 Commentary by Jack Hipple Subscribe via Email or RSS |  Biography |
July 8, 2008
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What Business Are You In? |
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With my activities in TRIZ, I am constantly thinking about function rather than jargon or business description. What function does my product allow someone to do? Not what do I sell them or what do they need. The function of the automobile is to move someone from place A to place B---or is it to allow someone to meet with someone? The function of a letter is to write to someone---or is it to request something, communicate something? The function of an insurance policy is to pay bills—or is it to provide piece of mind and security? The function of a web site is to share information—or is it a vehicle to sell advertising? It’s important that as we consider innovation in the context of our businesses that we think hard about what business we are truly in. In a Fortune article last year (July 9, 2007, p69), a senior executive at Xerox was interviewed about the company’s future with the backdrop of its stock price being virtually unchanged if you go back 15 years and only doubling in 20 years when the S&P 500 increased by a factor of 8. The interview focused quite a bit on the “vision” for the company. A quote from this interview, in response to the question, “What is your vision?” was this: “It’s helping our customers deal with their document-intensive processes. That means making sure they have the INFORMATION (my emphasis) they need where they need it, with the history and the context of the information they need…I want the document to be smart enough so that I don’t need to worry about it”. Wow, are we making progress from a copier company! Information, smart (not copied) documents. The interview went on to describe a smart document in the legal profession as one that would be able to searched in a legal discovery process via a tool they call Intelligent redaction. Those of you with TRIZ in your DNA will recognize this as a complicated way of saying that the “document identifies itself, using the resources already present”. In the legal area, where we still have a propensity for paper documentation, this is a big step forward, but what if Xerox’s business is totally “information” and not paper or copies in any way? What should they do? How about mass customization of information? They are making a move in this direction by working with magazines to customize subscriptions, but why not mass customize (I only get the type of articles I want on line, NO paper, my price is proportional to number of articles I actually read or download and print, the advertising and coupons are specific to me or my geographic area) INFORMATION, not documents. Has Xerox purchased an on line information storage company? It’s hard for a company like Xerox to walk away from paper, isn’t it? What business are you in which hasn’t been thought of in terms of its functionality, rather than what it sells? What could replace the function you are performing? Who could you acquire that would improve the functionality of what you provide? (That’s what Xerox did when purchasing Amici, which had the e-discovery technology for lawyers—notice that they still bought someone associated with paper). Think real hard about this. What is the functionality (not stuff) that you provide? How else could it be done? Could you do it? Should you buy someone who can? How could someone achieve the function of what you supply without your “stuff”? Figure it out before it’s too late. |
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Comments [10] | Permalink |
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| Categories: Management, Methodology, Strategy | |
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| posted by Jack Hipple [ http://www.innovation-triz.com ] | July 11, 2008 at 10:56 am |
Exactly!! What is the FUNCTION that the customer needs performed, not how it is currently done. Suppliers too often get so entranced by their way of providing the function that they do not think one or two levels above. When the customer figures out how to accomplish the "function" without your product or service, you're out of business. TRIZ teaches us that systems, over time, get integrated into their super-systems. Think about functions built into fax machines that eliminate the need for copiers-- about toothbrushes where the toothpaste is contained in the handle--about CD players integrated into cars--about non-prescription "medicines" (like cinnamon, fiber) into cereals and other foods. Have you seen a tugboat around a cruise ship lately? No, because steering hydraulics are now built into the ship. You don't want to be the supplier of any of these individual components long term. In my experience with groups, it is incredibly difficult to get business leaders to think "up" one or two levels, because it asks them to think about getting into a business they are not familiar with (ingredients vs. packaged foods, car assembly vs. stereo assembly, oral care vs. toothpaste tubes, complicated electronic assembly and software vs. one component assembly). They'd rather hunker down in the trench of the business they are in and wait it out. That's not strategy. So its not just differing views of producers vs. suppliers, it's thinking long term about upward system integration |
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| posted by paulette [ http://lovermus.com ] | July 12, 2008 at 9:50 pm |
Innovation has played an important role in our society nowadays. If there's no innovation, there's no progress. |
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| posted by Jack Hipple [ http://www.innovation-triz.com ] | July 13, 2008 at 9:51 am |
Added functionality IS independent of level of a system. Didn't mean to confuse you. System integration and added functionality (or its reverse, trimming) are really separate concepts, which we sometimes see combined. Parallel or lateral universes are thought about in TRIZ by using a cube instead of the traditional 9-box thinking/analytical tool. There is always a parallel universe of achieving a function, which the current providers don't consider. The alternative to today's airline travel is remote meetings via the Webex or Live Meeting. Airlines haven't figured this out yet. Within the travel business itself, the study of the history of Southwest airlines provides another. When they first started, their fares were not just a little under everyone else's--they were dramatically lower. The Harvard MBAs said, why are you leaving all that money on the table? And the reply from Southwest was that you don't understand, we are going to get people out of their CARS. That's the lateral or parallel universe. We know how much it costs to drive a car from point A to point B and that's how we determined the fare. TRIZ provides a structured, disciplined way of doing this kind of thinking instead of "brainstorming" around it. |
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| posted by Prakash [ http://trizit.blogspot.com ] | July 14, 2008 at 8:33 am |
Jack, another wonderful article. I think very few organizations are actually considering about the function than the "stuff" they sell. I think there is an amount of psychological inertia for organizations to get there, and at times, this inertia is more than just a mindset, but rather policies, systems, processes etc. The opportunity behind the function thinking is enormous, and yet very few actually makes this paradigm shift. One example I use frequently is from India is United Breweries, a big conglomerate in the liquor business launched Kingfisher airlines, and recently getting in the space of tourism by acquiring exotic locations around the world, and also foraying in to the space of digital entertainment. I see an element of function thinking here, something like "Living in style". When I said the opportunities behind the function thinking is, how companies manufacturing car washing products can actually cater to the market of manufacturing car paints, and how education institution can consider their vision as "Creating next generation" etc. |
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| posted by Jack Hipple [ http://www.innovation-triz.com ] | July 15, 2008 at 4:36 pm |
The function that a product or business does for a customer is the point--maybe not clear from the beginning. We need to look at the function we are providing for the customer, not what we are supplying to the customer. Confusion comes when we don't look at the "customer" a level or two up. |
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| posted by Jack Hipple [ http://www.innovation-triz.com ] | July 15, 2008 at 4:40 pm |
Shyam, your listing of the 4 options is accurate. There is no "right" answer. Depends upon a lot of things. The point here is that using TRIZ to think methodically about this provides the information to make better business decisions. The lines of evolution, in my opinion, will be the overriding driver to consider. |
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| posted by Prakash [ http://trizit.blogspot.com ] | July 16, 2008 at 2:12 am |
Shyam, thanks for writing, and making this thread informative. Good question " How does one make this call?" - I think no one make this call, except few companies. For many this transition is forced by their super-system (industry, competition, changing social scenario etc) elements, and there are enough examples that many became extinct because they are stuck with what they currently do. Mapping to Jack's view about lines of evolution: I believe the functionality thinking is the driver for new technology developments. A car washing product Mfrng Company can think about the Ideality trend and change them to achieve the ideal function (that's where companies will invest their money for R&D etc) through new technology, or maturing the existing technology, or at times through acquisition etc. This is where lot of TRIZ tools will help them solving contradictions, using existing resources etc. Using their existing technology to cater a different market (like toilet cleaning products) is nothing more than diversifying the product portfolio, and it isn’t bad for an organization from the business point of view. Perhaps they will do good in this new area of products compared to the car washing, and may evolve themselves as a company catering the ideal function in that space. Your conclusion is excellent and I second Jack, there is no right answer to this question. I have tried to use TRIZ for some of my work to do an assessment for situations like this. Using S-curve, IFR, 9 Windo |
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