Innovation by Design (Croatian SMEs)

23rd CROMAR Congress, Congress Proceedings

Marketing in a Dynamic Envinronment – Academic and Practical Insights, 2013

521

INNOVATION BY DESIGN: BRINGING DESIGN INTO THE

FOCUS OF SMEs

Sanja Rocco

Marina Hodak

Scientific paper

Abstract Managing design smartly provides innovations in products, services and processes as well as

better performance in the market, bringing benefits to all stakeholders involved – from

employees to clients and the society. There is growing awareness among managers of design as a

valuable means to achieve strategic goals. However, the reason for insufficient understanding of

the role of design in entrepreneurship, especially in the case of Croatia, is an attitude of

insurmountable differences that obstruct communication between managers and designers. This

is considered to be partly the fault of educational managerial programs with no design related

subjects. Also a common prejudice is that one cannot manage designers, nor any other creative

thinker. The objective of this research is to examine circumstances and identify barriers that

stand in the way of Croatian SMEs implementing design management.

Keywords Innovation, Design, Management, SMEs, Croatia

1. INTRODUCTION

In the modern global economy, innovation is recognized as one of the twelve pillars of

social development (according to the World Economic Forum). For almost thirty years,

the World Economic Forum studies and compares the factors of national

competitiveness in order to provide insight and stimulate discussion among all

stakeholders on the best strategies and policies that would help countries overcome

obstacles to improvement of competitiveness. Since 2005, the Forum competitiveness

analysis is based on the Global Competitiveness Indexes which are defined as “the set

of institutions, policies, and factors that determine the level of productivity of a

country”. The level of productivity, in turn, sets the level of prosperity to be achieved

by an economy. The productivity level also determines the rates of return obtained by

investments, which are the fundamental drivers of its growth rates (World Economic

Forum 2012, p. 8). Based on these facts a conclusion can be made that the most

competitive economies allow sustainable growth.

Since Adam Smith, economic theoreticians attempt to identify which components

contribute to the productivity and competitiveness creation. World Economic Forum

Report includes a number of factors which measure different aspects of

competitiveness, and the most important factors affecting the competitiveness form the

so-called «12 pillars of competitiveness»,



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Figure 1.1: The Global Competitiveness Index framework

Source: The Global Competitiveness Report 2012–2013, p. 8

There is a relationship between individual pillars of competitiveness (see Fig.1.1.),

since reaching a certain level of development a column affects directly the possibility

of developing another pillar of competitiveness. For example, a strong innovation

capacity (pillar 12) will be very difficult to achieve without a healthy, well-educated

and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies

(pillar 9), and without sufficient financing (pillar 8) for R&D or an efficient market of

goods that makes it possible to bring new innovations to the market (pillar 6) (World

Economic Forum, 2012). By analyzing the twelve pillars of competitiveness (Global

Competitiveness Index), a tool for assessing the degree of development of a society has

been created. Each of these pillars affects a specific economy, but each in its own way

and “the relative importance of each one depends on a country’s particular stage of

development” (World Economic Forum, 2012).

The basic requirements subindex assembles those pillars most crucial for countries in

the factor-driven stage. The efficiency enhancers subindex includes those pillars crucial

for countries in the efficiency-driven stage. And the innovation and sophistication

factors subindex includes the pillars critical to countries in the innovation-driven stage.

The three subindexes are shown in Figure 1. The basic criterion for grouping countries

according to the degree of development of society was GDP per capita at market

exchange rates. The second criterion is used to adjust to those countries that are

wealthy, but where prosperity is based on the extraction of resources. This is measured

by the share of exports of mineral goods in total exports (goods and services), and



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assumes that countries, which export more than 70 percent of mineral products

(measured using a five-year average), are factor driven to a large extent (World

Economic Forum, 2012).

According to the data listed in Table1.1. Croatia is still in the group of 21 countries that

are undergoing a transition phase from efficiency driven economy to innovation driven

economy.

Since innovation is one of the major factors of competitiveness, it is important to

emphasize that, according to the OECD definition, innovation is the implementation of

a new or significantly improved product (good or service) or process, a new marketing

method, or a new organizational method in business practices, workplace organization

or external relations of a company (OECD, 2005, p. 30).

There is a number of features of innovation, but some of them should be underlined.

First of all, innovation (United Nations Economic Commission for Europe 2012) is

associated with uncertainty over the outcome of innovation activities (it is unknown

beforehand what the result of these activities will be, or how successful process of

innovation will be). Another important feature is the connection between innovation

and investments, namely innovation involves investments such as acquisition of fixed

and intangible assets or other investment expenditures and that may yield potential

returns in the future. Further, companies that innovate by adopting the innovation can

benefit from knowledge spillovers as well as from the use of the original innovation.

For some innovation activities, imitation costs are substantially lower than

development costs, but an effective appropriation mechanism which would provide an

incentive to innovate may be required. Ultimately, innovation involves the utilization

of new knowledge, or a new use or a combination of existing knowledge. The use of

new knowledge or the combination of existing knowledge requires innovative efforts

that can be distinguished from standardized routines (United Nations Economic

Commission for Europe 2012).

Marketing in a Dynamic Envinronment

Table 1.1: Countries/economies at each stage of development

Source: The Global Competitiveness Report 2012

All these innovation features contribute to increasing the company competitiveness by

shifting the demand curve for the firm’s products (e.g.

quality, offering new products or opening up new markets or groups of customers) or

the firm’s cost curve (e.g. through reducing unit costs of production, purchasing,

distribution or transaction); or by improving the firm’s abili

increasing the ability to develop new

knowledge) (United Nations Economic Commission for Europe 2012)

The latest Competitiveness Report 2012

Croatia in the 74th

place

economy, as treating innovation,

Croatia is, therefore,

Regarding the innovation pillar Croatia is

(Greece, Slovakia), but

(32nd

place) are ranked better than Croatia

of the twelfth pillar of competitiveness

slightly better ranked,



Countries/economies at each stage of development

mpetitiveness Report 2012–2013, p. 8


shifting the demand curve for the firm’s products (e.g. through increasing product



distribution or transaction); or by improving the firm’s ability to innovate (e.g.

increasing the ability to develop new products or processes, or to gain and create new

United Nations Economic Commission for Europe 2012).

ompetitiveness Report 2012-2013 (World Economic Forum, 2012)

place according to the twelve pillars of competiveness

as treating innovation, can be classified as “efficiency driven

in a transitional phase to the ”innovation driven economy”.

the innovation pillar Croatia is better placed than some European countries

but at the same time, some neighboring countries such as Slovenia

place) are ranked better than Croatia. Although the analysis of specific

of the twelfth pillar of competitiveness –innovation - can extract two elements that are

slightly better ranked, in particular quality of scientific research institutions and PCT

524


through increasing product



ty to innovate (e.g.

products or processes, or to gain and create new

World Economic Forum, 2012) ranks

ars of competiveness – Croatian

can be classified as “efficiency driven economy”.

ovation driven economy”.

ean countries

some neighboring countries such as Slovenia

specific segments

can extract two elements that are

utions and PCT


patents, Croatia should especially work on raising the capacity for

is ranked only at the

collaboration in the field of

worrisome, because without

to improve the level of innovative

Figure 1.2: Stage of development

Source: The Global Competitiveness Report 2012

1.1. Croatian SMEs and innovation

Small and medium sized companies

98% of all enterprises, which makes 67% of total employment and 58%

added (GVA estimated for 2012) in the EU

importance of the SME sector

Croatian economy as well

products or new processes, a

legislation on small businesses, so called

factsheets), Croatian SMEs

15th

place regarding the percentage of SMEs introducing marketin

innovations (EC.Europa.EU 2012)



Croatia should especially work on raising the capacity for innovation

the 72nd

place.Another concern is it’s grade in university

the field of R&D (ranked the 80th

place), which is particularly

without a connection between science and industry, it is impossible

to improve the level of innovative economy.

Stage of development- CROATIA

The Global Competitiveness Report 2012–2013, p.4

and innovation

sized companies (with approx. 20,7 million) represent

, which makes 67% of total employment and 58% of gross value

imated for 2012) in the EU-27. This confirms the unquestionable

importance of the SME sector to the European Union economy and, therefore

as well. Regarding the introduction of innovations in their new

products or new processes, according to the Report on the implementation of EU

small businesses, so called Small Business Act Fact Sheets

Croatian SMEs are in the 13th

place out of 24 European countries

the percentage of SMEs introducing marketing or organizational

.Europa.EU 2012).

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innovation, since it

university-industry

particularly

is impossible

represent more than

of gross value

confirms the unquestionable

therefore, to the

Regarding the introduction of innovations in their new

ccording to the Report on the implementation of EU

Small Business Act Fact Sheets (SBA

European countries and in the

g or organizational



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A survey about Croatian innovation index has been conducted for the years 2011 and

2013, with a special focus on SMEs. The last survey, in which almost 300 SMEs

participated (254 small and 32 medium enterprises), indicates that the greater

interaction between companies, scientific community and public sector is needed. Only

38% of Croatian companies recognize innovation as one of the three main priorities of

their business, while 43% of them do not considered innovations as a business priority

and even 48% have not listed innovation in the company’s strategic documents. This

data indicates that companies do not think about innovation as an option for growth and

development. Also, only 5% of Croatian companies systematically develop innovative

ideas and most of them have no funds for the development of innovation in their

overall budget.

Hence, lack of development strategy and of systematic innovation management could

be underlined as the main factors that hinder the development of innovation in the

Croatian companies. The problem is the non-recognition of the importance of formal

framework for the innovation development. Croatian SMEs can only solve the problem

partially by financing their innovation projects using resources from various

governmental or EU support programs for direct investment or investment in staff

training (Sense Consulting, 2012).

2. DESIGN DRIVEN INNOVATION

As stressed earlier, innovation is of great importance to successful business for its

competitive advantage in the market. But there is no innovation without design in some

stage of the innovation process, weather redesigning the existing product, adding the

service to the product or implementing a new technology to the process of production.

When talking about the brands and their importance for the consumers, end-users – the

core value of brands is a well designed visual identity, which then becomes

recognizable creating an image with emotional meaning by communicating with the

consumers as well as with public, again using design (packaging, advertising,

interactive design, social media etc).

The European Commision considers design management to be a competence that

comes under the umbrella of innovation management, in recognition of the fact that

companies need innovation capability to be able to respond to new market

opportunities and threats. The role of design is to strenghten the communication

between different parts of the innovation process – for example between R&D and

production, or R&D and marketing, to turn ideas and technological inventions into

products and services, and make innovative products commercially acceptable, user-

friendly and appealing (EU Commision, 2009). Recent studies also show that design-

oriented companies have better results in innovation than others. There is a relation

between design implementation and business results; design investments only bring

results when there is a structured process of design meaning.



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When analyzing marketing literature, even in 80ies Philip Kotler identified design as a

powerful but neglected tool (Kotler and Rath 1984). Still in his Principals of Marketing

(12th

ed. 2010) he mentions design only in the chapter about product and defines design

opposed to style as “something broader”, more than superficial, which has an impact on

the essence of a product. Design did not get much attention in the book. Design is often

treated as an element for development of a physical product (Srinivasan et al., 2006).

Some recent marketing literature authors identify design as the way to respond to

customers needs (Venkatesh et al., 2012; Coley et al., 2010; Moll et al., 2007;

Gummesson, 1991). In marketing strategy, design of products and services is

considered to be the core innovation tool (Johansson and Holm, 2006; Verganti, 2006:

Von Stamm, 2008). There is growing interest in the field of design management (Gorb,

1980; Hollins, 2002, Topalian, 2003; Borja de Mozota, 2003; Cooper et al., 2011; Best,

2012) where authors approach to this matter differently and show possible aspects of

usefulness to implementing design in business. All of them agree on the fact that design

has to be integrated in every level of the business activity from functions to strategy.

The design-orientated literature (e.g. Moll et al., 2007) as well as market-orientated

literature (Gummesson,1991) both present a customer-oriented product design strategy

as crucial to business performance. Some of the best known examples include Apple or

Nike (Reppel et al., 2006) where design drives innovation and aesthetics of products

plays a fundamental role for success in the market. A related factor is the changing

expectations of customers, clients, end-users. In most industries technical and

functional qualities are taken for granted. Customers are looking for added values that

brands can provide them. Design and emotional experience are becoming more and

more important as competitive advantage.

Numerous researches already examined and proved the role of design in the process of

innovation, just to mention some of them: Robinson, 1990, USA, field – product

innovation; Roy, 1990, UK, Japan, Canada, Sweden, Denmark, Holland, West

Germany, field – role of design, source of design ideas etc.; Roy and Riedel, 1997, UK,

field – product design innovation, incremental and radical innovation; Roy, Potter and

Riedel, 1999, UK, field – Investments in design and development; Gemser and

Leenders, 2001, Netherlands, field - industrial design innovation strategy; Mozota,

1998, Europe, field – design management , value chain; Design Council, 2002, UK,

field - importance of design for business performance, design practices; Tether and

Hipp, 2002, Germany field – service innovation; White, Satler, Gann and Davies, UK,

2003, field – role of design activities, complementary design activities; Teknikfore

tagen and SVID, 2004, Sweden, field – design maturity model – design ladder; Tether,

2005, Europe, field – service innovation through design.

2.1. Growing interest in design

Interest in design has increased as a result of global competition and the growing

importance of non-price factors in determining competitiveness. Consumers are no

longer satisfied with common products and they ask for a more individual approach.

Companies that were the first to implement such approach, like Nike or Apple, gained

much attention. There has been a significant increase in demand for customization

against segmented markets.



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For every company obtaining benefits of design depends on the structured and

systematic process of managing it. Because the ability to build sustained competitive

advantage through design will depend on being able to repeatedly create new ideas and

build them up to the level of successful innovations. Over the years since the

80ies,numerousresearches have found evidence that support design driven innovations.

What is more important is that the benefits seem to be sustainable in terms of growth.

A pioneering study in the 1980s (Ughanwa, 1988) demonstrated how firms were able

to obtain competitive advantage initially through radical design and innovation, but that

they were able to sustain this over the following ten to fifteen years through a series of

systematic modifications and improvements. Successful firms were those which

improved their products in response to user needs and continuously revised and

updated their designs to take advantage of emerging new technologies and competing

products (Georghiou, Metcalfe et al. 1986).

Companies that manage design effectively and efficiently attain better performance

than those that do not. Therefore, good design does not emerge by chance or by simply

investing in design, but rather as the result of a managed process (Chiva & Allegre,

2009). The most common problem in implementing design is that managers from non-

design oriented companies are not interested in design. A prerequest to design projects

is collaboration and multidisciplinary team work. The main difficulty in achieving

collaboration in innovation projects is education: the training of managers is based on

the acquisition of theoretical technical knowledge. Junior engineers or researchers often

join companies without real life knowledge on techniques of conducting collaborative

project (Lacoste-Bourgeacq, J.-F., Groff, A., 2011). The research conducted in 2009 by

the authors on Croatian educational programs for marketers and managers shows lack

of design knowledge and design themes in the program curicula (See Fig. 2.1.). This is

probably the main reason for the fact that they are not well informed about the design

potential, but also that they have a different approach to thinking and different

priorities than designers. Another problem of cooperation between managers and

designers could be that designers are not familiar with managerial knowledge. This

problem could be solved through changing education programs – developing programs

that would include both design and managerial knowledge and through

multidisciplinary team work.


Figure 2.1.: Design and design management education in Croatian Business

Schools

Source: Authors' research results

The Cox Review (Cox, 2005) identified bareers to using design for innovation in Small

and Medium sized Enterprises (SMEs). It proposed design support to help companies

use design and in that

According to Acklin (Acklin, Hugentobler

design projects, advices and endorsements.

more strategic approach,

strategic R&D as well as into the decision

these efforts have not been sufficient to help companies adopt design on a managerial

level. Detected reasons for this

(SWOT analysis), or limited to a certain phase of adoption process (Design Atlas,

2000; Matchbox, Design Council 2006).

Several methods of measuring the level of design inside a company have been

developed. One of the simplest is t

and registered by the Danish Design Centre. It consists of four steps: from no use of

design to design as styling, design integrated in the development and finally design as

the core element of strategy. This method of measuring the maturity

design implementation can easily be implemented in every company.



Design and design management education in Croatian Business

Source: Authors' research results (Rocco S., Hodak, M., 2008/09)



that manner strengthen their competitiveness in the market.

to Acklin (Acklin, Hugentobler, 2008) current design support

ts, advices and endorsements. Moreover, there are recent proposals for

more strategic approach, one that would provide tools for integrating design into

well as into the decision-making process (Boult, 2006). However, all

efforts have not been sufficient to help companies adopt design on a managerial

reasons for this are that the applied methods are either too general

, or limited to a certain phase of adoption process (Design Atlas,

2000; Matchbox, Design Council 2006).


developed. One of the simplest is the Design Staircase method (figure 2.2.) developed



the core element of strategy. This method of measuring the maturity on the level of

design implementation can easily be implemented in every company.

529

Design and design management education in Croatian Business



petitiveness in the market.

, 2008) current design support focuses on

there are recent proposals for a

provide tools for integrating design into

making process (Boult, 2006). However, all

efforts have not been sufficient to help companies adopt design on a managerial

methods are either too general

, or limited to a certain phase of adoption process (Design Atlas,


.) developed



n the level of


Figure 2.2: Design Staircase Method

Source: Susie A. Ruff : Danish Design Policy / www.ddc.org / 12.2.2012.

The potentials of design have to be better recognized throughout the company. There is

still perception that design innovations need to be dramatic, but

research results show the significant impact of sustained incremental improvements on

both, the products and the production processes.

New technologies such as advanced computer simulations, prototyping tools and 3

printers, have great impact on the process of design and are

across various industries. These tools can

the project teams or during the construction or production period, as well as for

presenting the design to the clients and the end

in managing design is that there are many

consultants to organisations who are loosely labeled ‘designe

professionals’. This reflects their training in particular skills associated with design

but it sets up the problem that other memb

belonging to this group of special

becomes ‘someone else’s problem’

Although there is clear evidence of the contribution and

to affect competitiveness, there appears to be

terms of its application.

application of design management in services,

the contribution it could mak

Heathrow Express (introduced in 1999 and now used by almost 20,000 people each



Design Staircase Method

: Danish Design Policy / www.ddc.org / 12.2.2012.


still perception that design innovations need to be dramatic, but on the contrary


oth, the products and the production processes.

New technologies such as advanced computer simulations, prototyping tools and 3

mpact on the process of design and are becoming widely used

across various industries. These tools can be used both in the process of design inside


presenting the design to the clients and the end-users more easily. One of the problems

in managing design is that there are many individuals within organisations or acting as

consultants to organisations who are loosely labeled ‘designers’ or ‘design

This reflects their training in particular skills associated with design

but it sets up the problem that other members in organisations see the task of design as

belonging to this group of specialists and not relevant to them. In other words design

ecomes ‘someone else’s problem’ (Whyte, Bessant and Neely, 17).

Although there is clear evidence of the contribution and therefore potential for design

to affect competitiveness, there appears to be a significant difference across sector

terms of its application. Of particular significance is the relative lack of systematic

application of design management in services, although there is growing evidence of

the contribution it could make (Hollins and Hollins, 1999). Examples include the


530


on the contrary


New technologies such as advanced computer simulations, prototyping tools and 3-D

becoming widely used

be used both in the process of design inside


. One of the problems

individuals within organisations or acting as

rs’ or ‘design

This reflects their training in particular skills associated with design –

ers in organisations see the task of design as

In other words design

therefore potential for design

across sectors in

Of particular significance is the relative lack of systematic

although there is growing evidence of

Examples include the




531

day) and the pub chain Wetherspoons, currently the fastest-growing company in the

UK and the ninth fastest in Europe in job creation (according to a report by research

organisation GrowthPlus), Wetherspoon has achieved this spectacular growth through

set procedures for designing and developing the services in each new pub. It also has

quality standards that are checked and maintained by a group of 800 'mystery

shoppers'.

Many service companies do not even realize that they are involved in design when they

consider new service products. They do not have the ethos that industry has, so it must

be remembered that those in the service sector, in many cases being unfamiliar with the

whole concept of developing new services in a structured manner, need extra and

specific guidance' (Hollings and Hollins 1999).

2.2. The Models of Design Management

Design management seeks to link design, innovation, technology, management and

customers in order to provide competitive advantage. Within an organization, design

management is present in product and service design, corporate environment design,

communication inside the organization as well as with its clients and the public

(through brand, internet, advertising, PR etc). Externally, design management can

improve waste reduction strategies, responsible use of local resources, sustainable

development etc. The scope of design management ranges from the tactical

management of corporate design functions and design agencies, including design

operations, staff, methods and processes - to the strategic advocacy of design across the

organization as a key differentiator and driver of organizational success. It includes the

use of design thinking - or using design processes to solve general business problems.

Design management research results found out that design improves performance of

innovation as well as communication policy. However, most researches include

companies’ leadership but no significant research has been conducted among designers

on the topics of their knowledge and understanding of design management as well as

about the role they should have in the innovation process.

I will shortly present and analyze three developed design management models:

• a model by Brigitte Borja de Mozota that introduces the balanced scorecard of

design management (Figure 2.3);

• the Ferris and Sharma Design management maturity model (Figure 2.4);

• the Absorption model for SMEs developed by Claudia Acklin (Figure 2.5).

The Balanced Score Card is a management model by Kaplan and Norton. It was further

improved and implemented to design management by Borja de Mozota who suggests

designers and managers to use it to measure more adequately the impact of design. The

author states that the four perspectives of BSC model coincide with four design values:

customer perspective (where design serves as a differentiator), process perspective

(where design serves as coordinator), learning perspective (where design serves as

transformer) and finance perspective (where designs serves good business).


Borja de Mozota notes that the BSC model is widely accepted and used by strategy

consultants, as well as understood by most CEOs, marketing, finance or R&D

executives. It is also eas

vision-based and simple to apply on any design project. The most important thing

about the BSC model is that it is a cause

perspective has an impact on three other dimensions of design

provides a common toolkit for both designers and managers to validate design impact

on business, explaining the potentials of design thinking. It also serves as a framework

for convergence of design and management.

Figure 2.3: The Balanced Score Card for a design manger

(2006): modified from BSC by R. Kaplan and D. Norton: Linking the BSC

to Strategy

Source: B. Borja de Mozota: The four Powers of Design, 2006, p. 48

Design Management Maturity Model

This model has been developed by applying the basics of Humphrey Watts’ Capability

Maturity Model to a design management context. For most of small and medium

companies the first use of design comes beyond planned action, initiated by immediate

need of designing a logo or a website. Relationships with designers or design agencies

depend on this first experience and often does not result

continuous design management process. Design activity has to be conducted for a





executives. It is also easily appropriated by designers, because it is, according to her,

based and simple to apply on any design project. The most important thing

about the BSC model is that it is a cause-and-effect tool, which means that each

perspective has an impact on three other dimensions of design. This conceptual model



for convergence of design and management.

e Balanced Score Card for a design manger by Borja de Mozota,

odified from BSC by R. Kaplan and D. Norton: Linking the BSC

to Strategy

de Mozota: The four Powers of Design, 2006, p. 48





igning a logo or a website. Relationships with designers or design agencies

depend on this first experience and often does not result in an agreement and


532



because it is, according to her,

based and simple to apply on any design project. The most important thing

effect tool, which means that each

. This conceptual model



Borja de Mozota,

odified from BSC by R. Kaplan and D. Norton: Linking the BSC




igning a logo or a website. Relationships with designers or design agencies

an agreement and



reason, both designers

design activity and business performance. The biggest

making a conscious effort to understand the role of design in its organization and

planning design activities

no strategy.

The coordination of design activities forms the second level of design management

maturity within an organization. The design activity at this stage serves only as an

additional element of developing products, while in the third level design plays a pro

active role being embedded into core business processes. Here,

consciously managed by a manager or a CEO, design being a key competitive tool for

business performance.

implementation of design in all the functional parts of the organization, from the

products and services to the organisation’s culture and its’ behavior in the society. At

this stage the business key

capability.

Figure 2.4: Design Management Maturity Model

Source: I. Ferris and P. Sharma: DME Essays, Design Management Europe, 2010, p.5

At the final, fifth level of the Design Maturity Model design plays the key role as the

company moves towards design leadership and innovation policy. The model is seen as

a possible framework for companies to

success.



reason, both designers and companies should be aware of the causal links between

design activity and business performance. The biggest challenge for the company is

a conscious effort to understand the role of design in its organization and

planning design activities continuously instead of doing disjointed design projects with



nt of developing products, while in the third level design plays a pro

active role being embedded into core business processes. Here, design functions are


ce. The fourth level of the maturity model is strategic



this stage the business key objectives are strongly connected to company’s design


Source: I. Ferris and P. Sharma: DME Essays, Design Management Europe, 2010, p.5



a possible framework for companies to consider how design can improve their business

533

and companies should be aware of the causal links between

challenge for the company is

a conscious effort to understand the role of design in its organization and

instead of doing disjointed design projects with



nt of developing products, while in the third level design plays a pro-

design functions are


The fourth level of the maturity model is strategic



objectives are strongly connected to company’s design



how design can improve their business


Design Management Absorption Model

The design Management Absorption Model (DMAM) brings to SMEs with little or no

design experience a proposal of managing design as an organizational capability that

facilitates the absorption of new design re

competitive advantage. This ability can be supported by using design approach and

tools as well as by collaborating with external design resources. There is a potential for

design knowledge to be absorbed realizing t

socializing it inside the company. The model deals with the question of finding the way

for new design knowledge into the company and is based on Zahra and George model

(2002) who state that design management absorption i

organizational capabilities: acquiring, assimilating, transforming and exploiting new

design knowledge.

Figure 2.5: Acklin’s absorption design management

Source: Acklin: Design Management Absorption Model

of Design Knowledge by SMEs with Little or No Prior Design Experience (2011, p.8)

3. CONCLUSION

Innovation is of great importance for successful performance and competitive

advantage in the market. But there is no innovation without design. It is present in

every stage of the innovation process, weather redesigning the existing product, adding

the service to the product or implementing a new technology to the process of

production. It is of great importance that companies implement and manage design in a

structured and systematic way. Several models of design management have already

been developed to help companies implement design efficiently. Croatian SMEs are

mostly at the lowest level of the process of design implementation, partly because of

the educational programs and partly because of insufficient support

micro-environment. But Croatia has just become



Design Management Absorption Model



facilitates the absorption of new design resources and design knowledge to achieve



design knowledge to be absorbed realizing the design management capability



(2002) who state that design management absorption is divided into the four


absorption design management model for SMEs

Source: Acklin: Design Management Absorption Model – A Framework to Describe the Absorption Process

of Design Knowledge by SMEs with Little or No Prior Design Experience (2011, p.8)




rvice to the product or implementing a new technology to the process of



help companies implement design efficiently. Croatian SMEs are


the educational programs and partly because of insufficient support from the macro and

But Croatia has just become a part of the European Union. It can

534



sources and design knowledge to achieve



he design management capability by



s divided into the four


Framework to Describe the Absorption Process




rvice to the product or implementing a new technology to the process of



help companies implement design efficiently. Croatian SMEs are


the macro and

European Union. It can



535

take advantage of interdependent relationships with other countries within it, which

emphasize global cooperation and focus on sustainable development. We should

reconsider the significance of ‘national’ innovation measures and their value in new

context. The challenge behind the new national innovation strategy is to create the new

conditions that would attract innovators, instead of favoring their emigration to

countries with a more fertile ground.

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Sanja Rocco

Zagreb School of Business

Ulica grada Vukovara 68, 10000 Zagreb, Croatia

Phone: ++ 385 1 6310-888; Fax: ++ 385 1 6310-612

E-mail: [email protected]

Marina Hodak

Ministry of Entrepreneurship and Crafts

Sector for EU programs and projects

E-mail: [email protected]

Innovation by Design (Croatian SMEs)

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