Stage-Gate Controls, Learning Failure, and Adverse Effect on Novel New Products

Abstract

This article argues that Stage-Gate controls have the potential of restricting learning in a new product development project and thus hurting the performance of novel new products. Specifically, the authors examine whether control on new product development exercised through rigorous gate review criteria increases project inflexibility, which in turn leads to increased failure to learn. They also focus on whether the effect of project inflexibility is worsened when there is turbulence in the firm's technological and market environment. Furthermore, the authors study whether failure to learn can have an adverse effect on new product performance when the product is novel. Finally, they examine whether a certain relaxation in gate evaluation (gate conditionality) that has been suggested recently mitigates the adverse effect of rigorously enforced controls. The results, which are based on a survey of 120 projects that used the Stage-Gate process for new product development, show that repeated application of strictly enforced and objective evaluation criteria for improved control makes projects more inflexible. Gate conditionality does not mitigate the adverse effect of gate review criteria. Project inflexibility leads to learning failure, and this effect is worsened when the technological environment of the firm is turbulent. In turn, learning failure adversely affects the market performance of novel new products.