This article is the first in a two-part series on optimizing the Stage-Gate Product Development Methodology for the Industrial Internet of Things.

Product development has never been leaner – and for good reason.

According to a report by Cisco, nearly two-thirds of IoT projects don’t make it past the Proof of Concept (PoC) stage. Companies are spending a large chunk of their resources on ideating, developing and launching new products which fail to succeed. And that’s a major drain on a company’s resources.

It’s no wonder that manufacturers are pushing to use the most tried-and-proven product development methodologies.

This year GE will spend $458 million on research into products that don’t yet exist…the trick is to keep everybody focused on goals and deadlines.
Fortune Magazine

The Stage-Gate product development process is particularly popular, benefiting as it does both concept development and operations.

While this methodology has proven successful for new product development in many companies, it requires additional tools before it can be effective for the Industrial Internet of Things (IIoT).

Use case simulation for better gating

The Stage-Gate methodology and its structured system of targeted, measured progress, coupled with reviews, has enabled teams to reach long-term goals when taking a new product from concept to launch.

The Stage-Gate Product Development Process | Seebo IoT
Image: Seebo

Product teams perform tasks according to a structured plan, then analyze the results before presenting them for submission to a gate.

There, the stage process is rigorously reviewed – generally through powerpoint or documented specifications –  before passing on to the next stage.

Here’s the problem: The moment you expand the product specification to include an entire IoT system, specifications become increasingly incomprehensible for external teams, and the review process – torturous.

Conveying the use cases and their behaviors within a complex IoT system – including devices, numerous sensors, data connectivity, cloud services, multiple web or mobile applications, data analytics, security, etc. – results in a recipe that is difficult to follow, and which no one wants to try. The result is a delay in passing to another stage, and even costly errors later on in development.

To effectively describe and communicate complex systems, you need use case simulation.

Simulation of an IoT logistics system on the Seebo Platform.
An IoT logistics system simulated on the Seebo Platform, prior to prototyping.

A use case simulator is a digital prototype of the concept while still in design. 

First, you create a model of all the system components and visually describe the system behaviors and dependencies. A virtual simulator would then play back the possible scenarios in a visually clear and user-friendly way.

Think of it as a visual, department-agnostic specification that makes it easy for teams as different as R&D, Marketing and BI to understand exactly how the IoT system is designed, as well as its planned functionality.

By virtually prototyping the product design, you can expedite the gating process and build a stronger business case to present to stakeholders.

Even after a go/no-go gate, use case simulation continues to provide benefits further along the product development – especially for risk reduction.

Virtual prototyping during design –  reducing risks for complex system development

Industrial IoT products are complex systems, and adding complexity brings on new risks. With Industrial IoT, the cost of errors increases exponentially the later they are found:

Industrial IoT systems and the cost of errors in product development

The Stage-Gate process is supposed to reduce errors in product development and the ensuing costs involved in fixing them. For example, gates are intended to prevent teams from moving to development before establishing a firm business case and ensuring technical feasibility.

But the normal methodology leaves testing and validation until a physical prototype has been developed. As demonstrated in the chart above, catching mistakes in the IoT system logic only during development or ‘validation’, while still better than launching a faulty product, will cost a company an order of magnitude more than if they’d noticed mistakes during product definition and design.

Because of the inherent complexities and rising cost of error, Industrial IoT product development necessitates iterative agility in each stage.
This way, when the final gate is reached, there is a strong consensus that every possible risk or issue has been addressed.

A model-based IoT simulator enables agility in the innovation process; it complements the Stage-Gate methodology by testing and validating a connected system before hitting development, reducing costly errors in later stages.

Continue to part two of the series: Stage-Gate for Industry 4.0: creating a cyclic product development process for IoT.