Originally posted on on the e-Sourcing Forum [WayBackMachine] on Sunday, 17 September 2006

This is the last full weekend of the summer, and, thus, the last summer weekend series on e-Sourcing Forum. This summer we discussed, in detail, 12 topics in process and technology, supply management, and innovation that we hope you can use to help you design better sourcing methodologies. Today we are going to review the innovation topics.

Our ongoing purchasing innovation series talked about generic methodologies that you could use to foster and manage your innovation process, what tomorrow’s organization is likely to look like, and transforming new product development into an innovation-based process.

• I: An introduction
• II: TRIZ
• III: The Verifier Approach
• IV: Innovation Continued
• V: Sourcing the New Organization
• VI: CrowdSourcing
• VII: The Road Ahead
• VIII: Transforming New Product Development
• IX: The Purchasing Evolution!

In addition, I managed to organize a complementary cross-blog forum on The Future of Sourcing, that nicely complements the purchasing innovation series, which I summarized in my Sourcing Innovation Series:

• Part I
• Part II
• Part III
• Part IV
• Part V
• Part VI
• Part VII
• Part VIII
• Part IX
• Part X
• Part XI
• Part XII

The series was an embodiment of the cross-blog interaction I wanted to see even before I started my own blog, and the primary goal of my blog, which started with the entry “Strategic Sourcing Innovation Defined”.

In the first part of our Purchasing Innovation Series we talked about some generic methodologies that you could use to foster and manage your innovation process. In addition to basic techniques for continuous and discontinuous innovation (such as six sigma and “thinking outside the box”), we introduced you to TRIZ and the verifier approach.

TRIZ, Teoriya Resheniya Izobretatelskikh Zadatch, or 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. The basic methodology has four 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

Of course, the real power of TRIZ in a CPO’s eyes is the advanced implementation approach better known as “invention on demand” which can be used 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 verifier approach, which may be best known for its role in cracking the 400-year-old mystery of the Voynich Manuscript, is a seven-step methodology designed to solve problems that remain unsolved after the application of more traditional approaches. In its simplest form, the verifier approach may be applied to a problem using the follow methodology:

1. amass a knowledge of the discipline through interviews and reading,
2. determine whether critical expertise has yet to be applied in the field,
3. look for bias and mistakenly held assumptions in the research,
4. analyze jargon to uncover differing definitions of key terms,
5. check for classic mistakes using human-error tools,
6. follow the errors and gaps as they ripple through underlying assumptions, and
7. suggest avenues for research that emerge from steps one through six.

The power of the approach is that it can be used to zero in on the analyses most likely to lead to success by taking advantage of the “expertise gaps” that exist in most areas of specialization.

In the second part of our purchasing innovation series, we talked about what tomorrow’s organization, and thus tomorrow’s procurement organization, is likely to look like and the techniques it is likely to employ in its innovation initiatives. We talked about how networked person is replacing organization man and that a world class procurement organization is going to drive corporate transformation into the new millennia and how it will have a dotted line to every area of the business.

We also talked about crowdsourcing which takes advantage of the “new pool of cheap labor: everyday people using their spare cycles to create content, solve problems, [and] even do corporate R & D” to perform tasks, once exclusively the domain of professionals, that are suitable to crowdsourcing. Although it may have started with stock photography, content packaging, challenge driven R&D, and technical repair flows, companies like Eli Lilly, Colgate-Palmolive, Boeing, DuPont, and P&G are now using it to reduce R&D costs while propelling innovation forward. For example, back in 2001, pharmaceutical Eli-Lilly funded a new endeavor by the name of InnoCentive as a way to connect with brainpower outside the company – specifically, people who could develop drugs and speed them to market – and threw open the doors to other firms eager to access the network of ad-hoc experts. These companies post their most ornery (scientific) problems on InnoCentive’s Web site and anyone interested on the network can take a shot at cracking them, for a prize that ranges from $10,000 to $100,000 per solution. To date, more then 30% of the problems on the site have been cracked, which is 30% more problems than would have been solved using a traditional in-house approach (since these companies typically post the problems only after their internal R&D team has taken a shot and failed). And it’s extremely cost-effective – take the quoted Colgate-Palmolive example where they paid an InnoCentive member who found a solution to a fluoride powder injection problem a mere $25,000, a fraction of what it could have cost Colgate-Palmolive to dedicate their R&D team to the problem until it was solved internally.

In the third part of our purchasing innovation series, we talked about design for sourcing and transforming new product development into an innovation-based process where procurement is involved from day 1 since this typically reduces product development cost by 16% to 18% and overall product cost by 15% while increasing revenue by 19%, according to recent Aberdeen studies.

We also pointed out a little software company by the name of BrightIdea.com that provides an innovation management on demand software tool for only $49/month per user to demonstrate that tools exist to help you with your innovation efforts. Other software products include Jenni’s Idea Management Software, Centric Software’s Product Intelligence software, or Imaginatik’s Idea Central Software.

In other words, the future is innovation – through and through. Product innovation. Process Innovation. Technology Innovation. Organization Innovation. Regardless of what it is – it will be innovated.

After all, Innovation Matters.