Why Does the Tco Approach Allow Troon Management to Refresh Its Hardware at the Optimal Cost Level?
Reprint: R1209F The rigor with which a problem is defined is the about important cistron in finding a practiced solution. Many organizations, however, are not expert at articulating their problems and identifying which ones are crucial to their strategies. They may even be trying to solve the wrong bug—missing opportunities and wasting resources in the process. The key is to inquire the right questions. The author describes a process that his firm, InnoCentive, has used to aid clients define and articulate business, technical, social, and policy challenges and so nowadays them to an online community of more than 250,000 solvers. The four-step process consists of asking a series of questions and using the answers to create a trouble statement that will arm-twist novel ideas from an assortment of experts. EnterpriseWorks/VITA, a nonprofit organization, used this process to notice a low-cost, lightweight, and user-friendly product that expands admission to clean drinking water in the developing world.
"If I were given i hr to save the planet, I would spend 59 minutes defining the problem and one infinitesimal resolving information technology," Albert Einstein said.
Those were wise words, but from what I have observed, nearly organizations don't heed them when tackling innovation projects. Indeed, when developing new products, processes, or even businesses, most companies aren't sufficiently rigorous in defining the problems they're attempting to solve and articulating why those issues are important. Without that rigor, organizations miss opportunities, waste resources, and end up pursuing innovation initiatives that aren't aligned with their strategies. How many times accept yous seen a project go down one path only to realize in hindsight that information technology should have gone downwards another? How many times take you seen an innovation plan deliver a seemingly quantum outcome merely to find that information technology tin can't be implemented or it addresses the wrong trouble? Many organizations demand to become better at asking the right questions so that they tackle the correct problems.
I offering here a process for defining problems that whatever system can employ on its own. My firm, InnoCentive, has used it to help more than 100 corporations, government agencies, and foundations better the quality and efficiency of their innovation efforts and, equally a result, their overall functioning. Through this process, which we call challenge-driven innovation, clients ascertain and clear their business organization, technical, social, and policy issues and nowadays them as challenges to a community of more than 250,000 solvers—scientists, engineers, and other experts who hail from 200 countries—on InnoCentive.com, our innovation market place. Successful solvers have earned awards of $v,000 to $ane million.
Since our launch, more than 10 years ago, nosotros have managed more than 2,000 problems and solved more half of them—a much higher proportion than most organizations achieve on their own. Indeed, our success rates take improved dramatically over the years (34% in 2006, 39% in 2009, and 57% in 2011), which is a function of the increasing quality of the questions we pose and of our solver community. Interestingly, even unsolved problems take been tremendously valuable to many clients, assuasive them to cancel ill-blighted programs much before than they otherwise would have and then redeploy their resources.
In our early on years, we focused on highly specific technical problems, but we have since expanded, taking on everything from basic R&D and production evolution to the health and safety of astronauts to cyberbanking services in developing countries. Nosotros now know that the rigor with which a problem is defined is the most important factor in finding a suitable solution. But we've seen that nearly organizations are non proficient at articulating their problems conspicuously and concisely. Many take considerable difficulty even identifying which problems are crucial to their missions and strategies.
In fact, many clients accept realized while working with u.s.a. that they may not exist tackling the correct issues. Consider a visitor that engages InnoCentive to find a lubricant for its manufacturing machinery. This substitution ensues:
InnoCentive staffer: "Why do you need the lubricant?"
Client'south engineer: "Because nosotros're now expecting our machinery to do things it was non designed to do, and information technology needs a detail lubricant to operate."
InnoCentive staffer: "Why don't you supersede the machinery?"
Client's engineer: "Because no one makes equipment that exactly fits our needs."
This raises a deeper question: Does the company need the lubricant, or does it need a new way to brand its product? It could be that rethinking the manufacturing process would give the firm a new basis for competitive advantage. (Asking questions until y'all become to the root cause of a problem draws from the famous Five Whys problem-solving technique adult at Toyota and employed in Six Sigma.)
The example is like many we've seen: Someone in the bowels of the organization is assigned to fix a very specific, near-term problem. Simply because the firm doesn't employ a rigorous process for understanding the dimensions of the problem, leaders miss an opportunity to address underlying strategic issues. The situation is exacerbated by what Stefan Thomke and Donald Reinertsen have identified every bit the fallacy of "The sooner the project is started, the sooner it volition exist finished." (See "Six Myths of Production Development," HBR May 2012.) Organizational teams speed toward a solution, fearing that if they spend too much time defining the trouble, their superiors will punish them for taking so long to get to the starting line.
Ironically, that approach is more than probable to waste fourth dimension and money and reduce the odds of success than one that strives at the outset to reach an in-depth agreement of the trouble and its importance to the firm. With this in heed, nosotros developed a four-footstep process for defining and articulating issues, which nosotros accept honed with our clients. It consists of asking a serial of questions and using the answers to create a thorough problem statement. This procedure is important for 2 reasons. Kickoff, it rallies the system around a shared agreement of the problem, why the firm should tackle it, and the level of resources it should receive. Firms that don't appoint in this procedure often allocate likewise few resource to solving major problems or as well many to solving low-priority or wrongly defined ones. It's useful to assign a value to the solution: An organization will be more willing to devote considerable time and resource to an effort that is shown to represent a $100 meg market opportunity than to an initiative whose value is much less or is unclear. 2nd, the process helps an organisation cast the widest possible cyberspace for potential solutions, giving internal and external experts in disparate fields the information they need to crack the problem.
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To illustrate how the process works, we'll describe an initiative to expand access to make clean drinking h2o undertaken by the nonprofit EnterpriseWorks/VITA, a sectionalization of Relief International. EWV'south mission is to foster economic growth and raise the standard of living in developing countries by expanding access to technologies and helping entrepreneurs build sustainable businesses.
The arrangement chose Jon Naugle, its technical director, as the initiative's "problem champion." Individuals in this role should have a deep understanding of the field or domain and be capable program administrators. Because problem champions may also be charged with implementing solutions, a proven leader with the authorization, responsibility, and resources to see the project through can be invaluable in this office, particularly for a larger and more strategic undertaking. Naugle, an engineer with more than 25 years of agronomical and rural-development experience in E and West Africa and the Caribbean, fit the bill. He was supported past specialists who understood local marketplace conditions, available materials, and other critical issues related to the delivery of drinking h2o.
Step 1: Establish the Need for a Solution
The purpose of this stride is to articulate the problem in the simplest terms possible: "We are looking for 10 in order to accomplish Z as measured past W." Such a statement, akin to an elevator pitch, is a telephone call to arms that clarifies the importance of the upshot and helps secure resources to address it. This initial framing answers three questions:
What is the basic demand?
This is the essential problem, stated clearly and concisely. It is important at this stage to focus on the demand that's at the heart of the trouble instead of jumping to a solution. Defining the scope is also important. Conspicuously, looking for lubricant for a piece of mechanism is different from seeking a radically new manufacturing process.
The basic need EWV identified was access to make clean drinking h2o for the estimated 1.1 billion people in the world who lack it. This is a pressing issue even in areas that have plenty of rainfall, because the h2o is non finer captured, stored, and distributed.
What is the desired consequence?
Answering this question requires understanding the perspectives of customers and other beneficiaries. (The Five Whys approach tin can be very helpful.) Again, avert the temptation to favor a detail solution or approach. This question should exist addressed qualitatively and quantitatively whenever possible. A high-level but specific goal, such as "improving fuel efficiency to 100 mpg past 2020," can exist helpful at this stage.
In answering this question, Naugle and his team realized that the outcome had to be more than access to water; the access had to be convenient. Women and children in countries such every bit Uganda oftentimes must walk long distances to fetch h2o from valleys and so carry it uphill to their villages. The desired issue EWV defined was to provide water for daily family needs without requiring enormous expenditures of fourth dimension and energy.
Who stands to do good and why?
Answering this question compels an organization to identify all potential customers and beneficiaries. It is at this stage that y'all understand whether, say, you lot are solving a lubricant trouble for the engineer or for the caput of manufacturing—whose definitions of success may vary considerably.
If the problem you want to solve is industrywide, it'south crucial to understand why the market place has failed to address it.
By pondering this question, EWV came to see that the benefits would accrue to individuals and families also as to regions and countries. Women would spend less time walking to recollect water, giving them more time for working in the field or in outside employment that would bring their families needed income. Children would be able to nourish school. And over the longer term, regions and countries would benefit from the improved education and productivity of the population.
Step 2: Justify the Demand
The purpose of answering the questions in this pace is to explicate why your organization should attempt to solve the problem.
Is the effort aligned with our strategy?
In other words, will satisfying the need serve the organization's strategic goals? It is not unusual for an organization to be working on issues that are no longer in sync with its strategy or mission. In that case, the effort (and perhaps the whole initiative) should be reconsidered.
In the case of EWV, simply improving access to clean drinking water wouldn't be enough; to fit the organization'south mission, the solution should generate economic development and opportunities for local businesses. Information technology needed to involve something that people would buy.
In add-on, you should consider whether the problem fits with your business firm's priorities. Since EWV'southward other projects included providing access to affordable products such as cookstoves and treadle pumps, the drinking water project was appropriate.
What are the desired benefits for the company, and how will we measure them?
In for-turn a profit companies, the desired benefit could be to reach a revenue target, attain a sure marketplace share, or achieve specific cycle-fourth dimension improvements. EWV hoped to further its goal of being a recognized leader in helping the world'southward poor by transferring technology through the individual sector. That benefit would exist measured by marketplace impact: How many families are paying for the solution? How is it affecting their lives? Are sales and installation creating jobs? Given the potential benefits, EWV deemed the priority to be high.
How will nosotros ensure that a solution is implemented?
Assume that a solution is found. Someone in the organization must be responsible for conveying it out—whether that means installing a new manufacturing engineering science, launching a new business, or commercializing a product innovation. That person could exist the trouble champion, but he or she could also be the manager of an existing sectionalization, a cantankerous-functional team, or a new department.
At EWV, Jon Naugle was also put in charge of carrying out the solution. In addition to his technical background, Naugle had a track record of successfully implementing similar projects. For instance, he had served as EWV'due south state director in Niger, where he oversaw a component of a Earth Banking company airplane pilot project to promote small-scale individual irrigation. His function of the project involved getting the private sector to industry treadle pumps and manually drill wells.
Information technology is important at this stage to initiate a high-level conversation in the organization about the resources a solution might require. This can seem premature—after all, you lot're still defining the problem, and the field of possible solutions could be very large—but information technology's actually not likewise early to begin exploring what resources your organization is willing and able to devote to evaluating solutions and so implementing the best one. Even at the outset, you may have an inkling that implementing a solution will be much more expensive than others in the arrangement realize. In that case, it'south important to communicate a rough estimate of the money and people that will be required and to make sure that the system is willing to continue down this path. The result of such a give-and-take might exist that some constraints on resourcing must be built into the problem statement. Early in its drinking water project, EWV set a cap on how much information technology would devote to initial enquiry and the testing of possible solutions.
Now that yous have laid out the need for a solution and its importance to the organization, yous must define the problem in detail. This involves applying a rigorous method to ensure that you have captured all the information that someone—including people in fields far removed from your manufacture—might need to solve the problem.
Step 3: Contextualize the Problem
Examining past efforts to find a solution can save time and resources and generate highly innovative thinking. If the problem is industrywide, it'south crucial to understand why the market has failed to address it.
What approaches have we tried?
The aim here is to observe solutions that might already exist in your organization and identify those that it has disproved. By answering this question, you can avert reinventing the wheel or going down a dead end.
In previous efforts to expand access to clean water, EWV had offered products and services ranging from manually drilled wells for irrigation to filters for household water treatment. As with all its projects, EWV identified products that low-income consumers could afford and, if possible, that local entrepreneurs could manufacture or service. As Naugle and his team revisited those efforts, they realized that both solutions worked only if a water source, such as surface h2o or a shallow aquifer, was close to the household. As a result, they decided to focus on rainwater—which falls everywhere in the world to a greater or lesser extent—as a source that could accomplish many more people. More specifically, the team turned its attending to the concept of rainwater harvesting. "Rainwater is delivered directly to the stop user," Naugle says. "It'south every bit close as you tin get to a piped water system without having a piped water supply."
What have others tried?
EWV'due south investigation of previous attempts at rainwater harvesting involved reviewing enquiry on the topic, conducting five field studies, and surveying 20 countries to ask what technology was existence used, what was and was non working, what prevented or encouraged the use of various solutions, how much the solutions cost, and what part government played.
"I of the primal things nosotros learned from the surveys," Naugle says, "was that once you have a hard roof—which many people do—to use every bit a collection surface, the most expensive thing is storage."
Here was the trouble that needed to exist solved. EWV found that existing solutions for storing rainwater, such every bit concrete tanks, were as well expensive for low-income families in developing countries, so households were sharing storage tanks. But because no one took ownership of the communal facilities, they often fell into disrepair. Consequently, Naugle and his squad homed in on the concept of a low-cost household rainwater-storage device.
Their research into prior solutions surfaced what seemed initially like a promising approach: storing rainwater in a 525-gallon jar that was most as tall every bit an adult and three times as wide. In Thailand, they learned, 5 million of those jars had been deployed over five years. After further investigation, all the same, they found that the jars were made of cement, which was bachelor in Thailand at a low cost. More of import, the country's good roads made information technology possible to manufacture the jars in i location and transport them in trucks around the state. That solution wouldn't work in areas that had neither cement nor loftier-quality roads. Indeed, through interviews with villagers in Uganda, EWV found that even empty polyethylene barrels large enough to concur just 50 gallons of water were difficult to acquit along a path. It became clear that a viable storage solution had to be light enough to be carried some distance in areas without roads.
What are the internal and external constraints on implementing a solution?
Now that you take a better idea of what you want to accomplish, it'southward fourth dimension to revisit the issue of resources and organizational commitment: Practice you have the necessary support for soliciting then evaluating possible solutions? Are y'all sure that you tin can obtain the money and the people to implement the most promising one?
External constraints are just equally important to evaluate: Are there issues apropos patents or intellectual-property rights? Are there laws and regulations to be considered? Answering these questions may require consultation with various stakeholders and experts.
Do you have the necessary support for soliciting and evaluating possible solutions? Do yous take the money and the people to implement the most promising ane?
EWV's exploration of possible external constraints included examining government policies regarding rainwater storage. Naugle and his team plant that the governments of Kenya, Tanzania, Republic of uganda, and Vietnam supported the idea, just the strongest proponent was Uganda's government minister of water and the environment, Maria Mutagamba. Consequently, EWV decided to examination the storage solution in Uganda.
Step 4: Write the Problem Argument
Now it's time to write a total description of the problem you're seeking to solve and the requirements the solution must meet. The problem statement, which captures all that the organization has learned through answering the questions in the previous steps, helps establish a consensus on what a feasible solution would exist and what resources would be required to achieve it.
A total, clear description also helps people both inside and outside the organization chop-chop grasp the issue. This is especially important because solutions to circuitous issues in an industry or discipline often come up from experts in other fields (see "Getting Unusual Suspects to Solve R&D Puzzles," HBR May 2007). For example, the method for moving viscous oil from spills in Chill and subarctic waters from drove barges to disposal tanks came from a chemist in the cement industry, who responded to the Oil Spill Recovery Found's description of the problem in terms that were precise just non specific to the petroleum manufacture. Thus the establish was able to solve in a matter of months a challenge that had stumped petroleum engineers for years. (To read the institute's full trouble argument, visit hbr.org/problem-statement1.)
Here are some questions that tin assist yous develop a thorough problem statement:
Is the problem actually many problems?
The aim here is to drill down to root causes. Complex, seemingly insoluble problems are much more than outgoing when broken into detached elements.
For EWV, this meant making information technology clear that the solution needed to be a storage product that individual households could afford, that was calorie-free enough to be easily transported on poor-quality roads or paths, and that could exist easily maintained.
What requirements must a solution meet?
EWV conducted all-encompassing on-the-ground surveys with potential customers in Uganda to identify the must-take versus the nice-to-have elements of a solution. (See the sidebar "Elements of a Successful Solution.") Information technology didn't matter to EWV whether the solution was a new device or an adaptation of an existing 1. Likewise, the solution didn't need to be 1 that could be mass-produced. That is, it could exist something that local modest entrepreneurs could manufacture.
Experts in rainwater harvesting told Naugle and his team that their target price of $xx was unachievable, which meant that subsidies would exist required. But a subsidized product was against EWV'south strategy and philosophy.
Which trouble solvers should we engage?
The expressionless finish EWV hit in seeking a $20 solution from those experts led the organisation to conclude that it needed to enlist as many experts outside the field as possible. That is when EWV decided to engage InnoCentive and its network of 250,000 solvers.
What information and language should the trouble argument include?
To engage the largest number of solvers from the widest diversity of fields, a trouble statement must meet the twin goals of being extremely specific but not unnecessarily technical. It shouldn't contain industry or discipline jargon or presuppose knowledge of a item field. Information technology may (and probably should) include a summary of previous solution attempts and detailed requirements.
With those criteria in mind, Naugle and his team crafted a problem statement. (The following is the abstract; for the total trouble statement, visit hbr.org/problem-statement2.) "EnterpriseWorks is seeking pattern ideas for a low-cost rainwater storage system that tin can be installed in households in developing countries. The solution is expected to facilitate access to clean water at a household level, addressing a problem that affects millions of people worldwide who are living in impoverished communities or rural areas where access to clean water is limited. Domestic rainwater harvesting is a proven engineering science that tin can be a valuable option for accessing and storing water year circular. Nevertheless, the high cost of bachelor rainwater storage systems makes them well beyond the reach of depression-income families to install in their homes. A solution to this problem would not just provide convenient and affordable access to scarce water resource merely would also allow families, specially the women and children who are usually tasked with h2o collection, to spend less time walking distances to collect water and more than time on activities that tin bring in income and improve the quality of life."
To engage the largest number of solvers from the widest variety of fields, a problem statement must encounter the twin goals of being extremely specific just non unnecessarily technical.
What do solvers demand to submit?
What information about the proposed solution does your organization need in social club to invest in information technology? For instance, would a well-founded hypothetical approach be sufficient, or is a total-blown prototype needed? EWV decided that a solver had to submit a written caption of the solution and detailed drawings.
What incentives exercise solvers demand?
The point of asking this question is to ensure that the correct people are motivated to address the trouble. For internal solvers, incentives can be written into job descriptions or offered equally promotions and bonuses. For external solvers, the incentive might be a cash accolade. EWV offered to pay $15,000 to the solver who provided the all-time solution through the InnoCentive network.
How will solutions be evaluated and success measured?
Addressing this question forces a visitor to be explicit about how it will evaluate the solutions it receives. Clarity and transparency are crucial to arriving at feasible solutions and to ensuring that the evaluation process is fair and rigorous. In some cases a "we'll know information technology when we see it" arroyo is reasonable—for instance, when a company is looking for a new branding strategy. Almost of the time, however, it is a sign that earlier steps in the process take not been approached with sufficient rigor.
EWV stipulated that information technology would evaluate solutions on their ability to meet the criteria of low cost, loftier storage chapters, low weight, and easy maintenance. It added that it would prefer designs that were modular (and so that the unit would be easier to transport) and adaptable or salvageable or had multiple functions (so that owners could reuse the materials after the production's lifetime or sell them to others for various applications). The overarching goal was to keep costs low and to help poor families justify the buy.
The Winner
Ultimately, the solution to EWV'southward rainwater-storage problem came from someone outside the field: a German inventor whose company specialized in the design of tourist submarines. The solution he proposed required no elaborate machinery; in fact, it had no pumps or moving parts. It was an established industrial technology that had non been practical to water storage: a plastic pocketbook within a plastic bag with a tube at the top. The outer purse (made of less-expensive, woven polypropylene) provided the construction's forcefulness, while the inner bag (made of more-expensive, linear low-density polyethylene) was impermeable and could agree 125 gallons of water. The two-purse approach allowed the inner purse to be thinner, reducing the cost of the product, while the outer bag was strong enough to contain a ton and a half of h2o.
The structure folded into a packet the size of a briefcase and weighed about viii pounds. In brusque, the solution was affordable, commercially viable, could be easily transported to remote areas, and could exist sold and installed past local entrepreneurs. (Retailers make from $four to $8 per unit, depending on the volume they buy. Installers of the gutters, downspout, and base earn about $six.)
EWV developed an initial version and tested information technology in Uganda, where the system asked end users such questions every bit What practise you think of its weight? Does it run across your needs? Even mundane issues like color came into play: The woven outer bags were white, which women pointed out would immediately look muddied. EWV modified the pattern on the footing of this input: For example, it changed the color of the device to dark-brown, expanded its size to 350 gallons (while keeping the target price of no more $20 per 125 gallons of water storage), contradistinct its shape to make information technology more stable, and replaced the original siphon with an outlet tap.
Subsequently xiv months of field testing, EWV rolled out the commercial product in Uganda in March 2011. Past the stop of May 2012, 50 to 60 shops, hamlet sales agents, and cooperatives were selling the product; more than than 80 entrepreneurs had been trained to install it; and one,418 units had been deployed in eight districts in southwestern Uganda.
EWV deems this a success at this phase in the rollout. It hopes to brand the units available in 10 countries—and have tens or hundreds of thousands of units installed—within five years. Ultimately, it believes, millions of units will be in use for a variety of applications, including household drinking water, irrigation, and construction. Interestingly, the main obstacle to getting people to buy the device has been skepticism that something that comes in such a small-scale package (the size of a typical five-gallon jerrican) tin hold the equivalent of 70 jerricans. Believing that the remedy is to show villagers the installed product, EWV is currently testing diverse promotion and marketing programs.As the EWV story illustrates, critically analyzing and clearly articulating a problem tin yield highly innovative solutions. Organizations that utilise these simple concepts and develop the skills and discipline to ask better questions and define their problems with more rigor can create strategic advantage, unlock truly groundbreaking innovation, and bulldoze better business performance. Asking amend questions delivers amend results.
A version of this article appeared in the September 2012 event of Harvard Business Review.
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