Digital Business Innovation Management: Stages, Gates, Gatekeepers, And The Keys To Success

Stefan Zink and Andrii Pogorielov

Part of the “Digital Finance Transformation” series that provides a framework for CFOs to move forward confidently on the journey toward digital transformation

Digital innovation plays an active part in the ultimate success of a digital metamorphosis. Therefore, it’s important to recognize trends and to be able to create and realize good ideas for digital innovation. The question is, how can the innovation process be managed?

Innovation management in general sounds simple. Ideas are generated, and the best ones are chosen and equipped with financial and personnel resources. Innovation ideas then become projects, are refined, and end up as marketable or internally usable solutions.

Unfortunately, innovation isn’t that easy. In fact, the decisions about which ideas should be pursued, which project justifies the investment of resources, and the objective evaluation of those decisions is critical – and complex. Let’s break down that complexity into three elements: stages, gates, and gatekeepers

Stages

Any innovation undergoes a similar development process from initial idea to actual usage. Successful innovation management necessitates that you understand this process and control its progress and quality. Delivering successful management requires a holistic approach from trend investigation to usage, divided into manageable units, so-called stages. Each stage defines a distinct phase and a distinct result that can be evaluated. The following stages can function as a template for your company’s individual stages:

 

Gates

“Innovation from idea generation to problem-solving to commercialization is a sequence of organizational and individual behavior patterns connected by formal resource allocation decision points.”

Goldhar, J.L. (1980): Some Modest Conclusions, in Management of Research and Innovation, S. 283-284, Elsevier, Amsterdam

Between each stage transition, your team should interpose gates. Each gate encompasses specific measures that evaluate a result of the actual stage and confirm or reject a transition in the upcoming stage. Gates enable objective evaluation of idea development and achieved results at the end of each stage, assuring efficient handling of resources, since projects that do not fulfill the gate criteria can be stopped.

Here, the selection of measures is crucial. You need to differentiate qualitative and quantitative measures specifically used within the project lifecycle. In the beginning stages, innovation comprises an idea and a plan for further steps. In these stages, we recommend a qualitative evaluation of feasibility, usability, and degree of innovation, for example. In further stages, we suggest shifting measures to quantitative evaluations like estimations regarding potential market size or detailed profit structure. Depending on your company’s industry and innovation idea, the quantitative-qualitative measure border could be in earlier or later stages.

 

Gatekeepers

Qualitative measures in particular require an evaluation by gatekeepers. Building on best practices, gatekeepers can decide to stop, rework, or transition further development of an idea at the end of each stage.

We recommend that the gatekeepers represent various teams – ideally, a committee comprising senior managers from interdisciplinary teams to bring in different angles in the decision process. The committee itself should have relevant decision-making competency and authority.

Interaction between the key elements of innovation management

If you’re aiming to implement an innovation process within your company, remember the three key elements:

  • Divide the entire process into manageable units suitable for your areas of innovation.
  • Select measures for stage transition gates.
    • Consider that qualitative measures are used in the early stages, whereas quantitative measures become more relevant with progress in the innovation’s development.
  • Assemble a committee with members of each different divisions within your company.

Overall, innovation management itself should be adaptive. If improvements to the management process are suggested, implement them after successful evaluation.

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Stefan Zink

About Stefan Zink

Stefan Zink is a business process consultant in the business unit CFO Advisory within SAP. He has technical and functional knowledge in management accounting with SAP S/4HANA and SAP Business Planning and Consolidation. In the last few years, Stefan has actively driven national and international customers’ digital transformation in the area of controlling.

Andrii Pogorielov

About Andrii Pogorielov

Andrii Pogorielov is a business processes associate consultant in the business unit CFO Advisory within SAP. He has functional knowledge in areas of finance, business development, and business intelligence and has worked with international customers focusing on digital transformation projects.