How unit 3 is examined
This unit covers Stage-Gate, adapting the process to business models, in-house development, Open Innovation, and the limits and benefits of the method; no topic has been asked recently, so each is taught in full in case it appears.
Project approach to innovation management, method Stage Gate, its essence
<span style="display:inline-block;padding:.16em .6em;border:1.5px solid currentColor;border-radius:999px;font-size:.68em;font-weight:700;letter-spacing:.06em;text-transform:uppercase;opacity:.75">Not asked since 2022</span>
Definition. <mark>Stage-Gate is a project method in which an innovation project is divided into stages of work, each followed by a gate where management decides to go, kill, hold or recycle the project.</mark> It was developed by Robert G. Cooper and treats each innovation as a project with a leader, a team, a budget and a plan.
Diagram.
<figure class="ds-fig" style="margin:1.4rem 0;overflow-x:auto"><svg xmlns="http://www.w3.org/2000/svg" id="dsfig-u3-01" viewBox="0 0 544.4 166" width="544.4" height="166" role="img" aria-label="Stage-Gate: I idea, S stages of work, G gates (go, kill, hold, recycle), L launch"><style>#dsfig-u3-01 .e{stroke:#454C5A;stroke-width:1.4;fill:none}#dsfig-u3-01 .e.hi{stroke:#2340B8;stroke-width:2.6}#dsfig-u3-01 .n{fill:#FFFFFF;stroke:#16181D;stroke-width:1.4}#dsfig-u3-01 .n.hi{fill:#E3E9FC;stroke:#2340B8;stroke-width:2.2}#dsfig-u3-01 .n.rb-b{fill:#16181D;stroke:#16181D}#dsfig-u3-01 .n.rb-r{fill:#BD3227;stroke:#BD3227}#dsfig-u3-01 text{font-family:"JetBrains Mono",ui-monospace,Menlo,Consolas,monospace;font-size:13px}#dsfig-u3-01 .t{fill:#16181D;font-weight:500}#dsfig-u3-01 .t.inv{fill:#FFFFFF;font-weight:700}#dsfig-u3-01 .kd{stroke:#16181D;stroke-width:1.2}#dsfig-u3-01 .dot{fill:#16181D}#dsfig-u3-01 .ann{fill:#2340B8;font-size:11px;font-weight:700}#dsfig-u3-01 .lbl{fill:#6F7787;font-family:system-ui,-apple-system,sans-serif;font-size:12px;font-weight:700}#dsfig-u3-01 .ptr{fill:#2340B8;font-size:12px;font-weight:700}#dsfig-u3-01 .ah{fill:#454C5A}#dsfig-u3-01 .ah.hi{fill:#2340B8}#dsfig-u3-01 .wl rect{fill:#FFFFFF;stroke:#DCE0E7}#dsfig-u3-01 .wl .t{font-size:12px;font-weight:700}#dsfig-u3-01 .wl.hi rect{fill:#2340B8;stroke:#2340B8}#dsfig-u3-01 .wl.hi .t{fill:#FFFFFF}html.dark #dsfig-u3-01 .e{stroke:#B1B7C3}html.dark #dsfig-u3-01 .e.hi{stroke:#8FA3FF}html.dark #dsfig-u3-01 .n{fill:#161920;stroke:#E6E8ED}html.dark #dsfig-u3-01 .n.hi{fill:#1E2748;stroke:#8FA3FF}html.dark #dsfig-u3-01 .n.rb-b{fill:#E6E8ED;stroke:#E6E8ED}html.dark #dsfig-u3-01 .n.rb-r{fill:#FF7E71;stroke:#FF7E71}html.dark #dsfig-u3-01 .t{fill:#E6E8ED}html.dark #dsfig-u3-01 .t.inv{fill:#0F1115}html.dark #dsfig-u3-01 .kd{stroke:#E6E8ED}html.dark #dsfig-u3-01 .dot{fill:#E6E8ED}html.dark #dsfig-u3-01 .ann{fill:#8FA3FF}html.dark #dsfig-u3-01 .lbl{fill:#858D9C}html.dark #dsfig-u3-01 .ptr{fill:#8FA3FF}html.dark #dsfig-u3-01 .ah{fill:#B1B7C3}html.dark #dsfig-u3-01 .ah.hi{fill:#8FA3FF}html.dark #dsfig-u3-01 .wl rect{fill:#161920;stroke:#2A2E37}html.dark #dsfig-u3-01 .wl.hi rect{fill:#8FA3FF;stroke:#8FA3FF}html.dark #dsfig-u3-01 .wl.hi .t{fill:#0F1115}</style><defs><marker id="ah4" viewBox="0 0 10 10" refX="9" refY="5" markerWidth="7" markerHeight="7" orient="auto-start-reverse"><path class="ah" d="M0,1 L9,5 L0,9 z"/></marker><marker id="ahh4" viewBox="0 0 10 10" refX="9" refY="5" markerWidth="7" markerHeight="7" orient="auto-start-reverse"><path class="ah hi" d="M0,1 L9,5 L0,9 z"/></marker></defs><path class="e" d="M59,126 L105,126" marker-end="url(#ah4)"/><path class="e" d="M135.8,109.7 L166.8,58" marker-end="url(#ah4)"/><path class="e" d="M189.5,54.8 L233.3,109.6" marker-end="url(#ah4)"/><path class="e" d="M256.2,109.7 L287.2,58" marker-end="url(#ah4)"/><path class="e" d="M309.9,54.8 L353.7,109.6" marker-end="url(#ah4)"/><path class="e" d="M376.6,109.7 L407.6,58" marker-end="url(#ah4)"/><path class="e" d="M431.8,53.4 L489.6,111.2" marker-end="url(#ah4)"/><circle class="n" cx="40" cy="126" r="18"/><text class="t" x="40" y="126" dy=".35em" text-anchor="middle">I</text><circle class="n" cx="126" cy="126" r="18"/><text class="t" x="126" y="126" dy=".35em" text-anchor="middle">S1</text><circle class="n" cx="177.6" cy="40" r="18"/><text class="t" x="177.6" y="40" dy=".35em" text-anchor="middle">G1</text><circle class="n" cx="246.4" cy="126" r="18"/><text class="t" x="246.4" y="126" dy=".35em" text-anchor="middle">S2</text><circle class="n" cx="298" cy="40" r="18"/><text class="t" x="298" y="40" dy=".35em" text-anchor="middle">G2</text><circle class="n" cx="366.8" cy="126" r="18"/><text class="t" x="366.8" y="126" dy=".35em" text-anchor="middle">S3</text><circle class="n" cx="418.4" cy="40" r="18"/><text class="t" x="418.4" y="40" dy=".35em" text-anchor="middle">G3</text><circle class="n" cx="504.4" cy="126" r="18"/><text class="t" x="504.4" y="126" dy=".35em" text-anchor="middle">L</text></svg><figcaption style="font-size:.82em;opacity:.72;margin-top:.45rem">Stage-Gate: I idea, S stages of work, G gates (go, kill, hold, recycle), L launch</figcaption></figure>
Key points.
- Each stage is a block of planned, cross-functional work that gathers information, such as scoping, business case, development, testing and launch.
- Each gate is a decision meeting with fixed criteria, for example strategic fit, market attractiveness, technical feasibility and financial return.
- A gate has four outcomes: go, kill, hold or recycle, so weak projects are stopped early and scarce resources go to the best ones.
- Every stage costs more than the one before it, so risk is reduced step by step before the large spending starts.
- A named project leader and a cross-functional team own the project from idea to launch, which gives clear responsibility.
- The essence of the method is discipline: work is done in order, decisions are made on evidence, and the project portfolio is kept balanced.
Answer frame. Open with the definition; draw the stage and gate chain; develop stages, gates, outcomes, rising cost and team; close with the benefit of early killing of weak projects.
Adaptation of access to selected business models
<span style="display:inline-block;padding:.16em .6em;border:1.5px solid currentColor;border-radius:999px;font-size:.68em;font-weight:700;letter-spacing:.06em;text-transform:uppercase;opacity:.75">Not asked since 2022</span>
Definition. <mark>Adapting the approach to a business model means fitting the innovation process to the way the firm creates, delivers and earns value, instead of copying one fixed procedure.</mark>
Key points.
- A business model describes the customer, the value offered, the channels and the source of revenue, and the innovation process must serve this model.
- A manufacturing firm with physical products can use the full formal Stage-Gate process with heavy testing and tooling stages.
- A service or software firm needs a lighter and faster process, so it may cut stages, shorten gates or run agile sprints inside the stages.
- A firm entering a new business model may keep strict gates for the money and risk but leave the work inside a stage flexible.
- Gate criteria are changed to match the model, for instance customer adoption for a service and unit cost for a product.
- The process is a framework to be tailored, and over-bureaucracy in a small or fast firm kills the very innovation it should support.
Answer frame. Open by defining a business model; state that one process does not fit all; give the product versus service example; close that tailoring keeps control and speed together.
In-house business development of the innovation process in the company
<span style="display:inline-block;padding:.16em .6em;border:1.5px solid currentColor;border-radius:999px;font-size:.68em;font-weight:700;letter-spacing:.06em;text-transform:uppercase;opacity:.75">Not asked since 2022</span>
Definition. <mark>In-house (closed) innovation is development carried out entirely inside the company, using its own R&D, people and funds, with the firm controlling and owning all results.</mark>
Key points.
- Ideas, research, development and marketing all stay inside the firm, so secrecy and competitive advantage are protected.
- The firm needs a strong R&D department, funds and skilled staff, and often a separate innovation or business development unit.
- All patents and know-how are owned by the firm, and it keeps the whole profit from the innovation.
- Internal ideas come from employees, the R&D lab, internal ventures and corporate incubators inside the company.
- The process is slow and costly, because the firm carries the full risk and expense itself.
- It may miss ideas and technologies that exist outside, and good internal ideas that do not fit the current business may be wasted.
Answer frame. Open with the definition; list control, own R&D, ownership and internal sources; close with slowness and cost as the reason firms move to open innovation.
Open Innovation as a modern concept
<span style="display:inline-block;padding:.16em .6em;border:1.5px solid currentColor;border-radius:999px;font-size:.68em;font-weight:700;letter-spacing:.06em;text-transform:uppercase;opacity:.75">Not asked since 2022</span>
Definition. <mark>Open Innovation, proposed by Henry Chesbrough, is the use of purposeful inflows and outflows of knowledge to speed up internal innovation and to expand the markets for its use, so that a firm uses external as well as internal ideas and paths to market.</mark>
Comparison.
| Basis | Closed (in-house) innovation | Open Innovation |
|---|---|---|
| Ideas from | Only inside the firm | Inside and outside the firm |
| R&D | Own and secret | Shared with partners |
| Control | Full | Shared |
| Speed | Slow | Faster |
| Cost and risk | Borne alone | Shared |
| Unused ideas | Shelved | Licensed or spun off |
Key points.
- Outside-in (inbound) innovation brings ideas and technology in from customers, suppliers, universities, start-ups and licensing.
- Inside-out (outbound) innovation lets unused internal ideas go out through licensing, spin-offs or sale, which earns extra income.
- Common channels are partnerships, crowdsourcing, innovation contests, joint ventures and open innovation platforms.
- It works because useful knowledge is widely spread, and no single firm, however large, holds all of it.
- It is a modern concept because of mobile skilled workers, venture capital, shorter product life cycles and easy communication.
- Open Innovation still needs the firm's own R&D to understand, absorb and build on the outside knowledge.
Answer frame. Open with Chesbrough's definition; give the comparison table with closed innovation; develop inbound, outbound and channels; close with its role in modern business.
The limits of this method and its benefits for business development
<span style="display:inline-block;padding:.16em .6em;border:1.5px solid currentColor;border-radius:999px;font-size:.68em;font-weight:700;letter-spacing:.06em;text-transform:uppercase;opacity:.75">Not asked since 2022</span>
Definition. <mark>Open Innovation gives business development speed and shared cost and risk, but it also brings loss of control, leakage of know-how and dependence on partners.</mark>
Key points.
- Benefit: faster time to market, because ready ideas and technologies are taken from outside instead of built from zero.
- Benefit: lower R&D cost and shared risk, since partners bear part of the expense and failure.
- Benefit: a wider pool of ideas and closer contact with customers, which improves the fit to the market.
- Benefit: unused internal technology earns money through licensing and spin-offs, which supports business growth.
- Limit: the firm may leak know-how, and disputes arise over intellectual property and the share of profit.
- Limit: choosing and managing partners takes time and skill, dependence on them grows, and an outside idea may not fit the firm's own strategy or culture.
- Stage-Gate itself has limits: it can be rigid and slow for fast-changing markets, and heavy paperwork can discourage radical ideas.
Answer frame. Open with the definition; give benefits and limits in two short groups; close that the firm should use Open Innovation where the benefits exceed the risks.
Last-minute revision
- Stage-Gate: stages of work separated by gates with go, kill, hold or recycle decisions; by Robert G. Cooper.
- Gates use fixed criteria, and risk falls as spending rises stage by stage.
- The business model decides how much of the formal process to keep.
- Product firms use full Stage-Gate; service and software firms use a lighter, agile version.
- In-house (closed) innovation means own R&D, full control, slow speed and high cost.
- Open Innovation was coined by Henry Chesbrough.
- Outside-in brings ideas in; inside-out sends unused ideas out.
- Benefits of open innovation: speed, lower cost and risk, more ideas, extra income.
- Limits: leakage of know-how, IP disputes, partner dependence, loss of control.
- Stage-Gate limit: rigid and slow for fast markets.
Memory hooks
- Stage then Gate: work, then decide (Go, Kill, Hold, Recycle).
- Closed = Control, Open = Opportunity.
- In = outside-in, Out = inside-out.
- Open gains Speed and shared cost, and loses Secrecy.
- One model, one tailored process.
Coverage checklist
- Project approach to innovation management, method Stage Gate, its essence: no past questions; definition, diagram, six points.
- adaptation of access to selected business models: no past questions; definition and six points.
- In-house business development of the innovation process in the company: no past questions; definition and six points.
- Open Innovation as a modern concept: no past questions; definition, comparison table, six points.
- the limits of this method and its benefits for business development: no past questions; benefits and limits.