Design as locomotive of innovation; Itinerario adñ, an experience in small- and medium sized enterprises. Menno Veefkind1, Angel Palazuelos Puerta2, Belén Hermosa Arroyo1, Xavier Ayneto Gubert1 1Idom, Barcelona, Spain, menno.veefkind@idom.com 2ENISA, Madrid, Spain Abstract During the years 2009 and 2010, 46 small- and medium sized enterprises participated in a programme called “Itinerario adñ, a route to design and innovation” that was offered by the then National Agency for Design and Innovation (DDI), now part of ENISA, the National Enterprise for Innovation, Ministry of Industry, Tourism and Trade. Idom detailed the methodology and helped with its execution. The overall goal of adñ programme was to improve the competitiveness of small- and medium sized enterprises (SMEs) through the adoption of design management, design methodology and design practice, as the locomotive of innovation. The paper is directed to innovation policy makers and design professionals who are interested in fostering innovation in SMEs. It aims to share the Itinerario adñ experience and to contribute to the conception and improvement of similar programmes and initiatives. The introduction explains the programme’s design driven “learning by doing” approach, the need for it, and compares it with other approaches to fostering innovation in SMEs. The following sections describe the Itinerario adñ programme in terms of initiative, funding, purpose, specific goals, participants, methodology, results and evaluation. Descriptions of project cases illustrate the functioning of the programme in practise. Overall, the paper shows that chosen approach is a sound way to help SMEs increase their capacity for innovation in a sustainable way, and obtain tangible results at the same time. The authors consider programmes similar to Itinerario adñ a great opportunity for SMEs and design professionals to join forces for innovation. Keywords: Innovation policy, Design policy, Innovation management, Design management, Design Thinking, Learning by doing.

1. Introduction Innovation is the creation of better or more effective products, processes, services, technologies, or ideas that are accepted by markets, governments, and society (Wikipedia, 2012). From an enterprise’s perspective, innovation can be seen as the process of transforming ideas into competitive advantage. Some of those ideas have a technological character, others do not. Innovation is also associated with creativity and a pro-active posture towards change. It is widely accepted that innovation has a positive effect on the economical development of enterprises, regions, countries, and humanity in general. From this perspective it is logical that governments on different levels, as well as non governmental organizations, develop or support programmes that foster innovation within their geographic or thematic range. Because of their importance for regional development and the creation of jobs, a significant percentage of programmes focus on innovation in small and midsized enterprises (from here on: SMEs), roughly said, enterprises that employ between 10 and 250 persons. Without doubt, SMEs are responsible for a vast stream of new and improved products, services, marketing concepts and processes. This said, it is also true that a part of the SMEs show very little innovation activity or consider their efforts in innovation not effective or not efficient. In almost 10 years of practice in innovation management consulting, Idom has seen different situations in which innovation could not flourish (without pretending to be exhaustive): • The concept of innovation is mixed up with research and development, and

therefore considered only accessible for large enterprises or “techno-starters”. • There is little or no innovation going on. Ideas are not shared or developed

within the enterprise. • The management of the enterprise supports innovation, but does not provide a

strategic framework for it • Innovation is limited to, or dominated by, one of the enterprise’s departments

or a single employee, often the board of directors or the technical department. • Innovation takes place, but in an unstructured manner.

1.1 Two approaches to fostering innovation in SMEs Probably the most immediate way to foster innovation in SMEs is subsidizing or financing innovation projects, for instance the development of a new product or production process. The fact that the enterprise has developed one or more projects to be supported implies that innovation already takes place. In other words, this approach can be applied if the enterprise is already able to bridge the gap between the first idea and a concept that at least consists of a technical solution and some kind of business model, which is not always the case. The fact that an innovation project proposal exists does not say much about the quality of the front end process that was deployed before, or the capacity of the enterprise to develop the project from here on. Another way to foster innovation is preparing enterprises for innovation by means of training and support with the design and implementation of an innovation management system. The backbone of such an innovation management system is usually a formalized step-by-step innovation process, which covers the conceptualization and the development of new products, services and processes (Cooper, 2001). Other important elements are a strategic framework for innovation, a project portfolio management procedure and tools for the “propulsion” of the process (tools for idea generation, for instance). In Spain, innovation management systems are often designed according the UNE166002 standard. It is foreseen that a significant part of the European standard for innovation management, which the European Committee for Standardization is currently working on, will be based on

the UNE166002. Most enterprises that have participated in this kind of programmes consider the “preparation approach” effective, at least for the projects that Idom has been involved in. Although the preparation approach is much less theoretical than it looks like in the first place (projects typically include the creation of an innovation action plan), its perceived methodological character sometimes makes it difficult to engage enterprises. This is especially true for the ones that have little or no experience with innovation, who might feel that they have “nothing to manage yet”. Obviously, there exists a need for programmes that combine the practical approach of subsidizing or financing individual innovation projects, with the pursuit of quality and sustainability that characterizes the “preparation approach”. Also there is a need for programmes that help enterprises produce tangible results in the earlier phases of the innovation process, the generation of ideas and the bridging of the gap between initial ideas and sound innovation project proposals. 1.2 Design as the locomotive of innovation “Design thinking”, the use of methods and techniques which are typical for design practise beyond the strict design and development of physical products, places design as one of the locomotives of innovation. This in contrast to the traditional view on the role of design, where it comes after the innovation has been conceptualized. Creativity, a strong focus on end users, an iterative process and early prototyping are considered the main pillars of design thinking (Roger Martin, 2009). Enterprises such as Philips, Apple and car manufacturers, amongst others, learned to use design projects in the earlier phases of their innovation process. Design schools have “strategic design” programmes, some of them going back to the 80ties. In other words, design as a locomotive of innovation is a proven strategy which is based on a solid and ever growing body of knowledge. It is therefore no wonder that governmental and non governmental organizations, such as the Spanish National Agency for the development of Design and Innovation (DDI) and the Barcelona Design Centre (BCD), have been very active advocating design as such. In 2010 the European Commission confirmed their embracement of design as an innovating force with the publishing of a working document on design as a driver of innovation (Commission of the European communities, 2009). 1.3 The “learning by doing” approach In 2009 the DDI outlined a programme named “Itinerario adñ”, which aims to foster innovation and creative culture in SMEs by means of what was called a “learning by doing” approach. The idea behind this approach is to use design methodology in order to take the best out of the two approaches to fostering innovation that were sketched earlier in this article. In the Itinerario adñ, a tailor made innovation process is formalized after test driving a more or less generic process during a product or service design project. In other words, a pilot project precedes the design of the innovation management system, which is just the opposite of the “preparation approach”, where a pilot project is carried out after. “Learning by doing” pretends to be a practical “two track” approach that results in immediate, tangible, results (strategies, ideas, concepts, product designs and business models) and the basis for a sustainable innovation activity. In this aspect it meets the need expressed at the end of section 1.1. Design projects are the core component of the programme and design methodology its backbone, making design the locomotive of innovation in the Itinerario adñ. Idom detailed the methodology for the programme and helped with its execution. 2. The “Itinerario adñ” programme During the years 2009 and 2010, 46 small- and medium sized enterprises

participated in the “Itinerario adñ, a route to design and innovation” programme, which has been introduced at the end of the first section of this article. 2.1 Initiative and funding The programme adñ is an initiative of the National Society for the Development of Design and Innovation (DDI), agency accredited to the Spanish Ministry of Science and Innovation (MICINN), charged with the definition and application the ministry’s innovation and design policy. DDI’s mission is to start public promotion policies and the spread of design as well as innovation, considering both factors strategic for the Spanish enterprises’ competitiveness. Since the end of 2010 DDI is part of ENISA, the National Enterprise for Innovation, Ministry of Industry. The programme adñ was carried out in co-operation with the autonomous communities of Andalusia, Castilla la Mancha, Extremadura and Galicia. The Itinerario adñ programme’s budget was 1,3 million euro, which was co-financed by the European Union Regional Development Funds (ERDF) and the autonomous communities (70% and 15% respectively). 2.2 Purpose and goals The overall purpose of adñ programme is to improve the competitiveness of SMEs through the adoption of design management, design methodology and design practice, as the locomotive of innovation. The specific goals were the same for all the participating enterprises: • Adopt a culture that fosters innovation and design • Plan innovation and align it with the business strategy • Create new products or services • Introduce a design and innovation management system.

2.3 Participants One of the ideas behind the concept of design thinking and the Itinerario adñ programme is that every enterprise or organisation can benefit from design practise and design and innovation management. Therefore the programme was open for all the SMEs of the participating autonomous communities, with exception of industries that are excluded from ERDF funded programmes in general. In order to participate, the enterprises had to show the intention to participate with a cross functional team of 3 to 7 persons, one of them being employed as “Responsible Product and Innovation”. Enterprises from a wide range of product and service related industries participated in the programme, most of them being small enterprises (10-50 employees). Traditional “design associated industries”, e.g. street furniture manufacturing (product) or restaurants (service), were represented as well as industries that are not so likely to be associated with design, like manufactures of ingredients for the food-industry (product) or on-line language schools (service). There was also a high variation in starting points and reasons to participate. Some of the enterprises entered the programme in order to take their first steps in innovation, others to redirect their innovation activity or improve its effectiveness. 2.4 Methodology All the projects were carried out according to the same methodology, which is structured 4 phases:

1. Diagnostics of the existing innovation system 2. Strategic planning of innovation 3. New (innovative) product or service design 4. Creation of a design and innovation management system.

The methodology allows for a certain level adoption to each individual enterprise, especially in the third phase. The duration of each project is 11 months. The following diagram illustrates the four phases, their principal results and the duration of each phase.

Diagnostics

Strategic Planning New (innovative) Product Design

Creation of adesign and innovation

managementsystem

Evaluation of the currentsituation

Innovationplan

Design for anew product

or service

New ProductDesign process

Manual and procedures

2 months 5 months 3 months

11 months

1 m1 m

Figure1. Itinerario adñ methodology: phases, principal results and durations. The first phase (diagnostics) was carried out by means of a questionnaire and a follow up interview with a representative of the enterprise’s general management. In the other three phases the participating enterprises were supported by means of a one or two days of seminars and a series of workshops. They also received assistance by means of telephone or email, upon request. The seminars were carried out in groups of 3 to 7 enterprises. They were used to introduce best practises of innovation and design management, to create awareness for design related issues, such as user context and the social and emotional value of product and services, and to introduce the methodology and tools to be used in the upcoming phase. The seminars also made the participating enterprises to share knowledge peer to peer. The workshops were carried out on site with the cross functional project teams that the enterprises assigned to the programme. Consultants specialized in innovation management (phase 2 and 4) and design management (phase 3) led the workshops. Although all the consultants had previous experience with design or innovation projects, they also received a special training for the Itinerario adñ programme. Some of the workshops served to carry out parts of the methodology with the project team. This was the case with idea generation and the conceptualization of new products or services, for instance. Other workshops served to introduce methods that the project teams applied autonomously in the periods between two workshops, for instance in order to understand end users, specify to product or service or carry out design work. The consultants revised and discussed the results of these work with the project teams and adapted each project by selecting the suitable methods from a “toolbox”, which was created for the Itinerario adñ. Based on the experience that was obtained in during phase 3 of the project, the consultant outlined an innovation process for product or service development to be formalized in view of future projects. In the last phase of the project the team drew a tailor made innovation management system on the basis of this process.

2.5 Results All the participating enterprises specified a selection of ideas for innovation projects in an innovation action plan. Most of the companies developed ideas for new products or services as well as for process improvement. Ideas are specified according to a scheme that includes technical and commercial aspects, and an estimation of the time and capital needed for its development. All the participating enterprises developed one of these ideas into a user oriented concept, which includes a roadmap for its design and development. From here on there is a great variety in the tangible results that were produced by the project teams, both in terms of the nature of the results and the level of elaboration. Results on physical products varied from a verbal speciation of the product to a 3D-CAD model and a global prototype. Other results that were obtained include business models for services, design of packaging and labelling, detailed briefs for the graphical design of new brands and the design of marketing tools. At the end of the project each participating enterprise produced a manual that defines a policy and an organizational structure for innovation, an innovation strategy and a formalized innovation process that covers the conception and the execution of innovation projects. Some of them detailed the design and innovation management system with procedures that they considered relevant for their enterprise. 2.6 Evaluation by participating enterprises At the end of the phases 2, 3 and 4 the participating enterprises completed a questionnaire that made them to evaluate several aspects of the project and the support they received from the consultants. They were also asked to comment on the aspects of the process that they considered most beneficial and the ones to be improved. 95% of the enterprises rated the Itinerario adñ programme positive or very positive. The practical character of the project and the systematic approach were highlighted as very beneficial, as well as the contribution of the consultants. A few enterprises commented that it would be beneficial if the consultant would carry out part of the works related to the project. 3. Cases This section describes three projects that were carried out within the framework of the Itinerario adñ in terms of the enterprise involved, the principal results that were obtained and the impact of the project on the enterprises capacity for innovation. 3.1 Sima Sima is a manufacturer of machinery for use on construction sites, masonry saws and machines for paving treatment, amongst others. The enterprise was founded in 1970 and focuses on the safety, reliability and profitability of its machines. The general management of the company sees innovation as the source for growth and wants Sima to be known as a modern and dynamic enterprise, which was the main reason to participate in the Itinerario adñ programme. During the project the team created an innovation plan and designed three new machines. Comparing with the existing design, the newly designed machines are better adaptable to the wishes of individual clients. At the same time they are expected to be more cost effective. The realization of projects in a cross functional setting and the strong focus on end

users, both advocated by the Itinerario adñ programme, were important changes in the enterprise’s approach to product development. The general management is determined to continue with this design driven way of working. 3.2 Izmar Izmar is a medium sized manufacturer of metal structures and components for different industries. Apart of this, the enterprise aims to develop finished products for public spaces and the healthcare industry. Izmar’s general management saw in the Itinerario adñ programme an opportunity to boost this last activity, which was the main reason for the enterprise to participate. In order to take the maximum benefit from the programme, Izmar asked two industrial designers to join on the project team. During the project the team created a bus shelter, which is considered to be the first product of a future line of street furniture products. During the design special attention was paid to the needs of small and medium sized cities. Other focus areas were easy assembly and the needs of elderly and otherwise special citizens. The incorporation of industrial designers and the methodology introduced by the Itinerario adñ programme improved the quality of Izmar’s product design and development process and its capacity to undertake new business challenges. 3.3 Cabanes Gabanes is a manufacturer of street furniture, who produces customized products as well as products for its own catalogue. The president of Cabanes was already aware of the need to systemize the enterprise’s creative concept development process and product development process. The Itinerario adñ programme proofed a good opportunity to do so. During the project the team created a new, multifunctional, street furniture product that adapts to different terrains. The realization of creative work in a cross functional setting and the systematic inclusion of the needs of all the stakeholders involved in the product to be designed, both advocated by the Itinerario adñ programme, were important changes in Cabanes’ approach to product development and innovation. 4. Conclusions The “Itnerario adñ experience” shows that the “learning by doing” approach with a product or service design project being the core component, is a sound way to help SMEs increase their capacity for innovation in a sustainable way, and obtain tangible results at the same time. Although no strict research has been performed, the authors believe the following characteristics of design and design methodology to be particularly beneficial for the stimulation of innovation in SMEs. • Design is by nature an integrative activity. Design projects help to converge

the different visions on the same idea, which usually exist within the enterprise and often hamper the further development of the idea.

• Design methodology offers a well structured and step-by-step approach that helps to bridge the gap between the first idea and a sound innovation project proposal. Tangible intermediate results such as “personas”, collages, storybooks, sketches and early prototypes, motivate the team to do so.

• The user centered character of design enables team members to temporally “escape” the enterprise’s current limitations, by putting themselves in the skin of a user or other stakeholder. This results in new insights and new ideas.

• Carrying out a design (pilot) project provides the team with new insights and new knowledge about the course that innovation should take in the enterprise,

and the way to make it work. This makes it possible to surpass the “rearview mirror view on things” and to formalize an innovation system for the purposes of the future.

The deployment of the Itinerario adñ programme in 46 enterprises made Idom and the DDI to obtain a large experience in the field of the design driven “learning by doing” approach for fostering innovation. To be able to assist a large number of enterprises on a limited time and money budget, it proved necessary to have a formalized methodology that can be adapted to each of the companies. In the Itinerario adñ the consultants had a “toolbox” of formalized methods. Some new tools were formalized during the project. The nature of design activities makes that they can not be learned on a purely theoretical basis. The consultants that assist the enterprises during the programme must have prior “hands on” experience with design projects, despite the existence of a formalized methodology. In the same way, the programme helps enterprises to think as a designer, but it does not change them into designers. In fact it proved very beneficial when the participating enterprises had a designer on the team. In the evaluation of the projects, enterprises often recommended including hands on design services in future programmes. This indicates that it created a new demand for design services. All together, the authors believe that the design driven “learning by doing” approach is offers a great opportunity for SMEs and design professionals to join forces for innovation. 5. References Commission of the European communities, 2009. Design as a driver of user-centered innovation, European Commission Staff Working Document, 2009 Cooper, Robert G. (2001). Winning at New Products: Accelerating the Process from idea to launch, third edition. Basic Books. Martin, Roger L. (2009). The Design of Business: Why Design Thinking is the Next Competitive Advantage, Harvard Business School Press. Wikipedia (2012). <http://en.wikipedia.org/wiki/Innovation> [Consulted 12/02/2012]