Purchasing Innovation II: TRIZ

Q: What is TRIZ?

A: Teoriya Resheniya Izobretatelskikh Zadatch, better known as the Theory of Inventive Problem Solving, is a methodology, tool set, knowledge base, and model-based technology for generating innovative ideas and solutions for problem solving.

Q: What does it have to do with sourcing?

A: Everything, if you want it to be all that it can be!

Q: Why are we talking about it?

A: Because CPO Agenda, one of the leading publications in the space, finally ran an article on it in their Spring 2006 issue. I always knew CPO Agenda was good – but I never knew it was that good! (Without a doubt, it has earned its place on your tier 1 reading list in my book!)

The tagline for the article is that “CPOs can help their firms escape the clutches of patent-protected, monopolistic suppliers using a process called ‘invention on demand“, and this is most certainly true, but what it doesn’t tell you is that TRIZ is so much more. But I’m getting ahead of myself.

It points out that today’s CPOs are faced not only with big and smart and suppliers, but patent-protected suppliers who can often ask almost any price for their products since insourcing or outsourcing to another supplier is not an option thanks to the patent(s). And that these CPOs are just not willing to accept patent-protected suppliers as a way of life.

They are employing an approach called “invention on demand“, an advanced version of TRIZ to combat lock-in to patent-protected suppliers. Invention on demand extends the benefits of TRIZ from component-level mechanical engineering problems to system level problems in general, be they mechanical, electrical, electronic, or even pure software. The goal is not incremental product improvement, but the creation of a completely new product that can replace the predecessor product without giving the incumbent supplier any leverage to claim intellectual ownership.

The basis for the approach is the fact that over 90% of the problems faced by engineers have been solved before – somewhere. The founder of TRIZ, Genrich Altshuller, screened over 200,000 patents looking for inventive solutions to the problems the patents were addressing. He found that only 40,000, or 20%, had somewhat inventive solutions. (As of today, followers of the methodology have screened 10 times this many patents with the same results.) He then categorized these in a five level system according to degree of inventiveness, a 1 being an apparent solution, a 2 being a minor improvement, a 3 being a major improvement, a 4 being a new concept, and a 5 being a revolutionary discovery. Only 4% of solutions contained a new concept and only 1% a revolutionary discovery. This indicates that, in general, less then 1% of patents will actually contain a new concept, and our estimate of over 90% of all problems being solved before – somewhere – is probably very low and quite safe.

The problem solving model is based on four key steps:

  1. evaluate a specific problem
  2. translate the specific problem into a general (scientific) problem
  3. search for general (scientific) solutions
  4. translate the appropriate solutions into specific solutions

This allows standard solutions and processes to be reused across disciplines, a hydraulic problem may be solved with a mechanical solution, a mechanical problem may be solved with a software solution, and a software problem may be solved with an electrical solution, for example.

In the first step, the system is broken down into its smallest elements and the functional relationships between the elements are established (and usually represented graphically). Each element is assigned a “function rank” that quantifies its importance or usefulness according to its distance from the central output and the number of useful tasks it performs.

In the second step, key elements of the system, typically those that are the basis of the patent protected offering you are trying to replace, are “trimmed”. This results in contradictions (general scientific problems), which define the goal of the endeavor – how to provide the necessary functions of the trimmed element without the presence of the element.

In the third step, the contradictions are conceptually resolved by experts in the scientific process from various fields that use general scientific solutions. For each trimmed element, there may be a number of ideas, many rather exotic, on how to transfer the required functions to the remaining elements.

Finally, the conceptual solutions are explored and those that are feasible are developed into specific engineering solutions. (For more examples of general problem solving methods that can be applied in the last two steps, see my Problem Solving Series on SourcingInnovation).

The example CPO Agenda provides is that of a yoghurt drink manufacturer that is locked into a supplier that produces the specialized flavored syrups. Following this process, in the first phase the invention-on-demand team would identify the components of the system as the container, the lid, a straw, the plain yoghurt, and the flavor syrup. They would then trim the flavor syrup in the second step and generate the contradiction – how do you provide flavor to the plain yoghurt with just the container, lid, and the straw. In the third step, the conceptual directions of incorporating flavor into the container or straw would be identified. In the fourth step, the team would decide that “teaching” the straw to release flavor when the drink is consumed is the best direction and work on identifying the right time release technology.

Once the specific solution is fully identified, it is patented and the company is free to then either produce the new product internally, license the technology to a preferred supplier in a partnership arrangement, or use the patent(s) as leverage in negotiations with the incumbent supplier, who will often come around if the company is a major customer.

Furthermore, as CPO Agenda points out, invention on demand can do more for a company then just improve terms from a patent-protected supplier or bypass it altogether. “It can replace expensive components with cheaper ones. It can generate product improvements in combination with target costing. It can be applied to any technical problem, whether for reasons of technical improvements, the value-price ratio, or both.

The process as a whole can considerably boost a company’s performance. As an example, CPO Agenda points out the Korean conglomerate Samsung where TRIZ has become part of Samsung’s culture. In 2000, Samsung’s market capitalization was less then a quarter of Sony‘s. Today, it is almost double.

And it’s not restricted to technical problems. You can also apply it to your processes. It will help you weed out unnecessary steps and components and focus in on the key steps and component tasks. These refined processes can them be implemented to save even more time and money for your organization. Invention on Demand, and the TRIZ foundations it is based on, is one of the few generic problem solving approaches ever developed that actually works, and works well, in practice across a wide variety of problems. Getting to know it is worth the effort.

Some good starting points are the Wikipedia definition, Glenn Mazur’s page, and the TRIZ Journal. Happy reading!

For more ideas on how to innovate your purchasing – and your sourcing – see the Next Generation Sourcing wiki-paper over on the e-Sourcing Wiki.

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