Applying xTRIZ to eliminate contradictions of a system ...

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Applying xTRIZ to eliminate contradictions of a system dynamics (SD) business model

Nader Mahmoudi*a, Vahid Saeed Nahaeia , Ali Fahmia, Amin Faridyahyaiea aDepartment

of Industrial Engineering, University of Tabriz, Tabriz, Iran P.O. Box: 51666-14766 Cell Phone: +98-935-5138025

Email Addresses: [email protected], [email protected], [email protected], [email protected]

Abstract System Dynamics (SD) is a computer-based methodology to simulate complex problems in various areas such as management, health-care, and environment and so on. It provides decision makers and problem solvers to survey long-term issues. System dynamics models present feasible and optimal solutions for complicated problems. On the other hand, these models may confront side-effects which affect the general solution and may emerge the contradiction. Theory of Inventive Problem Solving (TRIZ) is a useful method for eliminating these contradictions. TRIZ enables decision-makers to select appropriate solutions from the existing 40 principles embedded within this method. These innovative principles provide actual procedures for removing conflicts by utilizing contradiction matrices. Since system dynamics is a management tool, extended TRIZ (xTRIZ) has been utilized to cross out the contradictions in a dynamic model. In a business model, increasing of income is an important issue. Yet it may have unexpected effects on other variables such as market proportion of the model. This paper presents a new method to omit the conflicts of a system dynamics model.

Keywords: System dynamics, TRIZ, Extended TRIZ (xTRIZ), Contradictions, Income, Market Proportion, Business contradiction matrix, 40 principles of TRIZ

1. Introduction TRIZ is an abbreviation for 'Teoria Resheneiya Isobretatelskikh Zadatch' in Russian, its acronym in english is (TIPS) translated as the 'Theory of Inventive Problem Solving'. This method is developed in Russia over the last 50 years. TRIZ provides an objective framework for accessing solutions from other technologies and sciences (Altshuller 1999; Salamatov 1999). TRIZ is an innovative method that seeks to eliminate conflicts (Yuan L., 2008). In addition, S. D. Savransky (2000) defined TRIZ as a human-oriented knowledgebased systematic methodology of inventive problem solving. TRIZ identifies solutions with the same contradiction and, using the `contradiction matrix’ (a two-dimensional matrix which lists all currently recognized pairs of contradictions), identifies the relevant two or three of the 40 `inventive principles’ on which TRIZ is based (Altshuller & Shulyak 1998). In recent years, more researches are applied TRIZ especially in non-technical areas such as business (Mann and Domb, 1999), finances (Dourson, 2004), marketing and advertising (Retseptor, 2005), quality control (Retseptor, 2003), food science (Mann and Winkless, 2001), sociology (Terninko, 2001), microelectronics (Retseptor, 2002), chemistry (Grierson et al, 2003), chemicals (Hipple, 2005), reverse operation management (Filkovsky, 2003), service operation management (Zhang et al, 2003), and so on. Especially, business and management innovation has always been among the most crucial drivers of success, but today it becomes clear that innovation is not luxury but necessity (Souchkov, 2007). In 1998, a TRIZ researcher applied TRIZ methodology for solving business and management problems and acquired extensive experience using TRIZ to help resolve business and management conflicts (Souchkov, 1999). During the last six years, a number of successful projects helped develop a process-based method titled “xTRIZ” (where x stands for eXtended TRIZ) which helps to analyze business and management problems, to identify root conflicts and causes, to select the problems to solve, to generate new ideas and solution strategies, and evaluate the final results. The approach organizes the use of both basic and advanced TRIZ tools and can be applied to both technological and business systems (souchkov et al, 2007). Business and management systems are dynamic and fast, due to this epithet it is necessary to study these systems by system dynamic approach. The modeling method system dynamics (SD) was developed by Jay Forrester to tackle socio-economic and/or socio-technical problems (Forrester, 1961). The initial focus was on the application of SD to management issues, but was soon extended to the analysis of environmental, social and macro-economic problems (Forrester, 1961, 1968, 1971).

System dynamics is a method of solving problems by computer simulation (Harris, 2000). Most descriptions of the SD method emphasize the iterative process required to build confidence in these models, and there is extensive literature on the kinds of tests that a model needs to pass (Barlas, 1989; Barlas and Carpenter, 1990; Barlas, 1994; Forrester and Senge, 1980; Sterman, 2000). The structure of a system in SD methodology is described by causal-loop or influence diagrams. A causal-loop diagram represents the major feedback mechanisms. These mechanisms are either negative feedback (balancing) or positive feedback (reinforcing) loops (P. Georgiadis and D. Vlachos, 2004). Even so this paper studies a business and management problem by system dynamics approach, finds contradictions by xTRIZ, and presents a solution for problem. 2. Literature Review TRIZ (pronounced "TREEZ", the Russian acronym for the Theory of Inventive Problem Solving) is an established science, methodology, tools and knowledge- and model-based technology for stimulating and generating innovative ideas and solutions (Altshuller, 1984). Modern TRIZ is a large body of knowledge which is a combination of a theory of solving inventive problems and systems evolution, analytical tools and methods for problem solving and analysis, collections of patterns of strong solutions, databases of specific effects and technologies, and techniques for creative imagination development (Souchkov, 2006). It was found further that 40 Principles are applicable not only for every technical field(s)??, including architecture, computer software, microelectronics, food production, but also for non-technical spheres - biology, agriculture, business, management, marketing, social relations, pedagogy, etc. (Mann and Tate, 1997; Mann and Domb, 1999; Vincent et al, 2000; Zoltin et al, 2001; Domb and Winkless, 2001; Terinko, 2001; Mann, 2001; Rea, 2001; Retseptor, 2002; Mann, 2002). All referenced examples demonstrate that 40 Principles are fundamental, universal and powerful instruments of human creativity. Today TRIZ is really taking off; more and more companies and organizations worldwide start recognizing TRIZ as the best practice of innovation. For instance, Samsung in Korea employs over 100 full-time TRIZ specialists, and each innovative project goes through TRIZ expertise (Kim and Lee, 2005). If TRIZ is rather well known and used in technology and engineering, applications of TRIZ in business and management areas have been practically unknown. This should not be surprising: TRIZ was created by engineers for engineers (Souchkov, 2007). But recently, within last 5-7 years, several TRIZ experts started to extend application of TRIZ techniques to business and management problems and tasks (Averboukh, 2003; Ruchti and Livotov, 1999; Smith, 2006; Souchkov, 1999).

A major step in further promotion of “business TRIZ” was made by Darrell Mann’s book “Hands-On Systematic Innovation for Business and Management” (Mann, 2004). The most popular technique for a majority of problems is 40 Inventive Principles and socalled “Contradiction Matrix” which provides a systematic access to the most relevant subset of Inventive Principles depending on a type of a contradiction. Although 40 Inventive Principles look similar for both Technology and Business applications, the matrices are different. While the Matrix for Technology and Engineering was originally developed by Altshuller in the 1960s, a Contradiction Matrix for TRIZ in Business and Management was developed by Darrell Mann and introduced in (Mann, 2004; Mann and Domb, 1999). Examples of using 40 Inventive Principles in various non-technological areas can be found in (Contradiction Matrix). Also, Souchkov (2007) developed a six-step process called “xTRIZ Lite” to solve business and management problems. These steps are: 1. Situation Analysis: Understanding customer needs and demands, documenting a problem, defining solution criteria, constraints, goals, and targets. 2. Problem Mapping and Decomposing: application of RCA+ to decompose a general problem and create a map of manageable contradictions. 3. Root Conflict Selection: Identifying what conflicts (contradictions) should be resolved to achieve the expected results. 4. Using TRIZ Patterns to Generate Solution Ideas: application of TRIZ techniques, such as Contradiction Matrix and Inventive Principles to eliminate selected conflicts, generation of new solution ideas. 5. Building Ideas Portfolio: composing a tree of generated ideas. 6. Scoring and Selection of best Solution Candidates: applying Multi-Criteria Decision Matrix to evaluate the Idea Portfolio and identify best solution candidates. Forrester (1961) introduced SD in the early 60s as a modeling and simulation methodology for analysis and long-term decision making in dynamic industrial management problems. Since then, SD has been applied to various business policy and strategy problems (Coyle, 1987; Sterman, 2000). System dynamics (Forrester, 1961) incorporates features that make it especially useful for certain problems:



System dynamics can model the effect of information feedback on the future direction of the model. For example, if the cycle time in a production process becomes excessive, management would typically intervene to make changes, while many process simulations would simply report that cycle time was continuing to grow. System dynamics handles this easily.



To facilitate the use of information feedback, system dynamics carefully separates information accumulated about the state of the system and information feedback from that state to control the evolution of future states. 3. Methodology Business problem’s explanation and analyze is one of the involvements of organization management in order to achieve organizational ascendancy and development. Organizational business management applies various approaches to solve problems, such as optimization, decision making and statistical analysis. Creation and innovation in organizational business is thrived thanks to appearance of new conditions to organization’s management. Especially systematic approaches in relation with organization’s innovative business management, creates better conditions to understand creative and innovative organizational management structures. Solving innovative problems in organizations using approaches such as TRIZ or innovation systems in either business or industries creates developing optimized conditions in organizations in terms of challenging them, function and skill optimization and leading them to process-based approaches. As presented in literature review, a new method similar to xTRIZ, using RCA+ is applied to solve organizational business problems, that helps to specify different factors’ positive and negative causes and effects that are related to basic business parameters such as sales volume, management concentration on technical and technological structure, market deployment, incomes, and so far. Furthermore, it is possible to resource analysis in order to business management and also offering various solutions by decision making approaches to optimize presented parameters. Considering the presented methodologies analysis and their utilization in solving and managing business problems, they have got some inefficiency. One inefficiency is their diverse and independent paradigm in analysis of effective parameters. It is evident in many cases, that optimum total of particles don’t contribute to total optimum. Coordination and unity among variables in order to attain a favorite value especially in innovation process will be problematic. Also another defect of these methods is lack of a dynamic analysis to study associated factors of these problems. Such approaches form a static structure to solve problems and lack parallel and total flexibility over time in relation to other factors and parameters. This static structures and lack of a parallel and total model for studying effective factors and vital variable in these problems, often leads to repetitive or sectional optimal point. System Dynamics (SD) approach could be considered an appropriate method for solving innovative management problems in organizational business. This method includes studying all related factors with such organizational management levels; meanwhile, it can

diagnose basic sources of probable problems and specify necessary policies and solutions over the time. In SD methodology various tools could be applied to study those problems, and different problem solving techniques can be utilized. But as an efficient technique, causal-loop diagram is mostly applied to specify outstanding characters of problems in start points of models of SD approach. A key parameter in organizational business analysis is organization’s products sales volume. Various factors affect sales volume. Apart from individual organizational factors and effective strategies, context conditions and market are also of principle effective parameters. In TRIZ approach’s point of view a successful business requires effective factors in optimal product designing in order to attain sales with help of management techniques, market conditions, technical-technological aspects and so far. Table 1 presents these factors that this approach implies.

Table 1. Effective factors in organization sales volume according to TRIZ Internal Factors

External Factors

Management concentrating on technical aspects Organizational strategy in various aspects Product attractiveness in designing aspect Designing department Complexity of produce process

Product applicability Geographical coverage Demand volume Customers satisfactory Coordination and cooperation between organization and customers Understanding customers’ value chain Market volume and its proportion Competition conditions Market prices Product prices’ feedback Brand

Packing method Technological situation Structural relationship between different parts R&D Team work

These factors interact and their consequence leads to higher sales volume and more income for organization. But the most important question is that how can this high income affect each of variables and cause organizational business methods’ productivity over the time. In other word, how and by what means probable low sales, and consequently low income could be analyzed. The first significant key aspect to consider in TRIZ problems and in organizational business is deeming Research and Development (R&D). Likewise we have considered this feature as the first point for effective parameters explanation in organizational business management. This aspect contributes to internal organization points amplification in order to enhance sales volume. Effective management of R&D within the organization leads to suitable reaction for newer products designing which are related to market. Apart from product life-cycle amplifying, it helps much to its characteristic ascendancy and also product’s attractiveness. New designing of a product requires related capacities and design process. Second development in organization

attempts model, is associated with acquiring dominant proportion of market for products. This fact is parallel with organization strategies development for diversifying its products. The other part of the model is related to organization perception situation behalf of the customer and the responsibility toward organizational conditions. In this paper, VENSIM PLE.3 is applied to simulate the SD model and represent diagrams and results. In the next step, the contradiction in the model are detected and the solutions are presented to remove this contradiction by TRIZ business contradiction matrix (Mann, 2004).

3.1.

Dynamic hypothesis

At figure 1, three growth loops for organizational business management are presented. R1 loop is named as organizational innovation management in relation to profitability. Whatever related to organizational business efforts and posed in this loop is associated with creating new capacities for production using research and expansion efforts in order to process creativity and new ideas and turning them to income for the organization. Concept of these efforts is implied in innovation. Along with technical-technological aspects of development, the organization considers designing characteristics and new conditions for its products and production process. Certainly the resulted income from this innovation process is systematically supplied in R&D activities and leads to growth. R2 loop mostly regards organization development and expansion in its boundaries. Therefore, this loop is named organizational expansion. The resulted income expands marketing activities, and apart from geographical coverage development of organization products’ market, leads to amplification of strategies regarding product diversification in order to cover these markets. Hereafter organization’s internal abilities are paid attention to. The first and second loops are interrelated in order to amplify strong points and create capacity respectively. The R3 loop manifests both R1 and R2 loops from the view point of the most beneficial element of the organization which is customer. The more organizational tradition is considered a fundamental and the organization behaves coherently, the more customers will rely on it. This loop is named business additional value. If a business is more and more profitable for customers, they won’t represent negative reactions towards product prices (neither exclusive market nor free). But important parameters are effective in this case, that we entered one of them as product quality. This means that as long as our business’s signboard is quality, customers’ reaction toward our business will be positive. If the customers tend to pay higher prices for products with better quality, the organization will also take more attempts to enhance its efficiency, products quality, and satisfaction of customers.

It is obvious that this model is represented based on interaction of power points and expansion creating contexts as well as customers’ satisfaction. Needless to say that other external but effective factors such as state rules, competitive affecting forces, and human resources are of no interest in this model.

Marketing + + Dominance in Market

R&D

+ Income

R2

+ Market Proportion

+

Sales Volume +

+ New Product Designing + Process Designing

R1

Emphasize on Technical-Technological Aspects + + Strategies of Organizational + Product Diversity Business Attempts+ + Customers Willing to Pay Much for Product -

+ Manufacturing Capacity

+ Organization Accretion R3

Customers Reaction to Price Product Quality

-

+ Customers Satisfactory

Business Valorization for Customers +

Figure 1: Causal-Loop diagram of organizational business management

3.2.

Develop a Stock-flow diagram

In the model development stage, the dynamic hypothesis is represented as a set of stocks and information flows. As shown in figure 2, there are three stocks or accumulation variables for each loop in Causal-Loop diagram, and six rate or flow variables (an inflow variable and an outflow variable for each stock) which boxes represent stocks or accumulations in the system, and double arrows represent material flow which is regulated by rate variables. Three variables of income, business valorization for customers and

market proportion are chosen because of the prominence that they might have in an organization. An increase in income is considered one of the most important success factors in an organization. But to achieve this success, market proportion is very important, also the volume of business valorization for customers is representing the amount of interaction with customers which is very important to achieve organizational goals. As shown in Figure 2 income stock variable changes through two rate variables; sale rate and operational costs. And this stock indirectly (through product show) affects the other stock variable named market proportion. Market proportion stock variable also changes through two rate variables; dominance in market rate and market proportion decrease. And market proportion stock variable indirectly (through product show) affects the other stock variable called business valorization for customers. Business valorization for customers stock variable also changes through two rate variables; customer satisfactory and customer dissatisfactory.

Figure 2: Flow diagram for problem

4. Result This designed dynamic model has three stock variables including Income, Market Proportion, and Business Valorization. An increase of 0.2 years in “Time to Mean Sale” has brought about an increase in “Income” as shown in below.

Figure 3: Comparison Diagram of Income

As the proposed model is dynamic, a variable could affect other variables. Increasing in “Time to Mean Sale” has influenced and decreased “Market Proportion.”

Figure 4: Comparison Diagram of Market Proportion

Increasing of Income stock variable and decreasing of Market Proportion stock variable is a clear contradiction in the model. To remove this contradiction between Income and Market Proportion, an extended survey about 40 key principles of TRIZ is done and a respondence of these principles with business management fundamentals has demonstrated 4 principles which are presented below:   



Principle 13; Do it in Reverse: This means that an inversion or the other way is needed to reach the goal. Principle 16; Partial or Excessive Action: This means that a partial overdone or excessive action could be done to eliminate the contradiction. Principle 17; Transition into a New Dimension: It shows a moving to or into a dimension, dimensionality change, or another dimension is the solution of the contradiction. Principle 40; Composite Material/Structure. This principle suggests using a combination of materials or structures in order to remove the contradictions.

In order to omit the mentioned contradiction in the model and considering the financial procurement assumption and also accomplishing the goal of concurrent increasment of the Income and the Market Proportion , it is obligatory to improve the quality of productions or

to design and produce a new product with new combined characteristics and applications according to customers’ psychological desires. But if financial procurement is not available, beautifying or improving the product appearance or changing the packing of product could be useful to reach the increasment of Income and psychological desires of customers and Market proportion. 5. Conclusion Existing problems in the real world are complicated and interrelated to each other so that modelling these problems in a statistic condition can not illustrate actual problem. A dynamic model is able to analyze the feedback of changes in the model, so dynamic studies can demonstrate the changes in the model in a long-term condition. The system dynamics methodology simulates the solution of problems and the way to achieve the goals. Due to the simulation in long-term conditions, it is probable to confront unexpected problems in future. So, reaching a goal causes loosing another. These contradictions can be solved by TRIZ methods that provide innovative solutions for problem solvers in order to avoid the negative impressions and achieve both positive and negative goals by TRIZ matrices.

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