Front End Transfers of Digital Innovations in a Hybrid Agile-Stage-Gate Setting Kati Brock , Elke den
Ouden, Fred Langerak, and Ksenia Podoynitsyna
 The front end comprises the messy first phase of the innovation process which “starts with the
discovery of an opportunity or a raw idea and ends when the GO decision is made to develop a
new product, so that the actual development can start and significant resources are committed”
 The hybrid Agile-Stage-Gate model encourages a collaborative instead of transactional approach
to front end work on digital innovations. • Digital innovation transfers are distinctly different from
technology transfers and, therefore, require a re-think of a firm’s existing innovation processes
and performance measurements. • Manager should take into account that there are three
different transfer practices that either facilitate (i.e., transfer management) or inhibit (i.e.,
transfer scope and synchronization) front end transfers of digital innovations. • Establishing
champions across the important organizational interface of Research and Development is crucial
in realizing front end transfers of digital innovations.
 This is imperative because prior research has mostly focused on technology transfers, yet
technology development is distinctly different from digital innovation (where the transfers are
much broader, e.g., software applications, services, hardware modules, and business models).
 So far the focus of hybrid models has been on the development and testing and commercialization
phases of the innovation process, as uncertainty is lower there and environments are easier to
control Instead this study focuses on the use of the hybrid model in the front end of innovation,
as this is where digital innovations emanate from and where the foundation is laid for corporate
renewal in the era of digitization
 Agile offers a promising approach to increase the flexibility and adaptability in the front end of
digital innovation, because it induces the readiness and urgency to rapidly and inherently create
and embrace change
 The hybrid Agile-Stage-Gate model to product development integrates elements of both Agile
and StageGate , where Stage-Gate provides the macro model “to select projects, and once
selected, map out the key stages, best practice activities, and roles and responsibilities as part of
the project”. Agile methods focus on micro-planning, so that the development teams can execute
projects in a focused, efficient manner, while still planning and building “on the fly”.
challenges in applying the hybrid model in general and in the front end of digital innovation in particular:
 The scarcity of resources for dedicated (front end) teams,
 Management skepticism,
 and handling fluid definitions of work done and products
Especially the fluid definitions do not seem to work well as deliverables in the concept or buildbusinesscase stage of a traditional front end project, as it is unclear when a stage has been finished and a
gate-decision can be made. This is important to resolve though, because in organizations with separate
Research and Development departments, front end results must (as deliverables) still be transferred to
Development for further advancement (“transferring the new opportunity into the firm’s formal
development function.) .Otherwise Research activities get trapped in an endless cycle of search and
change, project delays, and failed front end projects (Eldred and McGrath, 1997)
 Front end transfers typically require that Research work: (1) can be tangibly reviewed by an
expert, (2) is something that a customer can respond to, and/or, (3) is an entity that management
can actually see. In firms with separate Research and Development departments such a front end
transfer serves as the single most important input for Development to further develop and
commercialize the digital innovation
 Having separate departments for Research and Development:
o Advantages:
 economies of scale
 reduced interdepartmental transaction costs
 more innovative output
o Disadvantages:
 working separately and with little interaction
 people from each side lack knowledge about the challenges and constraints the
other department
 Consequently, front end transfers have been described as inefficient and
ineffective
 Development, as transfer recipient, struggles to assess the quality, applicability,
and potential market impact of the front end work
 not clear communications due to the lack of a shared language between both
departments
 Knowledge gaps and difficulties in locating a transfer recipient in Development
also contribute to the inability of Research to achieve front end transfers.
Above mentioned problems are even amplified when dealing with the digital innovation, where compared
to a traditional Stage-Gate setting the principles of progress and work done are more fluid and thus are
subject to change
This increased fluidity highlights the challenge of proficiently managing front end transfers in terms of
“what is transferred,” (scope) “how the transfer is realized”(Management) in terms of both process and
method, and how the front end transfers match the firm’s (digital) innovation strategy (Synchronization)
Results
Below we present the facilitators and inhibitors of front end transfers of digital innovations within this
hybrid setting, structured according to the three transfer practices (i.e., transfer management, transfer
scope, and synchronization). Where appropriate we use representative quotes to illustrate our
interpretations of the data.
Transfer Management
In the past (i.e., in the traditional Stage-Gate setting) Research would meet with Development only about
once per quarter. As a result, Research often lacked necessary market and business knowledge to make
appropriate intermediate front end decisions, which increased the risk of not being able to transfer its
front end work to Development. Through digital innovations, developed in an Agile way of working,
Research and Development enter into closer interdepartmental collaboration. Digital innovations
developed this way demand regular sharing sessions, so the closer, more frequent interactions with
Development lead to more knowledge sharing and a better knowledge balance.
But collaborating more closely does not guarantee that a front end transfer of a digital innovation is
achieved as there also needs to be a transfer recipient. (a Development champion , a customer, crossfunctional teams to bridge the gap, ).
To summarize: we find that in terms of transfer management, interdepartmental collaboration,
champions, customer involvement, and cross-functional teams all facilitate the realization of front end
transfers of digital innovations from Research to Development.
Transfer Scope
Although working on digital innovations in a hybrid Agile-Stage-Gate setting stimulates closer
interdepartmental collaboration, the focus on digital smart city innovations also created a gap between
Research and Development that did not exist before, as the latter department lacks the knowledge and
experience to continue the development of digital innovations that extend beyond their (analog) lighting
(product) domain. In the past, further development of a nondigital innovation (i.e., a new technology for
a new light bulb or luminaire) beyond the front end would have been straightforward, but digital
innovations, such as smart city solutions, are far more complex and dynamic. Currently, Research is
exploring a wide range of digital innovations with new business models, but their transfers are inhibited
by the inherent short-term focused scope of Development on traditional lighting products and related,
traditional business models. Yet, Research still depends on Development to accept their front end
transfers of such digital innovations to achieve their key performance indicators (KPIs).
To summarize: we find that in terms of transfer scope, current business models, KPIs, unclear definition
of done, and old fragmented technologies and systems inhibit front end transfers of digital innovations
from Research to Development
Synchronization
Thus even with digital innovations developed in a hybrid setting, the focus on front end transfers remains
dominant in the firm’s Research environment, where at the end of each year, it establishes front end
transfer plans for the next year. The responsible manager from Development starts in July, gathering
information about potential front end project topics and digital innovation directions. He aims to
complete the front end project planning and budget by the beginning of October, so that everything is
ready well ahead of the coming year. As part of the planning, Development also lists how many front end
projects they require, so that Research can organize its teams and resources and define the amount of
front end transfers it expects to be able to deliver within the budget. Substantial weight and expectations
thus surround front end transfers of digital innovations from Research to Development. This traditional
process, the so-called Annual Operation Plan, is a recurring event, with strict budgets and deliverables
that allow little flexibility or room for developing digital innovations through Agile.
To summarize: we find in terms of synchronization that conventional processes, lack of (relevant)
resources, and different timelines inhibit front end transfers of digital innovations.
We constructed the model in Figure 2 to summarize our findings with regard to the facilitators and
inhibitors of front end transfers of digital innovations in a hybrid Agile-Stage-Gate setting. This figure
depicts our empirical findings along with the three practices of how transfers are managed, what gets
transferred, and how transfers are achieved.
Transfer management, including interdepartmental collaboration, champions, customers, and crossfunctional teams, facilitate front end transfers of digital innovations within an Agile-Stage-Gate setting.
Cross-functional teams involve potential transfer recipients, or even champions, early on in the front end
of the digital innovation process. Furthermore, close collaboration with customers increases the
legitimacy of front end transfers. As such, Development feels more involved and can more easily find
alignment between the front end work of Research and their own activities, which streamlines the
transfer process.
In contrast, transfer scope has an inhibiting effect on front end transfers of digital innovations. Transfer
targets constrain the choices of business models, technologies and systems to use, and definitions of when
the front end work is done. These constraints also impede the development of complex digital
innovations, as Research is driven toward more incremental (often theoretical) ones that are better
aligned with the focus of Development. Additionally, Research is discouraged to pursue new directions if
the front end work proved unviable, because that would prevent them from meeting their front end
transfer KPIs. Moreover, the lack of modular technology and systems to test digital innovations with
customers inhibits Research’s ability to quickly iterate and validate new digital innovations. Research must
wait for Development to implement their front end work into existing systems and processes, and the
choice whether to do so is strongly guided by Development’s technology roadmap. Therefore, the broad
scope of digital innovations undermines the concept of front end transfers from Research to
Development.
Synchronization also has an inhibiting effect on digital innovations and their transfers, as well as on
transfer management and scope. Existing processes do not facilitate relationships between Research and
customers, though such efforts could help Research test its digital innovations and legitimize its work.
Even though close collaboration with other departments besides Development can prove beneficial for
the advancement of digital innovations, the adherence to the traditional front end transfer process with
Development as recipient, can prevent Research from achieving front end transfers. The lack of necessary
resources and capabilities in Development, as well as the constraints that existing Stage-Gate processes
and KPIs impose, force Research to work with current business models and create short-term, incremental
digital innovations to achieve their transfer targets instead of more long-term, radical ones.
Overall the empirically derived model illustrates that each transfer practice plays an intricate role in either
facilitating (i.e., transfer management) or inhibiting (i.e., transfer scope and synchronization) front end
transfers of digital innovations in a firm using a hybrid Agile-Stage-Gate model.
Findings:
1- Our results show that in the front end of digital innovation, the benefits of an Agile approach in
terms of for example, speed and flexibility, can be combined with the structure and control that
the Stage-Gate model brings.
2- Also through a hybrid way of working in the front end of digital innovation, Research can limit
wasted time and resources by terminating unfruitful digital innovation projects early on.
3- For Development, the use of the hybrid approach allows for iterative joint value creation with
Research. This enables them to also manage their development portfolio more efficiently.
However, Development needs to increase its flexibility in order to timely make resources available
that match the digital innovation activities within Research. This way Development is ready to
receive a front end transfer and continue the development of the corresponding digital
innovation.
4- However, the nature of front end transfers in a hybrid setting is inherently different from
technology transfers in a Stage-Gate setting. In the latter a transfer typically encompasses tangible
Research results in the form of intermediate goods, such as algorithms or prototypes (Du et al.,
2014), while in the former it signals that a sprint toward the completion of for example, software
applications, services, hardware modules, or business models, is done. Besides, we find that front
end transfers of digital innovations in a hybrid setting do not (always) meet acknowledged
technology transfer criteria as they: (1) often do not involve a written transfer plan, accepted by
both Research and Development, (2) not always coincide with priorities and activities in
Development, and (3) not always conclude with an agreement that the transfer from Research
to Development has taken place and is completed.
 Svahn et al. (2017a) suggest that instead of focusing on committing specific resources and creating
rigid functions, firms should develop generic digital resources. Such resources can be seen as
modular building blocks that can be applied in a flexible way to solve future innovation problems
that are still yet unknown and unpredictable. Key to such modular digital resources is the use of
shared platforms, on which both Research and Development can work simultaneously, each with
their own timelines
 Development often lacks sufficient insights in the choices that Research makes. Development
might, therefore, regard transferred front end work on digital innovations as a competitive threat
(Raisch and Tushman, 2016) or they might struggle with the “not invented here” syndrome
(Gomory, 1989)
Conclusion Our study shows that adopting Agile in a Stage-Gate setting is not enough to facilitate front
end work on digital innovations as Research still struggles to transfer new ideas and concepts to
Development for further advancement. The reason is that front end transfer practices in terms of
management, scope, and synchronization, are inherently different in such a setting, and that each transfer
practice plays an intricate role in either facilitating (i.e., management) or inhibiting (i.e., transfer scope
and synchronization) front end transfers of digital innovations. The discovery of these opposing forces and
their combined implications for theory and practice significantly advance our understanding of the use of
Agile in the front end of digital innovation, managing transfer practices from Research to Development in
a hybrid setting, as well as for theorizing about the digitization of innovation.