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Technologie und Innovationsmanagement (Subject) / 5. Organizing Innovation (Lesson)
Kapitel 5
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- What is Pass/Kill? Comparison of the project with must and can criteria. Does the scoring of the project overcome the gate?
- What is Prioritization? Overall score of the priject compared to active projects and projects on standby. Recources are distributed.
- What are the 4 Steps of Stage-Gate Systems from the Carl-Zeiss AG? 1. Screen and Select 2. Evaluate and Plan 3. Validate and Demonstrate 4. Transfer and Realize
- Effective gates are necessary to... ...select successful projects for new products.
- What are the reasons for unsing Gates? Inability to make tough decisions and focus resources - longer time to market - poor execution quality - Tasks in the initial phase are not fulfilled - correct market inputs missing - uncertain and vague product definitions - market launches are mediocre - high error rates - long throughput times - low profits
- What are characteristics of good gates? Appropriate balance between errors of acceptance and errors of rejection (errors 1. and 2. type) Project evaluation is characterized by uncertainty of information and lack of reliable financial data Each decision point is only a preliminary approval in an ongoing conditional process Project evaluation includes a variety of objectives and therefore considers several decision criteria The evaluation method must be realistic, easy to use and robust
- what are typical criteria of gates? (6) 1.Strategic fit and relevance 2. Product and competitive advantage 3. Market attractiveness 4. Leveraging effects for core business 5. Technological feasibility 6. Financial income vs. risks
- The evaluation criteria are different in each Gate and increase in difficulty throughout the process towards harder facts and figures Initial review Initial research Second review Detailed research Business case decision Development Evaluation of development Test and validation Business analysis before commercialization Complete product and market launch
- Differentiate between qualitative and quantitative evaluation methods. Qualitative Methods: Comparative approaches, benefit contribution, checklist, scoring Financial Evaluation methods: payback and break-even times, discounted cash flows
- A more advanced quantitative evaluation method is... ...a real options approach
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- Option Pricing Theory - Projects are gradually funded in increments - at each gate, management actually aquires an option on the project - decision problem is structured with a decision tree - repeated approach to calculate expected commercial value
- Be careful when using financial methods such as Net present value when assessing innovative projects. What are the dangers of npv? A too strong focus on finacial indicators such as net present value (NPV) can put highly innovative innovations at a disadvantage: 1. Future cash flows are much more uncertain and also strongly discounted by NPV approaches 2. NPV assesses the benefit compared to the basic scenario of "doing nothing", with the incorrect assumption that the current health of the company continues Stage-Gate Systems often drive out radical innovation in favor of incremental innovation
- Wrong applivation of the stage-gate systems can also be problematic. What are the problems with the Stage-Gate Model? (9) 1. Gates without teeth 2. Hollow decisions at the gates 3. Who are the gatekeepers? 4. Inappropriate behavior of gatekeepers 5.Set up portfolio management without a Stage-Gate process 6. Too much bureaucracy in the initiative process 7. A lot of work without direcht added value in the stages 8. Too much trust in software solutions 9. Expect the impossible from a process