Attitude is essential! Brand, Reputation and Design Management in small and medium-sized enterprises. Prof. Dr. Brigitte Wolf

Transcription

1 Attitude is essential! Brand, Reputation and Design Management in small and medium-sized enterprises Prof. Dr. Brigitte Wolf

2 Attitude is essential! Brand, Reputation and Design Management in small and medium-sized enterprises Prof. Dr. Brigitte Wolf

3 Copyright 2008 Hogeschool INHOLLAND Alle rechten voorbehouden. Niets van deze uitgave mag worden vermenigvuldigd, opgeslagen in een geautomatiseerd gegevensbestand, of openbaar gemaakt, in enige vorm of op enige wijze, hetzij elektronisch, mechanisch, door fotokopieën, opname of op enige andere manier, zonder vooraf schriftelijke toestemming van de uitgever: Hogeschool INHOLLAND. In so far as reproduction of this publication is permitted, based on art. 16b and 17 of the Dutch Copyright Act 1912, legal rights must be paid to Stichting Reprorecht, Postbus 882, 1180 AW Amstelveen. For the use of one or several parts of this publication for an anthology, a reader or other works of compilation the publisher must be contacted. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, mechanical, photocopying, recording or otherwise, without prior permission of the publisher. ISBN/EAN:

4 Publication with the speech delivered by Prof. Dr. Brigitte Wolf for her accession to the office of lector at the Centre for Applied Research in Brand, Reputation and Design Management (CBRD) at the INHOLLAND University of Applied Research in The Hague on 5 June 2008.

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6 Content 1 Introduction 7 2 The relation between design and business success Studies Tangible and intangible assets 16 3 The DNA of a company Best practice in design by small and medium-sized companies Success factors 23 4 Corporate Culture Positive experiences for employees Positive experiences for customers Positive experiences for partners Swarm intelligence a new approach to structure organizations 36 5 Design strategy 42 6 Conclusions and perspectives Research questions Activities of CBRD 49 7 Notes 52 8 Annex Annex Annex Literature 62 5

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8 1 Introduction The objective of business is to make money - the objective of design is to make the world better, more comfortable and more beautiful. This may seem like a contradiction at first sight, but actually business can profit a lot from design. In national and international markets there are good examples to prove the positive influence of design on business. Design is widely used in big and global companies, but it is not used as much in small and medium-size enterprises (SMEs). Although we find great design-pioneers in the group of SMEs that have built their international success on their design-strategy we can also find other SMEs that are rather ignoring design. Of course there is a lot in-between. The differences emerge through the different attitudes of the decision-makers. Different levels of designawareness, different engagements to quality, different ideas of man and different value systems can explain why every enterprise has a different position in the market. Small and medium-sized enterprises form the backbone of the economy. Business magazines describe their business strategy as a sustainable model. A lot of companies are family businesses, handed over from one generation to the next, whereas big companies usually have a management which is changed if not enough profit is earned. The corporate strategies of both types are based on different value systems. On one end of the scale we find the SMEs whose strategies are based on long-term thinking and social responsibility for the company, the employees and all the others that depend on the company, like suppliers, traders and the region as a whole. They cooperate in general very closely with their customers and respond directly to their problems and wishes. They place priority on customer value. Direct communication with their stake-holders helps them to develop special products and services that match their clients needs. On the other end there are the global players who are mostly dedicated to the growth of shareholder value. The satisfaction of shareholder interests is no guarantee for the satisfaction of customer interests. The interests of both parties may conflict. Therefore big companies spend a lot of money and energy on market research to explore consumer interests. In order to reduce the risk they base their design 7

9 activities largely on these results. The problems of market research are well known because a high percentage of new products fail. In order to improve the relation with their customers and to foster customers loyalty big companies have now started programs on Corporate Social Responsibility (CSR) (1) to make the public believe that they care for their customers and wider society. It seems reasonable that the strategic integration of design increases business success. But we need more knowledge on how it exactly works and what the important factors are. Applied research in design is rather new and therefore all approaches to investigate the impact of design are very valuable steps towards the exploration of best practice for strategic imbedding of design into the corporate philosophy, corporate strategy, corporate culture and business strategy. As a first step to generate knowledge on these items, the Centre for Applied Research in Brand, Reputation and Design Management (CBRD) participates in the ADMIRE-project, which is financed by the European Union. The task of the CBRD is to carry out a European benchmark study on the management of design in European SMEs, respectively to figure out the hindering reasons. The ADMIREproject is an important step to generate knowledge on the design-awareness, the role of design and the way design is managed in European SMEs. Furthermore it seems important to explore the attitudes of the leaders of SMEs to obtain knowledge on their concerns and objectives. These data will be crucial for the development of design support strategies. Best practice examples as well as research studies (2) confirm the relationship between the strategic implementation of design, business success and a sustainable market position. It is reasonable to assume that the attitude of the responsible leader is essential to implement design strategically in order to generate a unique corporate culture and to increase the company s value and performance. At the same time the corporate culture usually creates the conditions to make efficient use of design and design-thinking. We can presume the reasons for the implementation of design in SMEs and how it is handled as well as the reasons why it is not implemented. Little is known about the internal reasons and processes in SMEs with regard to the initiation, steering and the management of design. 8

10 To describe my standpoint I have defined three hypotheses as a priori statement which builds a frame of reference to my further comments: 1. The value system and the attitude of the leader are responsible for the corporate culture and the sustainable success of SMEs. 2. For sustainable success it is indispensable to create positive experience for all stakeholders: the customers and the users, the employees and the managers, the researchers, technicians and designers, the suppliers and traders, the visitors, the advisers and partners. 3. Design thinking, design management and the strategic application of design into the business strategy improve the processes and the performance of SMEs. To point 1 The attitude and the value system are crucial factors driving the leader s commitment to shape the company in order to produce positive experience for all stake holders. It is the attitude that determines how the internal structures, processes and the working conditions for the employees are structured. It is the attitude that ultimately decides about the role of design in a company and how far design-thinking is integrated to develop a sustainable and unique strategic position in the market. The attitude to think ahead constantly, to be leading in the sense of quality, to produce relevant products and services, to fulfill customers needs and wishes and to deliver good quality to maintain loyal customers, requires an inspiring and motivating environment as well as skilled and motivated people to keep the attitude alive. To point 2 Everybody enjoys positive experience at the workplace as well as in their spare time, by buying and using products or by the use of all kinds of services privately or professionally. Pine & Gilmore have written a book on experience economy (3) in which they emphasize the significance of good customer experiences for business success. Positive experience counts in the BtoB business as well as in the BtoC business. The success of a company depends on the positive experience of their customers. Customers are often said not to be loyal. They change brands because they are looking for better experiences respectively for a good relation between the money they pay and the experience they get. The creation of a good customer experience requires a complete offer that integrates material as well as immaterial 9

11 experiences. Service design has become a subject of increasing importance. In order to please the paying end-user with positive experience, a chain of positive experience in the corporate process chain must be created from the initial point onwards. Positive experience of employees and partners will influence their performance and hence the positive experience for customers. To point 3 Design-thinking is an appropriate tool to create positive experience for all, through careful consideration of all the relevant influence factors and then the creation of processes, which correspond best to changing challenges and requirements. The strategic application of design-thinking as an integrating corporate activity shapes the design of material goods and environments, the design of services and experiences and the design of all corporate processes. A holistic design strategy shapes the corporate culture of a company, the strategic positioning and its authenticity (4) - it shapes the unique look and feel. The problem still remains: a great number of SMEs has no design awareness or they are skeptical whether the investments in design will pay off although they could apparently do much better with design. There are books on the market, which demonstrate how to manage design for business success and other activities like exhibitions, lectures and conferences offer relevant information. However this information is obviously not sufficient or sufficiently clear or it does not reach all SMEs. With this essay I want to point out the decisive factor for commercial operations in SMEs: the attitude of the leader! My remarks aim at identifying approaches for applied research projects to analyze the critical factors, at leading to better understanding of SMEs and at proposing solutions. Those activities are intended to initiate common development processes, which will link CBRD and SMEs closer together. My paper is a theoretical construct, which intends to describe plausible assumptions. The remarks are based on literature and best practice examples and describe a 10

12 network of hypotheses leading to a number of research questions, which will be the subject of discussion for the research activities of the Centre for Applied Research in Brand, Reputation and Design Management (CBRD). Prior to the further elaboration of my hypotheses (see: chapter 3, 4 and 5) in chapter 2 I describe the relation between design and business success. In chapter 2.1 I refer to studies investigating the relation of design and business success. In chapter 2.2 I describe approaches to measure the tangible and intangible factors for economic success. Chapter 3 is dedicated to the first hypothesis and describes the importance of the attitude of the leader - the DNA of a company. He steers the business and takes the decisions. On behalf of best practice examples the success patterns of SMEs are described in chapter 3.1 and compared to the successful factors of experienced business consultants in chapter 3.2. The second hypothesis underlines the importance of positive experience for all stakeholders and refers to the corporate culture in chapter 4. Exemplary and positive experience of employees (chapter 4.1), customers (chapter 4.2) and partners (chapter 4.3) are outlined. Positive experiences are related to the organizational structures. New approaches based on swarm intelligence have generated success ful results; they are presented in chapter 4.4. The design strategy shapes the organizational structure and the corporate culture. This is outlined in chapter 5. Chapter 6 summarizes the remarks and chapter 6.1 points out the resulting perspectives for applied research at the CBRD. Chapter 6.2 describes the current activities of the CBRD fellows. 11

13 2 The relation between design and business success Successful and good design is often associated with exclusiveness, extravagance and high prices, such as represented by brands like Armani, Herman Miller or Cartier. The term design is also used in a massive way for commodities (hair design, nail design, pizza design etc.) with the intent to sanitize the public image and to ask for higher prices. Design must not be expensive. Companies like IKEA or H&M have their unique design strategies and are successful by selling big masses of products. Small and medium-sized companies are rather seldom involved in mass production; in general they create and produce special products and services and sell them to niche markets. The design awareness of SMEs covers a broad spectrum. On the one hand there are companies with an excellent corporate culture built on their design philosophy and corporate culture that are growing and acting in global markets and on the other hand there are companies on local markets which don t deal with design at all. Only few studies are available to investigate the economic success of design (5). And to my knowledge there is no study available for specific investigation of the economic success, which SMEs have achieved by design. It would be great to have a study on this issue in the future. The difficulty lies in that SMEs do not like discussing money. It will be difficult and perhaps impossible to get the desired data because they are kept secret. 2.1 Studies The relationship between the use of design competences and business success was the subject of two different research projects. One study explored a sample of Danish companies representing the total of Danish companies. (6) The other one was carried out by the British Design Council and investigated the top 100 public companies of Great Britain. (7) The Danish study was done by the National Agency for Enterprise and Housing in Denmark and investigated The Economic effects of design. The study was based 12

14 on the design ladder developed by the Danish Design Council. The design ladder provides four categories: no design design as styling design as methodological approach design as strategy (8) In the first category we find companies - mostly SMEs - that make no use of design. The second category describes companies using design as styling to make their products, catalogues, web sites etc. more attractive. Companies in the third category use design in a methodological way to design their products, product portfolio and their communication material. In the fourth category we find the companies in which design is used as strategy. Design-thinking is applied in all processes and across all departments of the company. Design shapes not only the material and immaterial products; it shapes all the processes from the first idea to the point of sale, the using process and even back to the companies recyc ling processes. The study showed that companies at a high position on the ladder which use design as strategy achieved great business success, like: higher turnover, higher export rates, higher growth rates and less staff turnover. The study showed a significant relationship between the use of design and success items. The study of the Design Council London, The Impact of Design on Stock Market Performance, analyzed the correlation between the use of design and economic success over a period of ten years from 1994 to 2003 and concluded that all companies follow the ups and downs of the stock market, but that companies with a strong design-awareness performed on a higher level and were economically in a much better position. Considering the market success of design-minded SMEs it seems plausible that economic benefits for SMEs follow a similar route. If design supports economic success, why do not all companies apply design in their companies? Big companies usually do so. Design helps them to differentiate from their competitors. However, SMEs are different and think differently. Some are very successful because of design, some use design activities partly and a large number does not make use of design at all. They have never used design and have 13

15 survived; they think design is too expensive and they need to spend their money on other priorities. Another frequently heard argument is: my father did not need design, my grandfather did not need design, why should I? Design is simply seen as a waste of money. Other companies are unsure if the money they might invest in design will gain a return. In other cases it is a lack of knowledge and awareness, the companies do not know how design can support their business. There are also companies, which do not know how to find the right designer and how to deal with designers. And there may also be companies that have had bad experiences with a designer. Considering the results of the Danish and the British study it seems short-sighted not to use design. Design-thinking on a strategic level could help SMEs to improve and to specialize their performance and to strengthen their positioning in the market. That is quite an interesting point as they can usually not compete in the price battle. Tom Lockwood, president of the Design Management Institute, has pointed out the necessity to measure the effect of design. We can find lots of examples that have proved that design can enhance the performance of a company. As an example of how design can generate business success Tom Lockwood compared Apple and Dell. The annual reports of both companies show that Apple and Dell earned about the same net income in But Apple used only half of the turnover. (9) It is clear that design is the reason for Apple s success strategy, alongside with technology, user-friendliness and easy handling. To be able to explain more precisely how design influences success, a deeper analysis is required and appropriate measurement tools need to be developed. This is a big challenge for the future. Lockwood has taken a first step and developed a qualitative framework of 10 categories to measure design efficiency. (10) Further research would be helpful, because business people decide on budgets and they want to know how investments in design pay off. The development of metrics to measure the effectiveness of design activities in detail is an important step and will deliver arguments that convince deciders to invest in design strategies. I do not want to create the impression that applying design is the golden recipe for SMEs to be successful. Like any other activity, design can be carried out well or badly. When design is done badly the success fails to appear. That is a big fear of 14

16 SMEs. A survey realized in the winter term 2006/07 at the Köln International School of Design (KISD) in cooperation with Michael Soendermann, journalist of economy concludes that there is a lack of knowledge and understanding on both sides - SMEs and designers - which might be the reason for unsuccessful co-operations. Miscommunication and misunderstanding are the result and the reason for failure. This problem is quite well-known and will be a research subject at CBRD. Recently, Joris Funcke has been preparing a research plan called bridging the gap. The research intent of fellow Joris Funcke is to focus on the gap between SMEs and design. The results are expected to deliver information on the attitude of the leaders and the designers. Better understanding of both sides will help to find a way to improve the cooperation and finally the performance of SMEs. (11) To apply design successfully a company must have a clear attitude as to its values and objectives and as to how design can contribute to a successful realization of the business objectives. Furthermore the designer needs to understand how the company ticks and what is the special situation. For good cooperation between a small or medium-sized company and a designer, mutual understanding, trust and sympathy are required as well as sharing the same values. Convincing non-design users of the advantages of design is quite a challenge. An interesting approach to support SMEs to solve their problems with design competence is a program developed by the Design Center Paraná located in Curitiba, Brazil. Every year the design center visits a number of small companies and asks about their problems and the challenges they are facing. To solve their problems the companies are offered to participate in a program which includes seminars, exchange of experiences and cooperation with designers. This program intends to support the SMEs in their climb up the design ladder. The program does usually not enable SMEs to jump from the no design level to the highest level on the design ladder. It is more likely that they jump to level two or level three. However the results are convincing. The companies improve their business. And it is most probable that the program and the lessons learned change the attitude of the participants in a way to make them climb up the design ladder even further. Every year an exhibition and a catalogue document the final results. In this project SMEs experience that design helps them to improve their position in the market and that 15

17 even for small companies the investment in design pays off. (12) This example underlines the importance of the attitude of the presidents or directors who were approached to participate in the program, because they decide on investments and they have the responsibility. Every year there are companies that refuse to participate. But there are always a remarkable number of companies which benefit from the program. The necessity to build a bridge between SMEs and design is widely discussed. This is one initiative to handle the problem. The knowledge or, even better, the experience that design competences strengthen the market position will probably facilitate the strategic integration of design into the business strategy. Nevertheless, concrete economic benefits of design thinking are still difficult to measure. One approach is the measurement of the brand value (see: chapter 2.2). This is an annual activity, carried out by different institutions. 2.2 Tangible and intangible assets To score well in the hearts and minds of customers a company has to deliver goods and services of consistent high quality and to take care of the changing demands and desires of their customers. In highly developed and industrialized economies it is becoming more difficult to differentiate products and services by their tangible assets. The level of technological development is balanced and seldom leads to market advantages. Other characteristics are crucial to gain the favor of the customers. The importance of intangible assets is constantly growing and influences the economic value of a company. Success as such can be evaluated through tangible and intangible assets, respectively hard and soft criteria. Measuring the hard facts is a common procedure. But the results cannot identify exactly the influence of certain design activities. The countable figures build only one part of the value of a company. Invisible qualities are becoming more and more important for the economic value of a company. An intent to measure the invisible assets is related to the brand value as a soft factor. In many companies the brand value represents the major part of their overall value. The intangible assets like reliability and trust strongly influence the reputation and the image of the company and the loyalty of customers. 16

18 The evaluation of brands is carried out only for the big companies. Comparable evaluations for SMEs are not published. It is very probable that banks have developed their own tools to measure the intangible assets of a company in order to decide on financial support. It would be very interesting to know more about the evaluation procedures for SMEs, which are used by banks and to compare their criteria. These data are supposedly top secret. Hard facts can be measured precisely expressed in quantitative figures. The economic success is measured for example: economically: factors to measure are: annual turn over, profit before and after tax, profit margin on one unit (product or service), investments, reserves, capital, shares, liquidity, volume of orders etc. numerically: production, quantity of sales, quantity of innovations, quantity of patents or petty patents, quantity of awards and honors, quantity of complaints, quantity of traders, quantity of customers, quantity of orders, market shares, number of employees etc. in time: length of development, time to market, the time a product or service stays in the market, time until a product is replaced, etc. Figures like these need to be measured to control the productivity and the efficiency of a company doing its business. These data are measured in all types of companies - small and big ones. The measured data are compared with the calculated and expected sales figures. If the expectations are met or even topped, the project is a success. If not, the reasons for the failure have to be investigated and appropriate measures have to be taken. Contrary to public companies small and medium-sized companies need not publish their business data and furthermore they do not like to do so. They don t want their competitors to know details on their business. Efficiency is necessary but not sufficient for sustainable business success says Michael Porter; a unique strategic positioning is indispensable for sustainable success. (13) This is especially true for SMEs as they usually cannot compete on the price with large scale production. They have the advantage of more flexibility and that they are able to respond to special requests of their customers. Specialization is a strategy to strengthen the reputation. 17

19 One approach for considering intangible assets is measuring the brand value. The percentage of the brand value in the overall value of a company is rising high because in industrialized countries the brand value makes the difference. The brand values often represent the major part of a company s total value. According to the report of brand-finance, Swiss companies for example show the highest value on intangible assets. Their brand value represents on an average 75% of the overall value. (14) A well-known method to evaluate the brand value was developed by Interbrand. (15) The Interbrand methodology is based on evaluation criteria like brand earnings, role of brand (influence on customers decision at point of purchase) and brand strength (brand ability to secure on-going customer demand). The results are published in the magazines Business week and Focus. The reputation of SMEs is rather based on their specialties and their innovation skills. Recently a competition between the most innovative SMEs was initiated in Germany. In a multilevel procedure the 100 top-innovators were selected. This seems to be a valuable tool to promote the strength and the innovative power of the SMEs. (16) An interesting subject for research would be to investigate the relation between design and innovation. In general it is assumed that design thinking supports innovation. Although SMEs will never jump into the brand ratings, they create strong brands and are desired objects of purchase for big companies to brush up their reputation. The values and the strength of the purchased SMEs are very often watered down after the merger. One example is the German company Braun. After it had been bought by global company Gillette the unique product design was changed to mainstream mass production. The destruction process of strong brands belonging to small and medium-sized companies by a take-over by global companies would be another interesting subject for applied research in order to find out where, when and why the values of the SMEs disappear. Mergers and the following change processes are usually dominated by the bigger partner and aim at increasing efficiency and share-holder value. The buy-out of an SME intended by Coca Cola just failed. Coca Cola is the No. 1 in the rankings of the world top brands (17) and wanted to buy the emerging 18

20 competitor Bionade. Bionade is a soft drink developed by a small German brewery, which was close to bankruptcy. After years of experimenting the company finally managed to produce a soft drink with the same technological procedure they used to produce beer. The soft drink is produced only with natural ingredients and without sugar. First it was only sold to health resorts and fitness studios. About 10 years ago Bionade became the favorite drink of the admen in Hamburg and developed into a so-called scene drink. The wellness movement supported the success. The production grew very fast and in the year 2006 the company sold 73 billion bottles. Coca Cola was not amused by the success of the healthy competitor, which presented the market with a soft drink that corresponded perfectly to the wellness movement in society. Coca Cola wanted to buy Bionade. The owner of the company refused and is instead eager to beat Coca Cola. (18) In all kinds of branches we find companies starting out in a garage, a car booth or in a students department that grow big within a couple of years and become successful global players, like Nike, Microsoft and Amazon to name just a few. It is worthwhile to take a closer look at the driving forces behind success and the role of design. (see: chapter 3) 19

21 3 The DNA of a company In the following chapters I want to come back to the statements I have made at the beginning. I start with my first hypothesis: The value system and the attitude of the leader are responsible for the corporate culture and the sustainable success of SMEs. The attitude of a human being is derived from her/his values and her/his idea of man. For human beings attitude and values are in a way similar to what instincts are for animals: they regulate and steer behavior. Basic values are based on ethics and moral. Any society agrees on cultural values which are transferred from one generation to another. Basic values of human beings like for example trust, human dignity and loyalty are described as relatively constant. Attitude is derived from personal values and is modified and differentiated by experience, learning processes, cultural socialization, education, personal interests and competences. Related to the leaders of SMEs we can assume that if for example high quality and constant improvements in any possible sense are basic values and design is not yet integrated into the company s policy, it is probable that design could be integrated into the corporate culture in the future to support further improvement in performance and business processes. Leaders who don t care about quality and contentedness of employees and customers are probably less likely to integrate design. There are companies in the market that are highly concerned about the satisfaction of their customers and others that are less so. The relevance of customer satisfaction is growing constantly. With the support of the internet, customers compare quality and prices and communicate their experiences in web blogs. The available information enormously strengthens the power of the customers. A qualitative study carried out in cooperation with Jörg Heithoff (Association of Young Entrepreneurs NRW) and with the students at the KISD (Köln International School of Design) supports my hypotheses. We explored SMEs, which are recognized in Germany as best practice examples in design. The achieved data underline the assumption that the DNA of a company is based on the attitude of the leader. To confirm my first hypothesis I will first describe the results of the study (see: 20

22 chapter 3.1). I will then relate the results to the success factors determined by Tom Peters & Robert H. Waterman and Hans Hass. (see: chapter 3.2) 3.1 Best practice in design by small and medium-sized companies The objective of the research was to find out if the design-minded companies show hidden patterns of best practice for success by design and if so, what these patterns are like. All in all we analyzed 16 SMEs in Germany, famous and success ful because of their design. (19) The SMEs were first analyzed from the outside and later from the inside. We started to explore the consumer touch-points, like the point of sale, the website, the catalogues and brochures, PR, exhibitions and presentations on fairs, service and events. In the second step we had a personal interview with the director/president of the company and visited the production area and the facilities of the companies. We wanted to get as much information as possible to understand the success factors. Therefore we did qualitative interviews based on an interview guideline. The research procedure followed Frederic Vester s ideas of networked thinking. He says that the decisive factor can be a tiny little detail easily overseen. To find the decisive factors, as much information as possible must be gathered and condensed in the further procedure. (20) For the condensation of the information we had a closed workshop session with all participants. All the companies we explored were completely different and had a unique corporate culture. However when we evaluated the data, we figured out that most of them have certain patterns in common: attitude: strong commitment to highest quality in functionality and design / constant improvements management: strong responsible leader personality (in most cases the owner is the leader) corporate culture: low hierarchies / discursive / decentralized responsibility values: high quality / fairness / self-responsibility / uniqueness / openness design: decisions are made on board level 21

23 products: high price market segment / niche markets / long lasting products / selected portfolio / strong quality control distribution: special trade shops / specialists external communication: internet / catalogues / sponsoring of cultural events / fairs internal communication: direct communication between employees, support of further education development: permanent research / cooperation with external specialists innovation management: innovative and classic products / process optimization by benchmarking with the best of the best / co-operation innovation drivers: the leader / new technologies / new user demands / research & development / fairs / external experts / recognition and rewarding of proposals from the employee suggestion system During our visits to the companies we heard quite often: we want to be the leader in terms of quality! This was a general objective. Anyhow, to achieve this objective companies rely on their high standards and quality control of production and on their power to innovate. Interestingly enough, most companies said: we do not spend money on market research! They explained that they know the market data and that they know well what their competitors are doing, but to decide on new products market research is not a useful tool. Market research data reflect the past. New products are directed to the future, therefore research & development and close co-operation with design studios, customers, experts, universities and business partners are more important and determine the new developments. The corporate culture of the analyzed companies is characterized by a strong corporate philosophy and value system. The strong commitment to design is integrated into the philosophy and into the business strategy of the companies, reinforced by the director/president of the company. The leaders of these companies believe in design and make sure that not only the design quality of the tangible assets like products, work places, corporate architecture, external presentation and communication is realized at the best possible level but also the intangible assets such as internal processes, work conditions, communication, relations and services. All the different elements and activities construct the corporate culture as a whole. 22

24 The aim is to guarantee positive experience for all stake-holders. Employees satisfied with their work place have a higher motivation. To produce high quality, highly motivated employees are required to fulfill the standards, which finally guarantee satisfied users and loyal customers. Summarizing, the survey on design-minded SMEs results in the assumption that the design attitude of the leaders creates the corporate culture and vice versa the corporate culture is the breeding ground for design excellence. But the seeds need to be planted and watered to develop fruits. The decisive impulses and orientations are given by the president/director who is in most cases the owner of the company. Design is an important success factor for these companies but it goes along with the organization structure. To understand the organizational factors which characterize successful companies I introduce the theoretical approaches of Tom Peters & Robert Watermen and of Hans Hass. I compare their findings to the findings of our study on design-minded SMEs. 3.2 Success factors In the search of excellence was the title of a book in which Tom Peters & Robert Waterman documented the essence of their knowledge on how to manage a company successfully. For many years they have been working as consultants for American companies and assessed them in doing their business. As a conclusion they name eight criteria, which characterize companies that are very successful and innovative. priority of acting closeness to the customer free space for entrepreneurship productivity through human beings actively lived value system commitment to the core business simple and flexible organization structure clear and precise but loose leadership (21) The above-mentioned success criteria refer to big American companies. To figure out if these criteria are also valid for small and medium-sized companies I refer to 23

25 the research of the behavioral scientist and economist Hans Hass. He became very famous with his research in behavioral science in submarine environments. Based on the theory of evolution he transferred his knowledge from submarine behavior to the behavior on developed industrial markets. He created a model for a sustainable development of SMEs and became a successful company consultant. His thesis is that in highly developed industrial markets goods will be most successfully exchanged by the party who cares thoroughly about the customers and helps them to solve their problems by providing special offers. (22) Exploring the market, he concluded that there are a lot of sharks in management. Like all animals, sharks follow their basic instincts to meet their needs: finding food. They are very well known as dangerous and gluttonous creatures in the ocean. To avoid difficult fights and to avoid waste of energy they prefer to catch injured or old fishes unable to defend themselves properly. Hass discovered that many managers do the same in business. They follow their basic instincts and try to make as much money as fast as possible, without spending a thought on future consequences. In the long run, taking advantage of the partners or consumers weakness is neither the appropriate nor the successful way to do businesses in a highly industrialized market, says Hass. On the contrary the company which understands its clients best and offers corresponding products or services is more likely to establish durable business success. Hass has defined nine rules for business success, which are the core messages of his assessment strategy. The nine theses of Hans Hass address basic values similar to what Peters & Waterman named as responsible success factors. Think about the advantage of the user in order to win Find your niche Find the problems of your customers and solve them Direct your performance towards the needs of your clients Specialize and diversify your performance in the right way Loyal customers steer your success Differentiate between profit and earning money Respect your employees Grow in a qualitative way (23) 24

26 Although the study on design-minded SMEs implies that design plays an important role in business success the above quoted authors who investigated success criteria do not specifically mention design. The comparison of the success factors with the results of the study on SMEs shows that success factors seem to have a more general relevance. Some of the Peters & Waterman criteria are not explicitly mentioned for small and medium-sized companies, because they have been determined by the companies size. Some criteria named by Hass are especially relevant for SMEs. The design-minded SMEs we explored are characterized by a strong commitment to quality and design defined by their leader s value system and his views on a sustainable business strategy. Peters & Waterman named an active corporate value system shared by all employees as a success factor and Hans Hass refers to the value commitment, when he says that offering a product or service to the customers which matches their needs and desires has priority and that profit is not all. The values a company stands for create its uniqueness, make the company distinguishable from their competitors and trustworthy for the customers. It takes a consistent value system, valid on the long run, to get loyal customers. Stick to your core competences is named as success factor by Peters & Waterman and Hass argues that it is important to strengthen the special skills and to diversify them according to customer needs. Both underline the advantages of constant improvement and development of the core business and describe the danger of failure when a company tries to do business in diverse new business areas of which they have no experience. The SMEs of our study had clear objectives for their area of competence and the intent to improve their competences constantly. Their product portfolio was clearly limited to their special branch of activity. Peters & Waterman state that it is important for success to learn from the customers and Hass points out the necessity to figure out the customers problems and to solve them and he requests to direct the performance to the clients needs. The SMEs attach importance to close contact with their customers and traders and put emphasis on research & development. Some of them were exploring future 25

27 tendencies in culture and technology to anticipate future desires in order to provide pro-active solutions. For this kind of knowledge they work together with designers and design studios. For further support, universities, artists, external experts and research institutes are involved in the development of future scenarios. Motivated staff is an important success factor and is named by Peters & Waterman as well as by Hass. Respect and fairness, acknowledgement of achievements, stimulating work environments, rewarding of ideas for improvements, further education and good internal communication, flexible work schedules and making employees responsible are factors that increase satisfaction with the workplace. In the explored SMEs these factors were all considered and the motivation of the employees was very high and as a consequence the fluctuation of staff was very low. Employees seemed to be very proud to work with their company, which is recognized by the public as a good company producing high quality products. Furthermore Peters & Waterman name a simple and slim organization structure and guidance as necessary - minimum control as success factors. Hass did not mention these factors explicitly. The explored SMEs all show a simple and slim organization structure, not only the small ones but also the medium-sized companies. The employees were in direct contact with each other and the internal communication structures were very good. Low hierarchies and employees who know each other are symptomatic for small and medium-sized enterprises and obviously one of their outstanding assets. Direct communication reduces the loss of information, allows for fast reactions and supports the flexibility. The SMEs are characterized by clear objectives and guidelines based on the attitude and values of their leader. The employees final work results are subject to control regarding the fulfillment of the order, dead lines and performance quality. The result counts. Compared to big companies the control system for employees in the SMEs was already reduced to the minimum, they shared responsibility to a certain extent. The freedom to experiment and entrepreneurship are important to create future oriented solutions and sustainable business strategies say Peters & Waterman. This is also true for SMEs and was practiced at most of them by rewarding employees for their ideas to improve, for example, corporate processes, production 26

28 of products or services and providing planning and development teams with time slots for experiments. Permanent improvement of products and service is a must for SMEs to stay competitive. The low hierarchy level supports the entrepreneurial thinking of the employees. In some really small companies with a limited product portfolio, which rarely changes over the years, new ideas are also welcome but not to the same extent. Other factors relevant for SMEs are described by Hass, like find your niche on the market and specialize your offer. For SMEs it is usually difficult - or even impossible - to compete with the big companies on large-scale production. They are more successful with specialized products for a special target group. The advantage is that special products sell for higher prices. The explored SMEs verified this factor. All of them have directed their business activities to the premium and high price market-segment and charge high prices for high quality products. Furthermore Hass strengthens the fact that offering products which solve special customer needs generates loyal customers and it might be that a company over the time will depend on their clients. This can be risky because special needs might become obsolete one day because of new technological developments. Therefore he recommends to develop and to diversify the existing core competences to serve different target groups. The SMEs of our study generally direct their performance to various target groups and in order to grow they sell their products on international markets. In general the design-minded SMEs have a high export rate. Up to 80% of their business is made on global markets. Finally Hass refers to the growth policy and claims that sustainable success in the economic and the ecological sense ask for qualitative growth. This factor was also confirmed in our study. All companies put high emphasis on the quality of their performance. The success factors concluded by experienced business consultants were verified with our study on design-minded SMEs. Although the approaches of Peters & Waterman and Hans Hass do not relate explicitly to the success-factor design there is a coherence between their findings and the organizational patterns in designminded SMEs. These success factors seem to be the base for good design practice. Later on in his career Tom Peters especially underlined the importance of design for the business success of companies. (24) Our study confirmed the assumption that design-minded companies match the success factors to develop 27

29 their corporate strategy and their corporate culture. The fulfillment of the success factors requires strategic design-thinking. Design can only develop its full strategic power when the conditions are set by the leader. This fact signifies that his mindset, attitude and value system are crucial to build the conditions in which design can prosper. These arguments strengthen my first hypothesis that the value system and the attitude of the director or president are responsible for the corporate culture and the sustainable success of SMEs. Her/his value system is the DNA and hence the driving force behind everything the company does and most of all how the company does it. How companies act to create positive experience is discussed by using best practice models to exemplarily address employees, customers and partners experiences in chapter 4. 28

30 4 Corporate Culture The previous chapter outlined that the intangible assets create a substantial part of the companies value. Best practice examples use design in a broad sense to create the corporate culture, which contributes substantially to the experiences of all stake-holders. The second hypothesis: For sustainable success it is a necessity to create positive experience for all stakeholders: the customers and the users, all the employees such as managers, researchers, technicians and designers, the suppliers and traders, the visitors, the advisers and partners is closely connected to the first one. It seems obvious that positive experience leads to more positive experience and that consequently companies with a good corporate culture provide better experiences for their stake-holders. The way the corporate culture is practiced in everyday life, how people interact and how decisions are made depends on the objectives and guidelines determined by the leader. I have already pointed out the necessity for research on the attitudes of the company leaders and the necessity to explore the gap between small and medium-sized companies and designers. In this chapter I want to describe the necessity for applied research on the stakeholders experiences, which match their desires pro-actively. To comment the second hypothesis I point out examples of corporate culture to demonstrate how positive experience for employees (chapter 4.1), for customers (chapter 4.2), and for business partners (chapter 4.3) were created. A big advantage of small and medium-sized companies is that in general the hierarchy levels are very low; people know each other and interact directly. It is very probable that SMEs act more like a group or like a swarm than a top-down management controlsystem. Therefore I introduce swarm theory and swarm intelligence as a theoretical model in the final part (chapter 4.4). Presumably knowledge on swarm intelligence may, in the future, deliver valuable advice for the organization of internal corporate processes and contribute to sustainable corporate culture. 29

31 4.1 Positive experience for employees It is a well-known fact, that employees who are satisfied with their work environment are more motivated and achieve better results. I use the company Wilkhahn as a best practice example to illustrate that the value system of the leader is crucial to shape the work place experiences of the employees. Respect, fairness, trust and responsibility characterize a good collaboration and work-atmosphere. The company Wilkhahn is well known for their social engagement and for their great respect towards employees. The special relation between the employees and the company stems from the beginning of the second half of the twentieth century when the company was rebuilt. The leadership principle is based on the personal beliefs of the former president and owner Fritz Hahne: No order without explanation. After he introduced co-operative leadership in the sixties a participation model was established. The employees are silent shareholders and share 50% of the profit. Three decades later the model was actualized as to changes in internal structures and compensation development. Following the market development in the nineties Wilkhahn was looking for a new organization structure to allow the employees to apply their skills and talents directly to the work process. The president of the company was clear about the fact that his employees were able to build their own house, to arrange their personal finances, to take care of their family and to educate their children. He concluded: Why should these people not be able to arrange their work at Wilkhahn company. Wilkhahn introduced autonomous working groups as a pilot project and under the supervision of a psychologist. The evaluation of the project was promising: employees were more satisfied with their work; the rate of illness decreased as well as the rate of failures and the amount of days employees did not show up was less. Today the employees enjoy a lot of freedom and share responsibility. The working groups receive an order and a dead-line. How they organize the work, who does what and when is completely up to them. What counts is that high quality production is delivered in time. The employees can work between 6.00 a.m. and p.m.; they can work 100 hours in advance and their work time can be 50 hours behind schedule. The change turned out to be an improvement for both sides. Since then 30

32 employees have been more often rewarded for proposals to improve processes and production and participate actively in maintaining and developing the corporate culture. Today, work at Wilkhahn is completely organized in groups and project teams. The organizational structure has been reduced to two hierarchy levels and Wilkhahn sees itself as an living company in which the employees act as entrepreneurs.(25) Just like other companies Wilkhahn has had good times and bad times. Until now the company has survived all crises whereas many other companies in the same sector of business do no longer exist - they are either bankrupt or were bought by a global company. The study of the British Design Council on the top 100 public companies concluded that all companies follow the ups and downs of the market but the level differs. Referring the results of the study to the SMEs leads to the assumption that design-minded companies follow the ups and downs on a higher level and therefore have better chances to survive in tough times. Wilkhahn was always aware of the fact that the design of the physical work environment influences the well-being of the employees and sets visual statements. The production-halls have been built in different decades. Each is a witness to history and represents the technology and the style of the period it was build. Architecture is seen as an important part of the corporate culture. Wilkhahn contracted renowned architects to design the buildings, which were awarded with several architecture prizes. The organization structure of Wilkhahn consists of a number of self-organizing units, which build the company altogether. As in systems-theory the whole is more than the addition of the particles. This kind of structure is comparable to the biological organization structures to be found in nature. The biological organizationstructures have proved their functionality for billions of years and are to a great extent resistant to failures. They can cope with environmental or natural disasters to a large extent. It seems plausible to learn from nature in order to create sustainable organization structures for business. The complexity of new challenges is growing in all companies and requires appropriate handling. Fredmund Malik from St. Gallen University states that the logic of success depends on the 31

33 consideration of complexity and he concludes that the handling of complexity needs new organizational structures, namely structures that organize themselves. (26) A lot of research is already done in the sector of technology - bionic - to benefit from natural principles (27), it is worthwhile to think about the investigation of natural organization structures - biologic. 4.2 Positive experience for customers Consumers are very choosy - they look, compare, evaluate and finally decide for the best option. For companies it is a big challenge to attend to their clients and to create positive experience for them, because loyal customers determine the invisible assets of a company to a large extent. To anticipate customer desires a lot of research activities are carried out like market research, future research and user research. These research activities deliver valuable data. The disadvantage is that the results are often not useful to decide about future customer desires. Prognostic methods like trend scouting, IDEO method carts and cultural scan (28) seem to deliver better information for the anticipation of prospect customer desires. In some businesssectors the customers participate directly in the development process. This is - not only - but very often the case in the BtoB business. The new technologies offer a wide variety of possibilities to keep in touch with the customers. Companies, which have established close relationships to their customers are generally better off. Understanding and empathy are very important capabilities to create positive experience for customers. How customers experience everyday life is an enormous area for applied research. Surveys based on holistic networked thinking can deliver the information to really understand the customers. Companies in general and especially small and medium-sized companies are so different in their competences and performances that every one needs to find his own special way to create positive experience for their customers. SMEs have a limited budget for research. To support them with information on consumer behavior in everyday life in different European countries the research project design by diversity is in preparation. The project is intended to be a co-operation between the University of Wuppertal and the Inholland University. The survey will use video podcasts to explore the cultural diversity and user-behavior in everyday life to support SMEs to design and/or modify their products for export markets. 32

34 I want to illustrate the importance of understanding and empathy and the necessity of applied research dedicated to the special customer living conditions by describing three different approaches: 1. anticipation of customer desires 2. integration of customers in the development process 3. customer social responsibility - after care To point 1 The design department of the Dutch company Philips worked out the first example I will describe. I use this example although Philips is not a SME. However, the project is related to one single project: the children s CT pavilion at the Lutheran General Hospital in Chicago. Therefore, it is not subject to large scale production. I have chosen this example, because Philips has been actively involved in developing appropriate tools and empathic methods to understand people s desires. Under the leadership of Stefano Marzano - relying on his attitude and foresighted thinking - Philips design has developed a great competence in the field of applied design research. The children s CT pavilion was deliberately designed from the patients perspective. The research led to four main themes: improvement of the workflow improvement of comfort on a physical and psychological level quality of contact between patients and staff as well as between patients and waiting family members or friends personalization of the examination environment. The CT is still the same, but the patients experience is different. The processes are transparent and follow the needs of the little patients: permanent contact with relatives is guaranteed, the staff is available and the environmental atmosphere is enriched by projections that can be chosen by the patient and distract from long procedures. Finally the experience for the little patient is much more pleasant and less scaring. (29) To point 2 Along with new technologies new possibilities occurred to integrate the customers in the development process. Pioneering in these activities is the game industry. In computer games such as Second Life and others the users develop new figures, 33

35 new environments, new accessories, new services and so on. They might even sell these items if requested and make real money in the virtual world. Individualization in order to fulfill special consumer wishes is a strong tendency and customers like to be involved in the development processes. The company Lego makes efficient use of their customers creativity. Lego has established a platform where users can place and exchange their ideas on the product mindstorm. Mindstorm is an interactive product that allows users to build an endless number of alternative applications. To stimulate enthusiastic users Lego initiated an international mindstorm-competition. The results are presented on the mindstorm-lego website. (30) The integration of user knowledge, experience and creativity is increasingly important to Lego. Lego benefits from the users ideas and at the same time this activity binds customers to the company. The internet provides the necessary media to do so. Users may benefit from their growing influence on corporate performance and companies may reduce the risk of not matching consumers wishes. To point 3 In saturated markets the way of doing something - the attitude and the basic values - are important for customers loyalty. Respect for human values and for the customer as a human being contributes to the identity and uniqueness of a company. Corporate social responsibility has become an objective in many companies, but the promises are not always kept. One good example for the application of corporate social responsibility is the medium-sized enterprise Betapharm, producers of generic drugs. As a medium-sized company Betapharm has no chance to win the price battle against the big boys. Therefore the company decided for a new strategy and applied the idea of corporate social responsibility. The care for cancer or stroke patients by pharmaceutical companies usually stops after the medication has been sold and/or the symptoms sufficiently treated in a medical sense. Afterwards the patients stand on their own to find their way back to a normal life. Betapharm has developed a special aftercare service for cancer patients called Betacare. The company helps patients solve the problems that come along with the illness and cares for them by offering different support activities. The company increased its business and now occupies third position in the market for generic products. Global companies occupy the first two places. This example 34

36 shows how a medium-sized company created a unique market-position and can compete successfully against the big ones by understanding their customers and taking them seriously as human beings. They are more than just buyers. Betapharm makes profit with non-profit activities. Successful activities are very likely to be copied. That is what is happening now. Therefore, the challenge for Betapharm lies in thinking ahead and understanding their consumers always better to position themselves as caretakers instead of sales people. (31) To create positive experience for customers understanding their queries is indispensable. Research methods like qualitative interviews and observation techniques are appropriate tools for these objects of investigation. The research project in preparation design by diversity will use these types of methods. The results will be made accessible for SMEs. One possibility is to cooperate in a later stage with the research project of the Research and Innovation Centre Entrepreneurship (RICE) enterprises on the move, which is financed by the Inholland University and has just started. 4.3 Positive experience for partners Most companies depend on providers to deliver parts for production. Even though they are independent, they still form part of a network and depend more or less on each other. A group of small companies in the electronic sector has built a production-chain to produce circuit boards for steering units. When they got a big contract, the work-load went through the chain with the ongoing production. Suddenly one company needed many new employees while the others nearly ran out of work. To solve the problem, a research project financed by the German Federal Ministry for Education and Research was started up. Now the employees move along with the work-load. To enable the exchange of employees special legal conditions had to be created. The final result was a success for all partnercompanies. Employees who work in different stages of the production process return to their mother-company with new knowledge and with this knowledge they improve internal processes. Failures in production have been reduced since then. Specialists can be exchanged and cost less than hiring externals. The alliance benefits from the emergent processes. The companies benefit not only from swarm 35

37 intelligence, they also benefit from the fact that a swarm is bigger and stronger than a single fish and so they can protect each other in difficult economic situations. Anyhow, certain rules, obligatory for all partners to guarantee a sustainable cooperation, have had to be established: poaching employees from one of the partner companies is not allowed calculation principles and rates have to be accepted intellectual capital has to be respected All the examples mentioned above in a certain way make use of swarm intelligence to generate positive experience for employees, customers or partners. The next chapter 4.4 will give an overview of the principles of swarm intelligence and refer to some areas of application. Although swarm intelligence has been used selectively the scientists have not yet claimed the business world as a subject of research or for application of results. 4.4 Swarm intelligence a new approach to structure organizations The examples mentioned above have shown that low hierarchy, decentralized responsibility and auto-organizing groups support processes and organization structures to improve experiences for the stake-holders. The tendency to cut hierarchy levels down and to establish project teams instead is an ongoing process in developed industrialized societies. Companies with decentralized responsibilities seem to make more efficient use of the knowledge and skills of their employees. Progressive companies have organization structures similar to natural autoorganizing systems. In auto-organizing systems hierarchies do not exist. Nature is an auto-organizing system composed out of many auto-organizing sub-systems interrelated to each other. Over the last years swarm behavior and swarm intelligence (32) came into the focus of discussion. SMEs seem to be predestined to apply cognitions from research on swarm intelligence. For example in natural swarms the amount of people joining the swarm is limited and the number can increase or decrease. Scientists are working hard to discover how swarms function. It is still a miracle how a crowd of non-intelligent animals can develop great intelligence as a group. For example a 36

38 single ant is quite stupid, but a swarm of ants is capable to do incredible things. In relation to the size of their bodies, the high buildings they construct, are much higher then the highest building constructed by human beings. They create complex road-nets, take care and secure the feed of the whole swarm. Also birds, bees and fishes live in swarms and develop intelligent behavior. It seems worthwhile to examine how swarm intelligence can be used to improve organization structures in SMEs to create better experiences for all. The biologist Jens Krause, specialized in the investigation of swarm behavior, was invited to deliver a speech at the 4. Design Management Forum 2007 in Cologne. (33) For the first time in his career he was discussing his research with design managers and he concluded afterwards, that transferring the knowledge on swarm intelligence to the organization structures of companies seems an interesting field for further research and application. The business world already knows several examples of the application of swarm theory to solve certain problems. Knowledge generated from swarm intelligence can be useful for different purposes. Beside improving organization structures and generating new knowledge in emergent processes, logistic processes may be improved; decision-making and customer integration may be supported. The investigation of swarm intelligence may deliver interesting hints for sustainable organization structures in enterprises. The characterization of swarms is that they have no hierarchy. They organize themselves and the swarm functions by respecting only a few rules. For example shoals of fish organize themselves by three rules: move to the centre of the other you see in the surrounding field move away if somebody comes too close move in the direction your neighbor is moving (34) If we compare these rules to the instructions for autonomous working-groups, we notice an analogy, although the content is different and employees are no fishes. The instruction for autonomous working-groups in production could be: produce a certain amount of products comply with the order before a certain date 37

39 arrange your work contribution with the other team members Swarm theory concludes that auto-organization creates intelligent solutions. Similar experiences have been made in companies, e.g. the quantity of ideas for improvement delivered by the employees usually increases after an employee suggestion system has been established. The creation of new knowledge and intelligent solutions is a great advantage for the companies, because it strengthens their innovative power and their competitiveness. Contrary to swarms SMEs have a leader and SMEs need a leader. This might seem a paradox, but in my opinion it is not. Specially trained people working in a highly developed industrial economy are different from bees, birds and fishes. For example: bees are born into their swarm with the inherent determination to collect pollen to feed the queen and to guarantee the survival of the swarm. Human beings need to decide which swarm they will join. Thus, an engineer has to decide if she/he joins a swarm to construct trains, washing machines or satellites. The difference between swarms in nature and working groups in industrialized countries is the diversity and the time limitation. A working-group consists of people with different characters, different talents, different skills, different knowledge, different experiences and different cultural backgrounds, who work together temporarily. People choose the swarm they will join. They make their choice by comparing their own attitude and value system with the attitude and value system of the swarm respectively the company. Highly sophisticated swarms in industrialized societies need a leader who sets the objectives and creates the rules and guidelines for the working people. The new generation of leaders sees their task primarily in preparing the conditions for the swarm activities to prosper, because they know that they can exploit the synergy of creativity, intelligence and knowledge for innovative solutions and a sustainable development. The investigation of swarm intelligence and swarm behavior is still in an early phase. Lots of phenomena are still unknown; especially the human phenomena of swarm intelligence. Nevertheless it seems to make sense for SMEs to figure out how swarm intelligence and auto-organizing processes can be used to increase the development potential, the innovative power, the motivation of the staff and the strategic positioning. The co-operation on further research projects with biologists 38

40 specialized in swarm intelligence, is desirable to get better understanding of the differences between swarms in nature and human swarms in industrialized environments and to find out which principles are transferable. Knowledge on swarm intelligence is also used to investigate optimization of logistic processes, to name just a few: transportation of cargo goods, traffic jams, organization of crowds in emergency situations or the prevention of panic in huge public events, like the hajj in Mecca. Swarm intelligence can also contribute to decision-making. Experiments have established that the average estimation of a group is usually more precise than the best single estimation. James Suirowiecki wrote a book on these phenomena with the promising title The Wisdom of the Crowd. He describes an experiment by Francis Galton about 100 years ago, to demonstrate that the crowd is very smart. Galton joined a weight-judging competition for an ox on a farmers market. More then 800 people voted - experts and non-experts. The best guess was supposed to win a prize. But Galton was interested in the average of the votes. He figured out that the crowd had guessed the weight of the ox to be pounds. The exact weight was pounds. The crowd s estimate was nearly perfect. Meanwhile a lot of similar experiments have been carried out. The results have confirmed that the average guesses of the crowd are generally more precise than the best guess. The wisdom of the crowd refers to swarm intelligence. Suirowiecki says that four conditions have to be fulfilled to apply the wisdom of the crowd successfully: diversity: everybody has private information independence: everybody has his own opinion - not a determined group opinion decentralization: people are specialized and have local experiences aggregation: some mechanisms to turn private judgments into a collective decision If these conditions are met it is a very likely to achieve an accurate collective decision. (35) It would be interesting to find out, if market research results would be more reliable if the test group were asked for a guess instead of an opinion. Before the smart car 39

41 was produced a market study was carried out and people were asked if they would buy this car. The majority of answers was yes. When the car was finally on the market the sales rates stayed far behind the expected numbers and three months after the launch, the company considered taking the car out of production. The remaining question is, would the result of the research have been different had the test group been asked whether they thought people would buy this car? The use of swarm intelligence may help minimize the risks for business decisions. Furthermore swarm intelligence can lead to new approaches to integrate stakeholders in the planning and development processes. The cited examples show that the integration of swarm intelligence can support the achievement of corporate objectives in different ways: satisfaction of employees by introduction of autonomous working-groups and delegation of responsibility to enlarge motivation and creativity improved decision-making and reduction of risks by making use of the wisdom of the crowd integration of customers and external partners and specialists into the development process to generate positive experience for all creation of new businesses by integrating the prospect customers The internet technology supports the auto-organization processes. Data can be transferred to anybody in nearly any place in the world at any time. Direct communication has created powerful tools, like blogs and communities to express personal and group-interests. The Internet is accessible to nearly everybody and it is not possible to control it. Every day new businesses and new communities are created, new activities are planned and new information is published. The internet enables emerging processes characteristic for swarm intelligence. It has become a substantial part of our private and professional lives. This is another reason to investigate swarm intelligence, because emerging processes in the internet are not only put to good use but to bad use as well. Relating the information on swarm intelligence to the success criteria discussed in chapter 3, it shows that they have a lot in common. As far as swarm intelligence has been applied, it has increased entrepreneurship, responsibility and creativity of the 40

42 employees, strengthened the corporate culture and the innovative energy, improved the customer relationship and competitiveness. The swarms only function well when there is an agreement on the objectives and the guidelines and rules. That is why the artificial swarms in industrialized businesses need a leader, who cooperates with the swarm and is willing to learn from swarm intelligence. Application of swarm theory does not automatically lead to success. The application in the right way, at the right time, in the right place is decisive for success, because all development and change processes require constant thinking and constant designing. 41

43 5 Design strategy After describing the importance of leadership attitude and its significance for positive experience for all stakeholders and the possibilities of swarm intelligence to support the objectives the third hypothesis will be discussed: Design thinking, design management and the strategic application of design into the business strategy improve the processes and the performance of SMEs. Design is now very often named as the key competence of this century. Technical differences between companies are disappearing - the difference is signified by the values a company stands for and the way the values shape the company s culture and performance. People want to buy products and services from companies whose value system matches their own values and they expect excellent service, which makes life easy, comfortable and enjoyable. Good Design is good for all states Tom Lockwood and he mentions the example of the Toyota dealer who increased his sales rate by more than 25% by creating the perfect customer experience. The design studio he hired redesigned all customer touch points for a specific experience. (36) Design competence is based on complex analytic and creative thinking. Therefore holistic design thinking and the strategic use of design support the development of a special and unique position in the market. A design strategy creates a strong and unique corporate culture to clearly strengthen the company s competences, to meet consumer wishes and to stand out from the crowd. (37) Michael Porter has explicitly pointed out how important a unique strategic position is for sustainable success. He also explains that the strategic position needs to be constructed out of many different activities. The more activities are integrated and the more complex the strategy is, the more difficult it will be to copy it. (38) A corporate design strategy always involves many different activities. Porters statement implies the demand to design positive experience for all stake holders in detail to generate a complex network of uniquely designed activities to finally fulfill the dreams and wishes of the target group in a unique and specific way which cannot be copied by other competitors. 42

44 Outstanding design is rarely the result of a sudden ingenious idea, which shot out of heaven like lightning. It is the result of a systematic process starting out with research on customers needs and wishes and new developments in technology to create new ideas. It continues with all the steps of the development process to evaluate, select and decide on the alternatives, the production process, the distribution and sales process and the communication processes - internal as well as external. Strength and weaknesses, chances and risks have to be investigated to define systematically the objectives: what kind of products will be produced and/or what kind of services will be offered and to whom. Outstanding design requires constant learning to improve substantially the ongoing repetition of development processes. The importance of holistic design approaches was brought to a point by David Arbuckle: I believe that managing design, design strategy, and innovation as a totality in the overall business is as important, if not more important, than the individual creative process. (39) To illustrate this statement I describe the example of the company Erco, which shows explicitly that hiring a designer is not enough. Design has to be integrated in the business strategy. In the 60s Erco was a small company producing kitchen lamps and some other types of lamps for private households. The competition was getting rough and the company had difficult times. Designers were hired to make the lamps more attractive. The use of design as styling did not change the business - it did not increase. After analyzing the socio-cultural and economic development, the new CEO proposed a newly designed business-strategy about 40 years ago. Erco decided to produce light instead of lamps. The new design-strategy was a break-through. Today, Erco has become an internationally well-known lighting specialist and is doing business all over the world. Along with the strategy the customers changed as well. Nowadays the main target group is architects. The company has been honored with innumerable national and international design awards and the prizewinning never stopped. Erco illuminates great pieces of architecture around all continents, like the hotel Burj Al Arab in Dubai, the Louvre in Paris and the Tokio International Forum. (40) 43

45 The success was built on the design strategy, the attitude of the CEO. Following his values he developed the objectives and the guidelines and shaped the workenvironment and the work-atmosphere for a holistic cross-disciplinary design strategy. About ten years ago Klaus-Jürgen Maack delivered a statement at the First Design Management Forum in Cologne claiming that Erco would be a smart company if Erco would know what Erco knows. (41) Consequently he started to develop an intranet database to make the knowledge of the company available to the employees and to the cooperating partners - all designed in ERCO style. Design-thinking finds its visual expression in a unique and consequent corporate identity. On a visit to the company in January 2008 we learned that a person would now need more than 20 years to read all the information stored in the company s intranet. The intranet platform is designed to benefit from emerging processes (swarm intelligence). It was also remarkable to see an exhibition on the ideas delivered by the employees that were realized over the time. At Erco, designthinking is a permanent process and design shapes all the processes of the company and links them together. Going back to the roots of successful businesses we usually find a story of personal involvement and identification with the business idea. In general there was a lot of passion, enthusiasm and willingness to realize a great idea, the disposition to take the risk as well as a strong sense for quality. This is true for brand new start-ups as well as for companies with a tradition going back more than a hundred years. People with a strong will to realize their own ideas and to create a business seem to have a sense for design and quality as the example of Dyson shows. At the end of the seventies when I was doing the research for my doctorate thesis I investigated the technological systems of vacuum cleaners, which had not changed basically since vacuum cleaners were invented about a hundred years ago. That time I found a little note in a newspaper about someone who was experimenting in a garage in Great Britain with a complete new technology for vacuum cleaners. His idea was to build vacuum cleaners that work with centrifugal force. At the time nobody really believed that he could succeed. 30 years later Mr. Dyson is a rich man, his company dominates the market; he holds about 1300 patents. Dyson has a huge research, development and design-team, which is permanently experimenting to improve the 44

46 products in order to secure its unique market position. Patents expire after 20 years, therefore the company always strives to be ahead of the competitors and followers in the market. Strategic design-thinking seems to make the success sustainable. (42) Companies cannot rest for a second; they have to go ahead and to be innovative all the time. The impulses for innovation can come from all different areas, technology, management, trade, changes in user-behavior, competitors and so on. Most probable is a mixture of different inputs, which might even not be completely new in itself, but leads to completely new solutions when combined with each other. The integration of knowledge from different disciplines is the strength of designthinking. Design-thinking can connect the expertise and the knowhow of different areas to existing problems and create new and innovative solutions. A designstrategy, which involves all areas of the company, can therefore contribute to business success on the long run. Management-thinking is rather linear and strives for efficiency; design-thinking is rather holistic, chaotic and emotional and strives for uniqueness and quality. Striving for efficiency is not sufficient to create sustainable success; furthermore, innovation and design are needed to create a unique profile. The integration of design and business strategy should be an emerging process, because successful new ideas and solutions are the result of net work and holistic thinking. In this context it seems logical that Rita Sue Siegel - well known headhunter in the US - has started to recruit CEOs in the design world arguing that designers are prepared to think comprehensive and holistic and that is obviously necessary to develop new business perspectives. (43) Advanced design-strategies - corresponding to the highest category on the design ladder - have turned out to be cross-disciplinary approaches integrating all business processes. Companies with strong design-awareness usually create an original corporate culture, representing their values and competences. In how far design is actually used in a small and medium-sized company depends on the attitude of the leader and refers back to the starting point. 45

47 6 Conclusions and perspectives At the beginning I described my hypothesis, which I further explained in my remarks to give reasons for their plausibility and to deduce research objectives. The most important and most promising research questions will be the subject of further research activities at CBRD. After introducing my hypothesis in chapter 1 I identified firstly the relation between design and business-success. I introduced the Danish survey on the economic effects of design and the British study, which compares the performance of the top 100 public companies differentiated by their designawareness in chapter 2.1. Both studies confirm that design has a positive influence on business-success, but do not explain how and why. In chapter 2.2 I described that the concrete effects of design are difficult to measure. The appropriate tools to measure the qualitative, intangible and mostly invisible characteristics of design need to be developed. This seems to be important when we consider the fact that the brand value of a company represents the highest percentage of a company s total value. The uncertainty about the financial effects of design is supposedly one of the reasons that hinder leaders of SMEs to make use of design. Others believe in the quality of design or are convinced that the investments will pay off. It is the attitude of the leader that decides about how the corporate culture develops. They represent the DNA of the company and are fully responsible. In chapter 3.1 I introduced the results of a survey on best practice SMEs in design, to describe their patterns of success and to compare them in chapter 3.2 with success factors named by business consultants. The data comparison shows that design-minded companies comply with the success factors named by the business consultants. Success factors seem to correlate with the design-awareness and cross-fertilize each other. The leader determines objectives, rules and guidelines, so we can wonder if it is the design attitude that shapes the success factors or if the success factors shape the design of the corporate culture. The corporate culture in general and especially the way people interact is the issue of chapter 4, which refers to the hypothesis that positive experience for all stake-holders support sustainable success. I underline this hypothesis with examples from best-practice companies exemplarily lining out the stake-holders: employees in chapter 4.1, customers in chapter 4.2 and partners in chapter 4.3. One important common characteristic of the cited examples lies in the flat hierarchy and the benefit from synergy of emerging processes, which build an 46

48 analogy to swarm-behavior. The discussion of the phenomena of swarm-intelligence goes along with the global success of the internet and the necessary changes in organization structures. SMEs show attempts to use swarm intelligence. Research related to human swarm behavior and to the business world is in its infancy. Cognition on swarm behavior could provoke positive changes in the corporate culture and stabilize sustainable success. My network of hypotheses is enhanced in chapter 5 with the description of the advantages of a complex and integrated design strategy. It is assumed that design-thinking encourages the innovation and development processes and shapes the corporate culture. While I elaborated this text I named several research questions, not all of them can be attended to by the CBRD. In Chapter 6.1 I will summarize the most important and manageable research items that I suggest as future subjects of applied research at the CBRD. The suggestions will be discussed with the CBRD fellows and the RIC Entrepreneurship fellows. In the final chapter 6.2 I introduce recent CBRD activities. 6.1 Research questions The task of the CBRD is to carry out applied research for companies and organizations in the field of strategic and practical significance of brand, reputation and design management (see: annex 1). With these tasks CBRD focuses on SMEs. The activities of applied research are supposed to develop support programs for the integration of strategic design into SMEs. The intention is to improve their performance and their competitiveness. Quite a lot of SMEs do not use design or do not make sufficient use of design, hence a number of research items for CBRD. Below I describe the research questions I have mentioned in my paper, but I concentrate on the projects with priority and which can be handled by CBRD: In the first place it is important to achieve a valid picture of the current status quo of the management of design-activities and design-strategies in SMEs and in case design is not used, we want to know the reasons. We expect valuable data to form a benchmark study, which is work in progress. CBRD is partner of the ADMIRE project and responsible for the work package 7: the execution of a benchmark study on design management activities 47

49 in European SMEs. CBRD has conducted a pilot study to validate the questionnaire for the quantitative European benchmark study and is right now preparing the final report on the pilot study. The pilot study experience is used to modify and improve the questionnaire for the European benchmark. The pilot study has already confirmed that a high percentage of companies is either not using design or not exploiting it to it s full power and competence. The main hypothesis of my paper states: attitude is essential! The logical consequence is to explore the attitudes of the leaders of SMEs. This should be done in a qualitative survey itemizing the concerns and priorities of the leaders, differentiated by branches. The mind-set and the values system as well as the resulting objectives are necessary to the development of support and strategies and cooperation projects between Inholland University and SMEs, in order to understand the attitude it makes sense to coordinate this project with the entrepreneurial parliament, which was developed by the research group Digital World. Understanding the thoughts and activities of SME leaders is the key to all further collaboration. Discovering the reasons for the difficult relation between SMEs and designers is another important research subject, which is also in preparation. The existing communication problems have something mystic and are bewailed by many designers but also by SMEs. To improve the relationship and to initiate support strategies it is indispensable to discover exactly which problems disturb the relation-building. Design-thinking is supposed to encourage innovative processes. Design-minded leaders of SMEs in best practice examples create a corporate culture, which animates and motivates employees to think ahead and to take an active part in the corporate development process. The question of how designthinking and design-management influences innovation was also subject of discussion in the last ADMIRE project meeting. There may be an opportunity to continue the research activities on European level with a research project that concentrates on the interrelationship of strategic design competence and innovation strength of SMEs. 48

50 Creating positive experience for customers is of great importance for sustainable success. The anticipation of consumer wishes is crucial for success and furthermore for the loyalty of the customers. SMEs sell a high percentage of their products on external markets and have therefore to consider cultural diversities of their customers and users. Regional rituals and user habits determined by different cultural backgrounds generate different expectations. The project design by diversity intends to develop a service that provides SMEs with information on cultural differences in customers expectations. The project will be cooperation with the University of Wuppertal, which is preparing the research application plan. The corporate culture and the organization structure interact with corporate performance and influence business success. Decentralization of responsibility and the installation of auto-organizing groups have proved to stimulate emerging processes, new ideas and innovative power by making use of swarm intelligence. CBRD intends to collaborate with scientists who are experts on swarm intelligence to find out which structures in SMEs could be further improved by swarm intelligence. 6.2 Activities of CBRD The main purpose of research is to create new cognitions and new knowledge. The importance of applied research is growing along with the complexity of factors that need to be considered for the future development of corporate organizations. This is especially true for SMEs for several reasons: in general they don t have large budgets for research, they do not have the people to carry out the research and a big number of small and medium-sized companies are neither aware of the necessity to do research nor of the benefit they could achieve. By providing the knowledge of applied research to the SMEs, CBRD could link SMEs closer to the Inholland University. A first step has already been taken. CBRD is partner of the ADMIRE project which is financed by the European Union to support design management activities in Europe. The task of the CBRD is to carry out a European benchmark study on the design management practice in European SMEs. In the beginning of 2008 a pilot study was realized with partner institutions 49

51 of the ADMIRE project. The aim of the pilot project was to test the questionnaire for the benchmark study, which has to be carried out as a quantitative survey. Many partners of the ADMIRE project supported the pilot study. In total the pre-test sample consists of 57 interviews carried out in eight different countries. The pre-test was set up to answer questions like: are we asking the right questions? have they been formulated in an understandable way? are the answering categories relevant, sufficient and clear? The evaluation of the pre-test results confirmed that a valid questionnaire had been developed. They detailed qualitative comments delivered by the interviewers from the different countries addressing the same factors and providing valuable hints for the modification of the questionnaire for the benchmark study. In general the SMEs were pleased about the initiative except for the micro-companies (1 9 employees). Micro-companies felt bothered sometimes because the questions asked in the questionnaire did not address their every-day business. As a consequence the micro-companies will not be considered in the benchmark study which will presumably be carried out in summer The relationship between INHOLLAND University and SMEs is frequently subject of discussion in the Research and Innovation Centre Entrepreneurship (RICE) of which CBRD as well as the research groups Digital World, HRM & Personal Entrepreneurship, Intellectual Capital, Entrepreneurship in SMS companies, and Microfinance & Development small sized companies are members. Recently RICE started the research project enterprises on the move which is based in the initiatives of CBRD and the Schools for Economics &Technology in Haarlem and Alkmaar. The project includes several activities, such as the entrepreneurial parliament to improve the cooperation between Inholland University and SMEs in The Netherlands and to contribute to their sustainable development. The discussion and reflection of masterminds and lateral thinkers is an enormous source of valuable knowledge. As mentioned in chapter 3 basic human values are stable, but the patterns of life and accordingly the attitudes have are modifying. Nevertheless we can learn a lot from history, because the structural problems 50

52 remain mostly the same, only the environmental conditions change with the technological progress. The fellows are working on a research subject of their interest or share one they are interested in. The CBRD meetings are supposed to give inspiration and to strengthen curiosity and motivation, to continuously deepen the research activities. CBRD meetings are combined with public lectures held by the fellows or external guests to exchange knowledge and to learn from each other. I am looking forward to exciting research projects at the CBRD that will further strengthen my hypothesis that attitude is essential to create positive experience for all and that strategic design shapes sustainable success for SMEs. This research guide-line (chapter 6.1) is based on my personal experiences and serves as an orientation frame. CBRD is open to discuss new and related ideas in the field of brand, reputation and design management, which are delivered by the fellows of CBRD and RICE as well as from externals. 51

53 7 Notes (1) Wieland, Josef & Conradi, Walter; Corporate Citizenship, Marburg 2002 Herchen, Oliver; Corporate Social Responsibility, Norderstedt 2007 (2) National Agency for Enterprise and Housing; The Economic Effects of Design, 2003 (3) Pine, Joseph B. & Gilmore, James H.; The Experience Economy, Boston 1999 (4) Pine, Joseph B. & Gilmore, James H.; Authenticity, Boston 2007 (5) National Agency for Enterprise and Housing; The Economic Effects of Design, 2003 (6) National Agency for Enterprise and Housing; The Economic Effects of Design, 2003 (7) Design Council; The Impact of Design on Stock Market Performance, London 2004 (8) The design ladder was adapted in a modified way to the ADMIRE project (9) Apple Reports First Quarter results, 2008; library/2008/01/22results.html. Dell, Fiscal 2007 in Review; com/content/topics/global.aspx/about_dell/investors/financials/index?~ck=ln&c =us&l=en&lnki=0&s=corp (10) Lockwood, Tom; Design Value: A Framework for Measurement, in: DMI Journal, 4/2007, p (11) KISD project documentation; Alles ist Design nichts ist Design, Köln 2007 (12) Centro de Desgin Paraná: Criacao Paraná 2005 (13) Porter, Michael; Wettbewerb und Strategie, München 1999 (14) Brand Finance Switzerland; Dreiviertel der Vermögenswerte von Schweizer Unternehmen sind immateriell, press release, January 18, 2007 (15) (16) Späth, Lothar (ed.); Top 100 Die 100 innovativsten Unternehmen im Mittelstand, Frankfurt 2007 (17) Interbrand, Zintzmeyer & Lux; Die 100 wertvollsten Marken 2007, Press release, July 26, 2007 (18) (19) Wolf, Brigitte; Pattern of Success of Medium Sized Industries, lecture at the 2. Design Management Forum, Köln

54 (20) Vester, Frederic; Die Kunst vernetzt zu denken, Ideen und Werkzeuge für einen neuen Umgang mit Komplexität, München 2002 (21) Peters, Tom J. & Waterman, Robert H.; Auf der Suche nach Spitzenleistungen, 5. edition, Landsberg am Lech 1994 (22) Hass, Hans; Der Hai im Management, München (23) Hass, Hans; Der Hai im Management, München 1999 (24) Peters, Tom; Design, 2005 (25) Wolf, Brigitte; Wilkhahn: A Tradition at the Cutting Edge, in: Design Management Journal, p , Volume 13, 2/2002 Wilkhahn (ed.); Mehrwerte, Bad Münder 2000 Wilkhahn; 100 years +, Bad Münder 2007/2008 (26) Malik, Fredmund; Unternehmenspolitik und Corporate Governance. Wie Organisationen sich selbst organisieren, Campus (27) Blüchel, Kurt G. & Malik, Fredmund; Faszination Bionik, Gütersloh 2006 (28) Culture scan was developed by Philips and is ongoing monitoring process of cultural changes in the world. The intention is to track, to interpret and to forecast how contemporary trends influence developments on a regional, national or global level. Culture scan uses socio-cultural trend analysis to examine and forecast trends in combination with visual trend analysis to visualize what it would look like. (29) Marzano, Stefano; Past Tense, Future Sense, Amsterdam 2005, p (30) (31) Klütsch, Kerstin; Profit with no profit (graduation thesis), Köln (32) Kennedy, James; Russell, Eberhart C. & Shi, Yuhui; Swarm Intelligence, San Francisco 2001 (33) Krause, Jens; Animal Social Networks and Collective Behavior, lecture at the 4. Design Management Forum, Köln 2007 (34) Reynolds, Craig; Steering Behaviors for Autonomous Characters, in: the Proceedings of Game Developers Conference 1999 held in San Jose, California, Miller Freeman Game Group, San Francisco, California, P (35) Surowiecki, James; The Wisdom of the Crowd, USA

55 (36) Lockwood, Tom; Design Value: A Framework for Measurement, in: DMI Journal, 4/2007, p. 94) (37) Dziersk, Mark; Visual Thinking: A Leadership Strategy, in: DMI Journal, 3/2007, p (38) Porter, Michael; Wettbewerb und Strategie, München 1999 (39) see: Gornick, Naomi; What s it like out there? The Value of Industry-based Research Projects in a Graduate Curriculum, in: Design Management Journal, 3/2002, p. 75 (40) ERCO (ed.); ERCO Lichtfabrik, Lüdenscheid (41) Klaus-Jürgen Maack; 1. Design Management Forum Design Denken, Köln 2002 (42) Dyson, James; Sturm gegen den Stillstand, Hamburg 2004 (43) Siegel, RitaSue; Design improves Lives and Business, Hong Kong Polytechnic University, November 25,

56 8. Annex 8.1 Annex 1 Centre for Applied Research in Brand, Reputation and Design Management (short: CBRD) is concerned with applied research and education within the fields of brand management, reputation management and design management. Whereas brand management focuses on questions like how to add value in a company s offering and how to leverage this value to other entities (like subsidiary companies and products), reputation management focuses on questions like how to build up and manage a corporate reputation and how to integrate various instruments of communication. Design Management is concerned with managing design processes within a company so as to increase the corporate value and reputation within a market. The vision of CBRD is that these three areas of interest with their different backgrounds and perspectives should be integrated in order to discover new insights whereby companies are better able to strengthen relationships with their stakeholders. The research group What is the objective? How does a company build up a reputation and how does it secure a solid place in the market? This complex question occupies centre-stage at the research group Communication & Design Management. Internationally the research group is known under Centre for Applied Research in Brand, Reputation and Design Management (CBRD). It combines the three disciplines of communication, marketing and design management in order to provide better insight into the issue. 55

57 What do we do in the field of research and education? The CBRD research group is working on an innovative combination of three disciplines: Brand management: how to turn a name into a strong marketing instrument? Reputation management: type of communication for building and keeping up a strong reputation? Design management: how to create a convincing image of your company or organization? Whom do we collaborate with? The research group Communication and Design Management connects education, science and the work field. This involves more than doing research and preparing and publishing branch-related articles. The research group also gives courses, develops curricula and organizes classes, conferences, work shops and training. The research group maintains contacts within corporate life, government bodies, branch organizations, professional magazines and publishers. The lector The Centre for Applied Research in Brand, Reputation and Design-Management (CBRD) has been run by Prof. Dr. Brigitte Wolf since 1 October Activities Since 2003 the lectorate Communication and Design Management (CBRD) has been active in the area between study, science and corporate life. Research and publication of branch-related and professional articles connect the three worlds. We are also active in the field of educational development. Furthermore, we organize classes, work shops and training and maintain contacts with companies and corporations. 56

58 Applied research Our research adapts current knowledge and experience to put to use in the daily practice of companies and organizations. Small and medium-sized companies are an important target group. The research results are always open for consultation by interested parties in educational and professional practice. Assigned Research The CBRD can act as external client to assign research projects. Research into a certain issue in daily practice can take place in cooperation with external partners. Every research assignment requires a very clear starting point and correct organization. CBRD guarantees research quality. Allowing for publication of the research results is important in view of the societal duty of the research group to impart knowledge with stake-holders. All parties involved at the beginning of the assignment decide together on how to impart the knowledge. Lector and fellows Prof. Dr. Brigitte Wolf is working with Gert Kootstra on the ADMIRE project. Furthermore she has elaborated two research proposals. One was approved in a modified version and has now been started in cooperation with other research groups at the INHOLLAND University. She has worked out the concept and the curriculum for an international master program in Design Management in cooperation with universities in North- and South America, Asia, New Zealand and Europe. The CBRD fellow Gert Kootstra is the main driver of the ADMIRE project. He has established the contact to the European research consortium. The ADMIRE project will provide reliable data on how design is managed in European SMEs and information on the reasons that prevent companies from introducing design and design-thinking. It is the first time that a study like this has been done to describe and explain the status quo of design management in Europe SMEs. This project is a first step to further researchprojects on European level, especially on the connection between strategic design and innovation. 57

59 Fellow Jaap van der Grinten is doing research on positioning. Recently he has been writing a book to summarize his results and make them available for everybody. Visual knowledge building is the subject of the activities of fellow Willy Geurts, who has finished his paper and is looking for a publisher. He is also involved in the planning process for an international master program on visual knowledgebuilding in cooperation with the universities of Helsinki (Finland), Lucerne (Switzerland) and Essen-Duisburg (Germany). Recently Joris Funcke has started as a fellow of CBRD and he is preparing a research project called bridging the gap. The subject of his research lies in the well-known difficulties in communication and cooperation between designers and SMEs. We expect the results to help us understand these difficulties and furthermore to enable us to take the right measures not only to avoid misunderstanding in the future but also to improve the cooperation between designers and small and medium-sized industries. The associate lector Cees van Wijk is doing his doctoral thesis on avantgarde now and then which covers a special part of design-research: the investigation of cultural innovation and the role of progressive design movements in the past. He is also the author of the Dutch study-book De Media-Explosie. Trends & issues in masscomunicatie and co-editor of the Dutch serial Merk en Reputatie, in which a new publication on issues-management has just appeared. It is the aim of the CBRD to link education to applied research. Students are now involved in the research activities. A special research minor Brand, Reputation and Design-Management was developed and lectured for the first time during the winter term 2007/08 at the School of Communication and Media of InHolland University. Cees van Wijk also involved the students of this research minor in the pilot study of the ADMIRE project. To further link education and research a master program with the working title master of design management is in preparation. On this project CBRD cooperates with ASAR. An applied research project is the subject of the master thesis in the concept for the study program. CBRD fellows Helma Wijnand Schut and Simon Palser have been supporting the working group. 58

60 Applied research projects can deliver valuable knowledge for the sustainable competitiveness of SMEs. The research fields are manifold. I have already pointed out areas of interesting research subjects in the previous chapters. These research questions are a guideline for prospect research activities, they coincide with the mission statement of the CBRD (see: annex 1) as well as with the RICE objectives (see: annex 2). What is true for SMEs is also true for CBRD: The attitude is essential! It is a great chance to work with a group of people sharing the objectives and values of CBRD. Should you be looking for opportunities for cooperation with CBRD, please contact [email protected], (tel.nr ). CBRD Dissertation award The research group grants an annual dissertation-award for students. They stand a good chance to win if their research brings about new, interesting insights. Another condition for participation is that the dissertation treats a subject in the field of brand management (marketing communication), reputation management (concern communication) or design management (design). Advice for graduation Upon consultation with the student s graduation teacher a CBRD expert can be asked for advice. The CBRD member then acts as consultant and imparts advice on that specific part of the dissertation or practice assignment for which he or she has expert knowledge. 59

61 8.2 Annex 2 The Research and Innovation Centre Entrepreneurship bundles all the INHOLLAND University research into entrepreneurship. Six research groups and ten Schools within INHOLLAND University study different methods from different angles to improve business, organizing and entrepreneurship as such. The RIC Entrepreneurship studies entrepreneurship at four levels: - The student as an entrepreneur: entrepreneurship as a competence. Important entrepreneurship competences for the future and how to teach these? - Business as an activity: starting a company How to teach and stimulate students into becoming entrepreneurs? - Business organizations: entrepreneurship as an organizational competence. How can a (large) organization be business-minded? How to stimulate intrapreneurship? - The business society: entrepreneurship as part of a culture How do countries get more business-minded? The research groups: Intellectual Capital, HRM & Personal Entrepreneurship, Communication and Design Management, Digital World, Business in SMS companies, and Micro financing & Development small sized companies work together in this RIC. Survey Research and Innovation Centre Entrepreneurship Communication and Design Management -prof. dr. Brigitte Wolf Rotterdam Digital World drs. Frans van der Reep Rotterdam HRM & Personal Entrepreneurship -dr. Petra Biemans Haarlem Intellectual Capital dr. Daan Andriessen Amsterdam/Diemen 60

62 Micro financing & Development small sized companies drs. Klaas Molenaar The Hague Entrepreneurship in SMS companies drs. Dick Scherjon Haarlem In case of questions or problems in one of the above fields or if you are interested in our current research work and its results, please contact Daan Andriessen, chairman of the RIC Entrepreneurship, or mail (website 61

63 9 Literature Apple Reports First Quarter results, 2008; see: library/2008/01/22results.html Bergmann, Gustav; Die Kunst des Gelingens, Sternenfels 2001 Blüchel, Kurt G. & Malik, Fredmund; Faszination Bionik, Gütersloh 2006 Borja, Brigitte; Design and Competitive Edge: A Model for Design Excellence in European SMEs, in: Design Management Journal, Academic Review 2002 Brand Finance Switzerland; Dreiviertel der Vermögenswerte von Schweizer Unternehmen sind immateriell, press release, January 18, 2007 Bruce, Margaret & Bessant, John; Design in Business, Essex 2002 Capra, Fritjof; Verborgene Zusammenhänge, München 2002 Cube, Felix von; Lust an Leistung, München 1998 Dell, Fiscal 2007 in Review; dell/investors/financials/index?~ck=ln&c=us&l=en&lnki=0&s=corp Design Council; The Impact of Design on Stock Market Performance, London 2004 Design Council; Managing Design for Excellence Eleven Lessons: Managing Design in Eleven Global Brands, London 2007 Dziersk, Mark; Visual Thinking: A Leadership Strategy, in: DMI Journal, Fall 2007, p Dyson, James; Sturm gegen den Stillstand, Hamburg

64 ERCO (Hrsg.); ERCO Lichtfabrik, Lüdenscheid 1990 Fuller, Buckminster; Bedienungsanleitung für das Raumschiff Erde, Dresden 1998 Gleich, Michael; Web of Life, Hamburg 2002 Gornick, Naomi; What s it like out there? The Value of Industry-based Research Projects in a Graduate Curriculum, in: Design Management Journal, 3/2002 p. 75 Hass, Hans; Der Hai im Management, München 1999 Hennemann, Carola; Organisationales Lernen und die lernende Organisation, München 1997 Herchen, Oliver; Corporate Social Responsibility, Norderstedt 2007 Herrman, Christoph & Möller, Günter; Innovation Marke Design, Grundlagen einer neuen Corporate Governance, Düsseldorf 2006 Heuer, St.; Große Freiheit, in: brandeins, Heft 5, 2007 Kaluza, M.; Von den Fischen lernen, in: brandeins, Heft 3, 2004 Kelly, Kevin; Der zweite Akt der Schöpfung, Natur und Technik im neuen Jahrtausend, Frankfurt 1999 Kennedy, James; Russell, Eberhart C. & Shi, Yuhui; Swarm Intelligence, San Francisco 2001 KISD project documentation; Alles ist Design nichts ist Design, Köln 2007 Klütsch, Kerstin; Profit with no profit (graduation thesis), Köln 2007 Koch, Richard; The Natural Laws of Business; New York

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66 Porter, Michael; Wettbewerb und Strategie, München 1999 Reynolds, Craig; Steering Behaviors For Autonomous Characters, in: the Proceedings of Game Developers Conference 1999 held in San Jose, California. Miller Freeman Game Group, San Francisco, California, p Rocchi, Simona; Unlocking New Markets Via Sustainable Innovation and Design Break Through. A Few Questions for Investigation, Koninklijke Philips Electronics N.V., 2006 Sun Tsu; Wahrhaft siegt wer nicht kämpft, Die Kunst der richtigen Strategie, Freiburg 1988 Siegel, RitaSue; Managing Design Consulting Firms to Survive in Tough Times; in: Design Management Journal, Summer 2003, p Späth, Lothar (ed.); Top 100 Die 100 innovativsten Unternehmen im Mittelstand, 2007 Surowiecki, James; The Wisdom of the Crowd, USA 2004 Vester, Frederic; Die Kunst vernetzt zu denken, Ideen und Werkzeuge für einen neuen Umgang mit Komplexität, München 2002 Wieland, Josef & Conradi, Walter; Corporate Citizenship, Marburg 2002 Wilkhahn (ed.); Mehrwerte, Bad Münder 2000 Wilkhahn; 100 years +, Bad Münder 2007/2008 Willenbrock, H.; Chaos und Kontrolle, brandeins, Heft 2, 2001 Wolf, Brigitte (ed.); Design Management in der Industrie, Giessen

67 Gestao do Design, O Design Management como factor de sucesso, Campina Grande / PB Florianopolis / SC, Brasil 1999 Wolf, Brigitte; Design Management in Professional Life, survey in cooperation with the Design Management Institute Boston, 2002 Wolf, Brigitte; Wilkhahn: A Tradition at the Cutting Edge, in: Design Management Journal, p , 2/2002 Presentations Krause, Jens; Animal Social Networks and Collective Behavior, lecture at the 4. Design Management Forum, Köln 2007 Maack, Klaus-Jürgen; 1. Design Management Forum Design Denken, Köln 2002 Siegel, RitaSue; Design improves Lives and Business, Hong Kong Polytechnic University, November 25, 2005 Wolf, Brigitte; Pattern of Success of Medium Sized Industries, lecture at the 2. Design Management Forum, Köln

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70 Centre for Applied Research in Brand, Reputation and Design Management (CBRD)