DECISION SYNCHRONIZATION GATES

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1 DECISION SYNCHRONIZATION GATES THE KEYSTONES OF ROBUST PRODUCT DEVELOPMENT AUTHORS Jérôme Weill Pierre Boy de la Tour Sébastien Maire

2 DS GATES: A UNIQUE TOOL TO SUPPORT PRODUCT DEVELOPMENT At a time when development cycles are accelerating in every industry and companies are under pressure to produce more products more quickly and more efficiently, it is critical to ensure robust product development. Throughout the life of a development project, a company must make some crucial decisions: When to begin development When to launch the design phase Whether to continue a project whose economic viability is challenged Whether to make the corresponding investments Whether to launch the product. If so, when? Synchronization gates are thus vital bridges connecting the various development stakeholders for the purpose of identifying and managing risk, particularly when using concurrent engineering models. DS gates 1 are decision synchronization gates or critical milestones in the life of a development project. All relevant information must be synthesized at each gate so that decisions can be made in full cognizance of the facts. KEY CONDITIONS FOR THE SUCCESS OF DS GATES COMPETENT, INDEPENDENT EXPERTS CAPABLE OF CHALLENGING THE PROJECT PLAYERS ARE ESSENTIAL TO GOOD GOVERNANCE The fact that project team members declare deliverables complete and of a satisfactory maturity level is often an insufficient metric to ensure actual quality and consistency. Indeed, although the project manager is responsible for identifying, anticipating, and resolving problems (particularly those related to interfaces and quality), the very nature of a development project often puts considerable pressure on deadlines and costs. This can lead team members to conceal issues, in hopes that problems will be solved later or, worse, will simply go away by themselves. Unfortunately, this rarely happens, and these problems may ultimately imperil the project or even the company. 1 The term DS gates may vary by company: maturity gates, gate reviews, project milestones, product maturity levels, etc. 2

3 Exhibit 1: Synoptic view of DS gates and key success conditions Relevant deliverables at the gate Independent experts with the skills to challenge the maturity of deliverables and their overall consistency are essential success factors. It is also preferable to give independent experts enough responsibility (such as review chairman) to decide whether to move on to the next gate. DS GATE DECISION AND SYNCHRONIZATION Decision point Synchronization point for risk assessment Sufficient maturity of deliverables Assessment of maturity by independent experts A CLEAR DECISION AT EACH GATE The project manager must clearly identify and explain the decision to be made to guide and orient the work of the project players throughout the preparatory phase. Examples of decisions: Whether to submit a bid proposal Whether to begin the detailed engineering phase Whether to invest in industrial tools and equipment Whether to launch production Whether to launch the product on the market Exhibit 2: Preparation of a DS gate using the V-model IDENTIFICATION OF RELEVANT DELIVERABLES Define the decision to be made at the gate Make the decision (DS gate meeting) The decision at the gate is automatically based on a certain number of key deliverables. The project manager must identify the deliverables beforehand and assign them to the relevant project players. Identify required deliverables and corresponding maturity criteria Assess deliverables (assessment by independent experts to prepare the gate) DESCRIPTION OF EXPECTED MATURITY OF DELIVERABLES: A CRITICAL CONDITION THAT IS OFTEN POORLY EXECUTED Conduct the work to obtain the required deliverables Deliverables frequently evolve during the course of a project, and their maturity or completeness is an essential factor for making decisions. It is important to describe not only the deliverables themselves, but also their state of expected maturity at each gate. This is to prevent team members from simply the ticking the box without ensuring the quality of the deliverables. 3

4 SOUND GOVERNANCE PRINCIPLES These sound governance principles must be adapted to the specific situation of each company. Implementation will differ, for example, at an aeronautics firm with a single development program underway, a major automotive company launching several new vehicles a year, or a railway equipment company managing a hundred projects a year. The process must start each time with a prior analysis of the project risks and the role played by customers in the acceptance cycle. The involvement of senior management is a must for projects engaging the future of the company, for instance.

5 For example, when product design studies are launched, the deliverable might be the proposed product concept. The expected maturity level could be represented by proof that this choice has undergone the proper level of analysis (to be as certain as possible that the concept will not be challenged after launching the design phase.) In particular, this includes a presentation of other possible concept choices and the reasons that the proposed concept represents the best commercial, financial, and industrial compromise. Examples of factors that could support this analysis: Review of solutions selected in the past with the reasons they were or were not slated to continue, based on experiential feedback A benchmark of solutions used by competitors and the reasons a differentiation or follower strategy was chosen Following the review, the objective is to turn the proposed product concept into the chosen product concept. OLIVER WYMAN HAS DEVELOPED AN APPROACH TO APPLY DS GATES AT COMPANIES When a company decides to apply DS gates, many questions naturally arise. How many DS gates are needed? At what stage of the project must they take place? Which independent experts should be involved? How can we identify deliverables and their expected maturity at each phase? Who should be responsible for these deliverables? How can we use DS gates to turn the company into a veritable project factory? The answers to these questions do not depend specifically on the company s industry, but its business model (business-to-business versus business-to-consumer), its customer relationship model for development (design-to-market versus design to client), and naturally, its product range. Every company must establish a specific methodology base adapted to these factors. This base is meant to be broken down for each project depending on the context or characteristics of the product to be developed (technical characteristics, financial risk, strategic importance, industrial risk, technology transfer, or political and economic context). 5

6 A challenge when developing the specific methodology base is to categorize deliverables in a way that breaks up the work and defines responsibilities so that the work gets accomplished. To do this, a process-oriented approach is always necessary (see Exhibit 3). This approach may have more or less detail depending on: The complexity of the product to be developed (the more complex the product, the greater the need for detailed process mapping) The desired approach an iterative approach with rapid methodological deployment, followed by gradual updates (learning by doing) can be used initially to skirt detailed process mapping A company-specific DS gate methodology is thus designed according to the following steps (see Exhibit 4): 1. Define the company DS gates, timing, decisions to be made, required assessments by independent experts and the gate chairman 2a. Develop high-level process mapping 2b. Map processes and corresponding deliverables in detail (optional phase) 3. Identify and define key deliverables by gate 4. Define expected maturity of deliverables It is essential to test this methodology as it is being designed in order to demonstrate its efficiency progressively and foster the adhesion and commitment of the concerned teams. Exhibit 3: Link between DS gates and development processes DS GATES DECISION AND SYNCHRONIZATION POINT DS1 DS2 DS3 DS4 DSN Program management Design DEVELOPMENT PROCESS TYPE OF ACTIVITIES Sales and Marketing Industrialization Which deliverables? Which activities? When to deliver? What maturity level? Assessment by an independant panel 6

7 DS GATES OFFER POWERFUL VECTORS FOR CHANGE IN COMPANIES BY HARMONIZING PRACTICES AND REINFORCING COLLABORATION As many examples have shown (aeronautics, defence, and transportation), DS gates can improve product development within business organizations and can be adapted to a wide variety of contexts. DS gates represent powerful tools to ensure robust product development and can help business organizations gain better control of their overall project portfolio in some cases. This tool is also a powerful vector for change in companies. It can harmonize work models making them more collaborative. In this regard, it can also be used in certain critical contexts (such as post-merger integration) as an inductor to integrate entities with different cultures. Exhibit 4: Company-specific DS gates methodology design CURSORY METHODOLOGY 1 4 Define company DS gates (number, timing and decisions) Identify maturity criteria for key deliverables at each gate 2a 3 Define high-level product development processes Identify key deliverables for each gate DETAILED METHODOLOGY 2b Define detailled product development processes This level may be conducted at a later stage depending on the desired level of granularity 7

8 Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 26 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm s 3,700 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit Follow Oliver Wyman on JÉRÔME WEILL Partner jerome.weill@oliverwyman.com SÉBASTIEN MAIRE Partner sebastien.maire@oliverwyman.com Copyright 2015 Oliver Wyman All rights reserved. This report may not be reproduced or redistributed, in whole or in part, without the written permission of Oliver Wyman and Oliver Wyman accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions in this report were prepared by Oliver Wyman. This report is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accountants, tax, legal or financial advisors. Oliver Wyman has made every effort to use reliable, up-to-date and comprehensive information and analysis, but all information is provided without warranty of any kind, express or implied. Oliver Wyman disclaims any responsibility to update the information or conclusions in this report. Oliver Wyman accepts no liability for any loss arising from any action taken or refrained from as a result of information contained in this report or any reports or sources of information referred to herein, or for any consequential, special or similar damages even if advised of the possibility of such damages. The report is not an offer to buy or sell securities or a solicitation of an offer to buy or sell securities. This report may not be sold without the written consent of Oliver Wyman.

Energy OIL S WILD RIDE DRIVING COST EFFICIENT OPERATIONAL RISK MANAGEMENT. AUTHORS Keric Morris, Partner Susie Scott, Principal Damian West, Principal

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