Report 103

Your newsletter on applied creativity, imagination, ideas and innovation in business – delivered to your e-mail box on the first and third Tuesday of every month.

Tuesday, 21 August 2007
Issue 111

Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.

As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.

Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.

MORE GUEST WRITERS!

Innovation expert readers of Report 103 are making life ever easier for me by providing a steady stream of quality articles for this publication. And that's great! It means less work for me and more quality reading for you.

Today's guest writers include a new name and a familiar one. Jack Hipple has written a brief introduction to TRIZ – a structured problem solving technique. Regular contributor John Higgens has written an article on risk aversion. I also recommend you visit bother contributor's web sites for more articles and information.

If you would like to contribute an article to Report 103, please e-mail me a couple of sentences describing your article. If you wish to run a previously published article in Report 103, you are welcome to do so. But, please do ensure you have the authority to do so. If your article has been published in a magazine or book, the publisher may own the rights to your article. (This is not the case with Report 103 – all writers retain copyright to their articles.)

TRIZ—GETTING RID OF OUR EGOS AND USING OTHER PEOPLES’ BRAINS

by Jack Hipple

Carl Sagan once said, “It is an astonishing fact that there are laws of nature, rules that summarize conveniently—not just qualitatively, but quantitatively—how the world works”. Now he was saying this in the sense of physics and his studies of the universe, but there is no better statement of what TRIZ is all about. Genrikh Altshuller, a prolific young Russian inventor and patent examiner, is not as famous (currently) as Sagan, but he asked the same question about invention in general. Could there possibly be a pattern of rules and laws that govern how inventions are made? And the obvious place to test this hypothesis is to study the global patent literature, for that is where we record the records of inventions.

He soon discovered that breakthrough inventions (only a few percent of the total) were characterized by a common trait—they resolved what today we would call and “Excedrin headache” contradiction. We want something to have this property and that property, behave this way and that way. If you study these breakthrough patents (less than 5% of the total), you find there are just 40 inventive principles that the world reuses over and over again to solve many different problems, including those of management and business. The contradictions that need solved can be identified in a number of different ways, but once they are identified, their solution comes quickly. Though TRIZ has progressed beyond this original state, the original 60 year old contradiction table has solved some long standing and difficult problems in the real world that have stumped the most brilliant engineers within many a company.

Now, you’re an engineer at a company. You have been working on a tough problem for a long time and someone comes to you and says that, in principle, your problem’s already been solved. What’s your reaction? Ridicule? Disbelief? Or maybe curiosity about how this could be and the potential impact on your engineering and problem solving challenges. I’ve seen both of these reactions and unfortunately too much of the former. Our egos are precious. They are what we are all about and it takes a hard gulp to swallow the basic premise of TRIZ—that there are a limited number of inventive principles and our effort needs to be spent in defining the problem we have in the most generic way that we can (and stop using all that fancy industry or company jargon that makes us think our problem is special). Effort in drawing cause and effect diagrams to understand the relationships between elements in our product or system. Then we can take these general, non-jargon models and identify the TRIZ principles that assist us in solving the problem.

There is an algorithm for inventive problem solving. An algorithm is an analytical process which provides an answer to a problem. This is very different than the numerous psychologically based inventive tools such as CPS, DeBono techniques, etc. These techniques stimulate our brains in an attempt to change our patterns of thought. For many simple problems, this may be enough, and these techniques are fairly easy to learn. However, they do not bring into the room any ideas or perspectives and they do not offer the capability of generically solving any problem. Admitting that there is an algorithm says that you recognize that your problem is not unique and that there is a generic solution if only you can generalize your problem (not easy!). Think about the analogy between trying to solve quadratic equations by trial and error vs. the now famous x= -b equation that we learned in high school algebra. TRIZ is like algebra for problem solving, but before algebra works, you have to admit that the equation would really work for all similar quadratic equations. We have to do the same thing to effectively use TRIZ. We have to believe that our problem is not special.

About the Author

Jack Hipple is Principal in Innovation-TRIZ, Inc., a consulting company specializing in unique approaches to TRIZ training, the application of TRIZ to non-technical and organizational problems, and the integration of TRIZ with other innovation and creativity tools. For more information about Jack and his firm, please visit http://www.innovation-triz.com/.

RISK AVERSION IS AVOIDABLE

By John Higgins

Risk aversion is a common complaint from teams seeking investment for new business concepts. Insights into risk aversion come from work which studies the difference between rational and intuitive decision making. Leading thinkers in the field include Daniel Kahneman who shared the 2002 Nobel Prize in economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty”

Judgement and decision making under uncertainty is a good description of the thinking process required for innovation.

Consider this example:

Imagine your company has a policy which states that the target net benefit from development project investment is $10 million. Money has been allocated to undertake a project and you must decide which of two projects will receive the investment. An experienced team has studied the project proposals and provided the following analysis:

A) If the investment is placed in Project A the company will gain $3million.

B) If the investment is placed in project B there is a 30% probability that the company will gain $10million and a 70% probability that there will be no benefit

Now, which of the two projects will you choose?

Suppose, however, the analysis was ‘framed’ as:

C) If the investment is placed in Project C the company will lose $7million.

D) If the investment is placed in Project D there is a 30% probability that there will be no loss and a 70% probability of losing $10million.

Try this with your colleagues. Ask them to choose between either; A or B, or, C or D. (Try not to let on that you are providing different sets of choices!)

Purely rational analysis shows that there is no difference between the first and second decision frame. Yet when presented with these choices most people will choose A in the first set and D in the second. It’s a neat illustration of the difference between rational and intuitive choice. Our intuition guides us to avoid a loss and we may choose greater uncertainty to do so. It follows that we can influence investment decisions through careful choice of their framing for those making the decision.

Key lessons are:

• Risk aversion can be understood as avoidance of loss.

• Be aware of the intuition influencing effect of frames.

• The quality of innovation investment decisions is enhanced by ensuring important choices are framed in different ways before we choose.

About the Author

John Higgensis passionate about application of the very best thinking in innovation. His speciality is appropriate use of the toolbox for creating new value through science and technology. Tools include; selection criteria, technology forecasting, technology roadmaps, project valuation including real options analysis and application of prospect theory to investment decisions. John has 25 years experience in manufacturing industries. He has engaged in production, supervision, research, process and product development, project management, team leadership and strategy development. Services include consulting, customised executive coaching and seminars.

John can be contacted at www.virtual.co.nz/index.php/JohnHiggins/JohnHiggins.

INNOVATION AND FRAMES OF REFERENCE

As John Higgens points out in his article above, risk aversion kills off a lot of creative ideas before they can grow into innovations. However when an idea does pass risk assessment and moves onto the implementation stage, there is another threat that can derail its completion: lack of a frame of reference in the mind of the implementer. Without the right kind of support from management, this can lead to uncertainty, lack of confidence and even failure of the project.

A frame of reference in this case is a set of ideas, rules and notions that govern our thinking and actions. A baker, for instance, has substantial experience in baking bread, cakes and pies. As a result, she has a well developed frame of reference for making a cake. She knows how much of each ingredient to put into the cake, how long to stir the ingredients and how minor changes in the ingredients will affect the flavour and texture of the cake. Likewise, if something goes wrong – perhaps the flour has gone bad – she will quickly recognise the problem and know whether the cake has been ruined or whether it can be fixed.

As a result, she can readily evaluate incrementally creative ideas in her head and probably determine whether they would work or not. Her frames of reference would probably also give her a sense of the market for such ideas.

On the other hand, if she has the radical idea to turn her bakery into a combination bakery and Indian curry shop, she will have more trouble making the curries, especially if she has little experience eating or cooking such food. She lacks the appropriate frames of reference.

As a result, it is much harder to make the curries. It is difficult to evaluate the quality of the curries or know how to improve any weaknesses.

At the same time, the baker probably has a good sense of daily sales levels of her baked goods. She'll know how many of each kind of item to make for each day. She will be able to anticipate changes in sales levels on holidays and so on. That's because she has the suitable frame of reference for selling baked goods in her village.

Curry, on the other hand, is unknown to her. She lacks the frame of reference and may make too little or too much.

Of course, she can research curries by visiting Indian restaurants, taking Indian cooking lessons, buying cookbooks, talking to Indians and doing some research in her village. Nevertheless, there will be lot of trial and error (or “research and development” if you want to use corporate jargon).

If it is her bakery and her idea, she is likely to be willing to take the risk and carry her Indian curry project through.

In a larger firm, however, asking an employee to take charge of implementing a radical idea is asking her to work without the frames of reference she is used to. It is potentially putting the employee in an uncomfortable situation. (Unless, of course hers is the kind of organisation where radical ideas are being implemented all the time, thus giving employees frames of reference for radical innovation.)

The employee will find it hard to know how well she is performing, where to seek help, what milestones she should set and much more. The situation becomes even worse if company politics are a problem. Then colleagues of the employee may well try to further undermine her confidence, making the project even less likely to succeed.

The results can include...

• Demotivated Employees.
  Without frames of reference to use in implementing a project, the employee can feel uncertain and professionally vulnerable, particularly in firms which are not normally innovative. This can leave people feeling demotivated about being stuck with an uncomfortable project, rather than feel proud to be in charge of an innovative project. Management can counteract this through continuous positive reinforcement, suitable training and bringing in experts to provide support.

• Inappropriate Results
  Without frames of reference regarding how the finished project should look and feel, innovators can easily come up with less than impressive results. A good example was in the early days of the world wide web. Designers often made web sites that looked a lot like brochures. Indeed, the term “brochureware” was created to describe such work. That's because designers in the early 1990s came from a print design background and thus used the brochure as a frame of reference. That was fine, except that a brochure lacks the interactive potential of the web and brochureware web sites seemed static and dull. In order to prevent inappropriate results, managers should work with implementers and others to define aspects of how the finished project should look. In addition, regular milestones and reviews enable to the implementer to get feedback and guidance on the project.

• Poor Quality
  Just as results may sometimes not be appropriate, they may also be of inferior quality. Again, this is due to a lack of a frame of reference for quality standards for the innovation. It can also be the result of demotivated employees who want to finish the uncomfortable project as quickly as possible, irrespective of the results. Again, positive reinforcement, milestones and reviews can all help the implementer stay on track in terms of quality.

The most important point to remember here is that an implementer could feel proud to be put in charge of an innovative project that has full support of the management and might change the future of the company for the better. Or she could feel disillusioned that she has been dumped with a project that is completely outside of her usual activities and which she feels less than confident about implementing. How the implementer actually feels is largely up to top management.

PARTNER'S NEWSLETTER: YOU CAN HELP!

OI Solutions (http://www.oisolutions.co.uk), our sales and service partner in the United Kingdom is launching a new e-mail newsletter on Marketing and HR Innovation. The newsletter will come out twice a month and include three concise stories.

However, the good people at OI Solutions have not been able to come up with the perfect name for their newsletter. So, they want to tap into your creative skills! They are offering a delicious Harrods Confectionery to any subscriber who comes up with the perfect name. You can choose your prize from any of those here.

The on-line subscription mechanism is not yet operational. So, to subscribe please contact my good friend Peter Eales by e-mail: peter@oisolutions.co.uk. Also, if you have any questions about the newsletter or OI Solutions, please send Peter a message.

LATEST IN BUSINESS INNOVATION

If you want to keep up with the latest news in business innovation, I recommend Chuck Frey's INNOVATIONweek (http://www.innovationtools.com/News/subscribe.asp). It's the only e-newsletter that keeps you up-to-date on all of the latest innovation news, research, trends, case histories of leading companies and more. And it's the perfect complement to Report 103!

Happy thinking!

Jeffrey Baumgartner

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Report 103 is edited by Jeffrey Baumgartner and is published on the first and third Tuesday of every month.

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