Henkel’s Stage-Gate Process (Portugal Division)

NYU, New Products & Services Development March 25

th

, 2006 MCM

Henkel’s Vision Henkel is a leader with brands and technologies that make people's lives easier, better and more beautiful.

Three Areas of Competence Home Care Personal Care Adhesives, Sealants & Surface Treatment Consumer Industry Quality with Brands & Technologies

Henkel in Portugal



We do not develop new products But...



We are able to launch in Portugal NEW brands or products that the company owns.

The Stage-Gate Process

Discovery

Gate 1

Idea Screen Go / Kill

Stage 1

Scoping

Gate 2

Second Screen Go / Kill

Stage 2

Gate 3

Building the Business Case Third Screen Go / Kill

Stage 3

Testing

Gate 4

Forth Screen Go / Kill

Stage 4

Launch

Post Launch Review

The Stage-Gate Process

• • • •

Discovery / Ideation Pre-work designed to discover and uncover opportunities and generate ideas

Promote internal campaign for ideas Create a “bank Idea” Assign a team member to manage Ideas generated

Gate 1 – Idea Screen Go/Kill decision point

• • • • • • •

This gate is a “gentle screen” and amounts to subjecting the project to a handful of key “must-meet” and “should-meet” criteria.

Is the idea aligned with the company’s mission, goals and strategy?

Is the market attractive?

Does the idea offer competitive advantage over competitors?

Is the idea part of the product portfolio of the company?

Does the company have expertise to manufacture the product (technical feasibility)?

Does the product fit with company’s policies?

Are there any killer variable (environment issue / legislative action)?

Discovery Gate 1 • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

The Stage-Gate Process

• • •

Stage 1 - Scooping A quick, preliminary investigation of the projects – largely desk research

Preliminary market potential and market acceptance.

–

market assessment

Internet search, library search, internal reports, customers, focus groups to determine market size, Preliminary

technical assessment

to establish product objectives & feasibility – Quick and preliminary in/house appraisal of the proposed product Preliminary

business & financial assessment

to map out strategic & competitive rationale

Gate 2 – Second Screen Go/Kill decision point

• • • •

The Idea is reevaluated in the light of the new information obtained in Stage 1.

Does the product respond to a customer need?

Is the competition moving to the same direction?

Is the company capable of manufacturing the product? When would be the payback period?

Discovery Gate 1 Stage 1

Scoping

Preliminary Assessment: • Market • Technical • Financial For the 3 “winners” • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

Gate 2

Second Screen

- MKT Manager & Country Manager

Go / Kill

• • • •

The Stage-Gate Process

Stage 2 – Building the Business Case A much more detailed investigation involving primary research – both market an technical – leading to a business case, including product and project definition, project justification and a project plan . It is the “critical homework stage”!

Define the

“winning” new product

(concept and positioning

)

: - Target market - Benefits - Desired features, attributes, requirements and especifications

Competitive Analysis

- Determine strength and weakeness

Detailed Technical Appraisal

- Manufacturability / cost to manufacture - Detailed legal, patent, and regulatory assessment.

- Investment review

Business and financial analysis

Discovery Gate 1 Stage 1

Scoping

Preliminary Assessment: • Market • Technical • Financial For the 3 “winners” • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

Gate 2 Stage 2

Second Screen

- MKT Manager & Country Manager

Building the Business Case

Detailed Investigation for the “winner idea”

Go / Kill

Gate 3

Third Screen

- Country Manager & Intl. SBU Manager

Go / Kill Gate 3 – Third Screen Go/Kill decision point

• • •

This is the last point at which the project can be killed before entering heavy spending. Here the full project team is design and it must be headed by a leader with authority!

Is the marketing still attractive to justify the investment?

Can the customer’s inputs be translated into technically and economically feasible solution?

Is the company responding to a competitor’s weakness?

• • • • • •

The Stage-Gate Process

Stage 3 – Testing and Validation Tests or trials in the market-place, lab, and plant to verify and validate the proposed new produxt and its marketing and production/operations

Carry out an extensive validation of the entire project Implement in-house product tests User or field trials of the product Trial, limited, or pilot production Pretest market, test market or trial sell Reviewed business and financial analysis

Gate 4 – Forth Screen Go/Kill decision point

• • • • •

This final gates open the door to full commercialization – market launch and full production or operations start-up. It is the final point at which the project can still be killed.

Was the testing & validation activities properly executed?

Were the results from the Testing and validation satisfactory?

Were required improvements implemented in the product?

Is the expected financial return according to the plan?

Are the operations and marketing plans reviewed and approved for implementation?

Discovery Gate 1 Stage 1

Scoping

Preliminary Assessment: • Market • Technical • Financial For the 3 “winners” • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

Gate 2 Stage 2

Second Screen

- MKT Manager & Country Manager

Building the Business Case

Detailed Investigation for the “winner idea”

Go / Kill

Gate 3

Third Screen

- Country Manager & Intl. SBU Manager

Go / Kill

Stage 3

Testing

Test the product in 1 supermarket chain for 1 month Gate 4

Forth Screen

- MKT Manager & Sales Manager

Go / Kill

•

The Stage-Gate Process

Stage 4 – Launch Commercialization – beginning of full operations or production, marketing, and selling

Implement of the marketing launch plan and the production or operations plan • • • • •

Post Launch Review

Review product launch performance • • Market acceptance Ability to support technical product • • Market trends Finances Revise financial review with updated information - Review sales & profits Review strengths & weakness - Identify successful actions - Identify mistakes/unsuccessful actions Evaluate what changes (lessons learned) need to be made for future launches Evaluate whether launched met criteria and fulfilled mission, goals & strategy of corporation & department Discovery Gate 1 Stage 1

Scoping

Preliminary Assessment: • Market • Technical • Financial For the 3 “winners” • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

Gate 2 Stage 2

Second Screen

- MKT Manager & Country Manager

Building the Business Case

Detailed Investigation for the “winner idea”

Go / Kill

Gate 3

Third Screen

- Country Manager & Intl. SBU Manager

Go / Kill

Stage 3

Testing

Test the product in 1 supermarket chain for 1 month Gate 4

Forth Screen

- MKT Manager & Sales Manager

Go / Kill

Stage 4

Launch

Post Launch Review

New Product and Services Development

Conclusions:

       The Stage-Gate is a plan that focuses on quality of execution, builds in the up-front homework, is strongly market-oriented and is backed by appropriate resources This model brings discipline to the new product process It is relatively simple and easy to understand and communicate.

The process provides a road map to facilitate the project and it defines the project leader’s objectives and tasks (include senior executives from the beginning) Increase investment as risk decreases Check acceptance with customer during the whole process It gives you the opportunity to “

Win by a nose!”

Discovery Gate 1 Stage 1

Scoping

Preliminary Assessment: • Market • Technical • Financial For the 3 “winners” • Bank idea (Ideas Generation) - The Product Manager manages the group

Idea Screen

- PM & Marketing Manager

Go / Kill

Gate 2 Stage 2

Second Screen

- MKT Manager & Country Manager

Building the Business Case

Detailed Investigation for the “winner idea”

Go / Kill

Gate 3

Third Screen

- Country Manager & Intl. SBU Manager

Go / Kill

Stage 3

Testing

Test the product in 1 supermarket chain for 1 month Gate 4

Forth Screen

- MKT Manager & Sales Manager

Go / Kill

Stage 4

Launch

Post Launch Review

ANNEXES - The Stage-Gate Process: The Development Stage

• • • •

Stage 3 – Development The actual detailed design and development of the new product, and the design of the operations or productuction process

Product development in parallel with corporate marketing & technical product development - Rapid prototype, working model, or first prototype are taking to the customer for feedback / assess.

- Continue market analysis - Map out a market launch plan involving corporate marketing and technical area.

Undertake lab tests, in-house tests and alpha tests Revise financial analysis with update information Assess legal issues (approval patents, regulations) • • • • •

Gate 4 – Forth Screen Go/Kill decision point

Is the developed product consistent with the original quality definition specified at Gate 3?

Does the product continue to be attractive to the market?

Is the product ready to move forward to Testing? Are revised financials still with Budget?

Are the marketing and operation plans reviewed for probable future execution?