteria inFig. 4 work well in order to rankprojects in the TD bucket, but formodifications and improvementsor sales requests, clearlyfinancial criteria—profits, savingsor expected sales increase—arethe best way to rank theseprojects.

MAKE YOUR TD PROJECTSPAY OFF

Technology developments arethe engines of growth for many

corporations and industries,providing the platforms forthe next generation of newproducts and new processes.With most companies facingconstrained resources andhaving a short-term focus, it isimperative that such projectsbe managed more effectivelythan in the past so that theytruly do achieve their promisedresults. Adopting a TD Stage-Gateprocess, using custom-tailoredGo/Kill scorecards and successcriteria, and employing strategicbuckets to ensure resourceavailability, are but some ofthe approaches that leadingcompanies are adopting to handlethese vital TD projects.

REFERENCES AND NOTES

1. Stage-Gate® is a registered trademark of Product DevelopmentInstitute Inc.; PACE® is a registered trademark ot’PRTM.

2. The argument that technology projects require a special versionof Stage-Gate® has been voiced previously; see Koen, P. 2003.Tools and Techniques for Managing the Front End of Innovation:Highlights from the May 2003 Cambridge Conference. VisionsXXVII, 4 (October).

3. Ajamian, G. and Koen, P. A. 2002. Technology Stage Gate: AStructured Process for Managing High Risk, New TechnologyProjects. In The PDMA Toolbox for New Product Development,edited by P. Beliveau, A. Griffin and S. Somermeyer, New York:John Wiley & Sons, pp. 267–295.

4. Cooper, R. G. 2005. Your NPD Portfolio May Be Harmful to YourBusiness’s Health. PDMA Visions XXIX, 2 (April), pp. 22–26.

5. Cooper, R. G., Edgett, S. J. and Kleinschmidt, E. J., 2004.Benchmarking Best NPD practices—II: Strategy, ResourceAllocation and Portfolio Management. Research-TechnologyManagement 47, 3 (May–June), pp. 50–59, Exhibit 2.

6. The reasons for the shift in portfolios are explored in (4).7. Quotations are from over 100 problem-detection sessions held

in companies, and from several studies by the author andco-workers; see for example the three-part RTM series beginningwith: Cooper, R. G., Edgett, S. J. and Kleinschmidt, E. J.2004. Benchmarking Best NPD Practices—I: Culture, Climate,Teams and Senior Management Roles. Research-TechnologyManagement 47, 1 (Jan–Feb), pp. 31–43; also (5) and (11).

8. See for example: Christensen, C. M. 1997. The Innovator’sDilemma. Harper Business, Harper Collins Publishers; andFoster, R. N. and Waterman, R. H. 1998. Innovation: TheAttacker’s Advantage, Summit Books.

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9. Cohen, L. Y., Kamienski, P. W. and Espino, R. L. 1998. GateSystem Focuses Industrial Basic Research. Research-TechnologyManagement 41, 4 (July–August), pp. 34–37.

10.The IRI study on portfolio management methods employedby industry is reported in: Cooper, R. G., Edgett, S. J. andKleinschmidt, E. J. 1998. Best Practices For Managing R&DPortfolios. Research-Technologv Management, 41, 4 (July–Aug),pp. 20–33; and summarized in: Cooper, R. G., Edgett, S. J. andKleinschmidt, E. J. 2002. Portfolio Management for New Products.2nd edition. New York, NY: Perseus Books.

11.See: PDMA studies: Adams, M. and Boike, D. 2004. PDMAFoundation CPAS Study Reveals New Trends. VisionsXXVIII, 3 (July), pp. 26–29; and 2004. Cooper, R. G., Edgett,S. J. and Kleinschmidt, E. J. Benchmarking Best NPDpractices—III: Driving New-Product Projects To Market Success.Research-Technology Management 47, 6 (Nov–Dec): pp. 43–55.

12.Source: Koen, P. in (2).13.An early version of a technology model is described in:

Eldred, E. W. and McGrath, M. E. 1997. CommercializingNew Technology—I. Research-Technology Management 40, 1(Jan–Feb) pp. 41–47; see also the model outlined in (2) and (3).

14.An earlier version of this model is outlined in Cooper, R. G.2005. Product Leadership: Pathways to Profitable Innovation 2ndedition. New York, NY: Perseus Books, Chapter 7.

15.See (10) and Cooper, R. G., Edgett, S. J. and Kleinschmidt, E.J. 1999. New Product Portfolio Management: Practices andPerformance. Journal of Product Innovation Management 16, 4(July), pp. 333–351.

16.See (10) and Cooper, R. G., Edgett, S. J. and Kleinschmidt, E.J. 2002. Portfolio Management: Fundamental to New ProductSuccess. In The PDMA Toolbox for New Product Development,edited by P. Beliveau, A. Griffin and Somermeyer, S. New York:John Wiley & Sons, pp. 331–364.

17.See Chapter 5 and Exhibit 5.6 in Portfolio Management for NewProducts (10).

18.Sec IRI study and (10. 15. 16).19.Cooper, R. G. and Mills, M. 2005. Succeeding At New Products

the P&G Way: A Key Element is Using the Innovation Diamond.PDMA Visions XXIX, 4 (Oct.), pp. 9–13.

20.This section is based on (4)’, strategic buckets are explained inPortfolio Management for New Products (10).

Robert G. Cooper is professor of marketing at McMaster University’s M.G. DeGrooteSchool of Business, Hamilton, Ontario, Canada; ISBM Distinguished ResearchFellow at Penn State University’s Smeal College of Business Administration;and president of the Product Development Institute. He is the developer of theStage-Gate® idea-to-launch process, and author of six books on product innovationmanagement. He has won two Maurice Holland awards for the best paper publishedin Research-Technology Management in 1990 (“New Products: What Distinguishesthe Winners?”) and 1994 (“Debunking the Myths of New Product Development”).www.stage-gate.com

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