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Design management is the business side of design and design managers need to speak the language of the business and the language of design. Design management is a business discipline that uses project management, design, strategy, and supply chain techniques to control a creative process, support a culture of creativity, and build a structure and organisation for design. The objective of design management is to develop and maintain a suitable business environment in which an organisation can achieve its strategic and mission goals through design, and by establishing and managing an efficient and effective system. Design management is a comprehensive activity on all levels of business performance (operational to strategic) from the discovery phase to the execution phase. "Simply put, design management is the business side of design. Design management encompasses the ongoing processes, business decisions, and strategies that enable innovation and create effectively-designed products, services, communications, environments, and brands that enhance our quality of life and provide organisational success."[1] The discipline of design management overlaps with marketing management, operations management, and strategic management. Traditionally, design management was seen as limited to the management of design projects, but over time, it evolved to include other aspects of an organisation at the functional and strategic level. A more recent debate concerns the integration of design thinking into strategic management as a crossdisciplinary and human-centred approach to management. This paradigm also focuses on a collaborative and iterative style of work and an adductive mode of thinking, compared to practices associated with the more traditional management paradigm.[2]

Over recent years, design has become a strategic asset in brand equity, differentiation and product quality for many companies. More and more organisations apply design management to improve design-relevant activities and to better connect design with corporate processes. Contents [hide]
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1 Extended definition 2 Definition of related terms

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2.1 Design 2.2 Management 2.3 Design leadership

3 History
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3.1 Business
   

3.1.1 Managing product aesthetics and corporate design (early contributions) 3.1.2 Managing design systematically (1960s 1970s) 3.1.3 Managing design as a strategic asset (1980s 1990s) 3.1.4 Managing design for innovation (2000s 2010s)

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3.2 Notion of the term design management 3.3 Politic (till 2000s) 3.4 Promotion and conference (till 2000s) 3.5 Education (till 2000s) 3.6 Research

4 Different types
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4.1 Product design management 4.2 Brand design management 4.3 Service design management 4.4 Business design management

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4.5 Urban design management 4.6 Architectural management

5 Business
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5.1 Value for business 5.2 Relation to other disciplines and departments 5.3 Hierarchy 5.4 Role and responsibility

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6 Politic (since 2010s) 7 Education (since 2010s) 8 See also 9 Notes 10 References 11 Further reading 12 External links
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12.1 Organisations 12.2 Conferences 12.3 Awards

[edit] Extended definition

Design management plays three integrative key roles in the interface of design, organisation and market. The multifaceted nature of design management leads to varied opinion,[3] making it difficult to give an overall definition. Furthermore, design managers have a broad range of roles and responsibilities, combined with a multitude of factors such as industry, company size, market situation and the importance of design within the organisation's activities. Therefore, design management is not restricted to a single design discipline and depends on the individual context of the organisation. On an abstract level, design management plays three key roles in the interface of design, organisation and market. The three key roles are to: 1. Align design strategy with corporate and/or brand strategy 2. Manage quality and consistency of design outcomes across and within different design disciplines (design classes) 3. Enhance new ways of user experience, create new solutions for user needs and differentiation from competitors Defining quotes Design management is the effective deployment by line managers of the design resources available to an organisation in the pursuance of its corporate objectives. It is therefore directly concerned with the organisational place of design, with the identification with specific design disciplines which are relevant to the resolution of key management issues, and with the training of managers to use design effectively. Peter Gorb[4] Design management is a complex and multi-faceted activity that goes right to the heart of what a company is or does [...] it is not something susceptible to pat formulas, a few bullet points or a manual. Every company's structure and internal culture is different; design management is no exception. But the fact that every firm is different does not diminish the importance of managing design tightly and effectively. John Thackara[5] [edit] Definition of related terms [edit] Design Main article: Design Unlike unique sciences such as mathematics, the perspective, activity, or discipline of design is not brought to a generally accepted common denominator. The historical beginnings of design are complex and the nature of design is still the subject of ongoing discussions. Above all, particularly in design, there are strong differentiations between theory and practice. The fluid nature of the theory allows the

designer to operate without being constrained by a rigid structure. Moreover, in practice, decisions are often referred to as intuition. In his Classification of Design (1976), Gorb divided design into three different classes. Design management operates in and across all three classes: product (e.g. industrial design, packaging design, service design), information (e.g. graphic design, branding, media design, web design), and environment (e.g. retail design, exhibition design, interior design). [edit] Management Main article: Management Management in all business and organisational activities is the act of getting people together to accomplish desired goals and objectives efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organisation (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Towards the end of the 20th century, business management came to consist of six separate branches, namely: human resource management, operations management or production management, strategic management, marketing management, financial management and information technology management responsible for management information systems. Although it is increasingly difficult to subdivide management into functional categories in this way, it helps in navigating the discipline of management. Design management overlaps mainly with the branches marketing management, operations management and strategic management. [edit] Design leadership Main article: Design leadership Design managers often operate in the area of design leadership. However, design management and design leadership are not interchangeable, but interdependent. Like management and leadership, they differ in their objectives, achievements of objectives, accomplishments and outcomes. Design leadership leads from creation of a vision to changes, innovations and implementation of creative solutions. It stimulates communication and collaboration through motivation, sets ambitions and points out the future direction to achieve long-term objectives. In contrast, design management is re-active and responds to a given business situation by using specific skills, tools, methods and techniques. Design management needs design leadership to know where to go and design leadership needs design management to know how to get there.[6] [edit] History Difficulties arise in tracing the history of design management. Even though design management as an expression is first mentioned in literature in 1964,[7] earlier contributions created the context in which design management could arise. Throughout its history, design management was influenced by a number of different disciplines (e.g. architecture, industrial design, management, software

development, engineering) and movements (e.g. system theory, design methodologies) and in its understanding it can be attributed neither directly to design nor to management. [edit] Business [edit] Managing product aesthetics and corporate design (early contributions)

Peter Behrens, around 1913 in his office in Berlin, is one of the first contributors to design management. The early contributions to design management show how different design disciplines were coordinated to achieve business objectives at a corporate level and demonstrate the early understanding of design as a competitive force on the national level. In that context, design was merely understood as an aesthetic function and the management of design was at the level of project planning. The practice of managing design across several design disciplines to achieve a business objective was first documented in 1907. The Deutscher Werkbund (German Work Federation) was established in Munich by twelve architects and twelve business firms as a state-sponsored effort to better compete with Great Britain and United States by integrating traditional craft and industrial mass-production techniques.[8] The German designer, and architect, Peter Behrens created the entire corporate identity (logotype, product design, publicity, etc.) of AEG (Allgemeine Elektrizitts Gesellschaft) and is regarded as the first industrial designer in history. His work for AEG was the first large-scale demonstration of the viability and vitality of the Werkbund's initiatives and objectives and can be considered as first contribution to design management.[9] In the following years, companies applied the principles of corporate identity and corporate design to increase awareness and recognition by consumers and differentiation from competitors. The company Olivetti became famous for its attention to design through their corporate design activities.[10] In 1936, Olivetti hired Giovanni Pintori (publicity department) and promoted Marcello Nizzoli (product design

department) to develop design into a comprehensive corporate philosophy. Up to and during the 1960s, the debates in the design community were focused on ergonomics, functionalism and corporate design, while the debates in management addressed Just in time, TQM and product specification. The main contributors to design management in that time were AEG, Bauhaus, British Design Council, Deutscher Werkbund, Olivetti, Peter Behrens and Walter Paepcke.[9] [edit] Managing design systematically (1960s 1970s) Industries influenced the work of the designers in the 1960s as the debate on design evolved from an aesthetic function into active cooperation with the industries. Designers had to work in a team with engineers and marketeers and design was perceived as one part of the product development process. In the early years of design management, the discipline was strongly influenced by system science and the emergence of a design science (e.g. blooming period of design methodologies in Germany, USA and Great Britain); main contributors had backgrounds in architecture. The early discussions on design management were strongly influenced by the Anglo-Saxon literature (e.g. Farr, Rittel), the methodological studies (e.g. HfG Ulm, Christopher Alexander) and theories in business studies and dealt with two main issues:
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how to develop corporate systems of planning aims and how to solve problems of methodological information processing.

Instruments and checklists were developed to structure the processes and decisions of companies for successful corporate development.[11] In this period, the main contributors to design management were Michael Farr, Horst Rittel, HfG Ulm, Christopher Alexander, London Business School, Peter Gorb, Design Management Institute and the Royal Society of Arts. Debates in the design discipline were focusing on design science, design methodology, wicked problems, Ulm methodology, new German design, semiotic and scenario technique. [edit] Managing design as a strategic asset (1980s 1990s) In the 1980s, several managers realised the economic effect of design,[12][13][14][15] which increased the demand for design management. Because companies were unsure exactly how to manage design, there was a market for consultancy, focusing on helping organisations manage the product development process, including market research, concept, project, communication, and market launch phases, as well as the positioning of products and companies. Two important publications were published in 1990: the Publication of Design Management A Handbook of Issues and Methods[16] by Mark Oakley (Editor) and the Publication of Design Management Papers from the London Business School[17] by Peter Gorb (Editor). The new method-based design management approach helped to improve communication amongst technical and marketing managers. Examples of the new methods included trend research, product effect triad, style mapping, milieus, product screenings, empiric design methods, service design etc., giving design a more communicative and central role within organisations.

In the management community, the topics of management theory, positioning strategy, brand management, strategic management, advertisement, competitive strategy, leadership, business ethics, mass customisation, core competencies, strategic intent, reputation management, and system theory were discussed. Main issues and debates in design management included the topics of design leadership, design thinking, and corporate identity, plus the involvement of design management at the operational, tactical, and strategic levels. In 1980, Robert Blaich, the senior managing director of design at Philips, introduced a design management system that regards design, production, and marketing as a single unit.[18] This has been an important contribution to the definition of design as a core element in business.[19] At Philips Design, Stefano Marzano became CEO and CD in 1991, continuing the work of Robert Blaich to align design processes with business processes, furthering design strategy as an important asset of the overall business strategy. [edit] Managing design for innovation (2000s 2010s) Since 2000, design management has taken a more strategic role within business, and more academic programmes for design management have been established. Design management has been recognised (and subsidised) on European Union level as a function for corporate advantage for companies and nations.[citation needed] Main issues and debates included the topics of design thinking, strategic design management, design leadership and Product Service Systems. Design management was influenced by the following design trends: sustainable design, inclusive design, interactive design, design probes, product clinics and co-design. It was also influenced by the following management trends: open innovation and design thinking.[citation needed] [edit] Notion of the term design management The term architectural management was coined by the architects Brunton, Baden Hellard and Boobyer in 1964 and they highlighted the tension and synergy between the management of individual projects (job management) and the management of the business (office management).[20] Although they did not use the term design management, they stressed identical issues. In the same time the design community discussed methodologies for design. Christopher Alexander's work played an important role in the development of the design methodology, he devoted his attention to the problematic of form and context and focused on disassembling complex design challenges into constituent parts to approach a concrete solution. His intention was to bring more rationalism and structure into the solving of design problems. In 1965, the term design management was published first in a series of articles in the Design Journal. This series includes a pre-publication[7] of the first chapter of the book Design Management by Michael Farr,[21] which is considered as the first comprehensive literature on design management. His thoughts on system theory and project management led to a framework on how to deal with design as a business function on corporate management level by providing the language and method to effectively manage it.[22]

[edit] Politic (till 2000s)

The British Design Council was founded in 1944 to promote design in the British industry. Design policies have a long history and reach back to the end of the 19th century (when design programmes with roots in the crafts sector were implemented in Sweden (1845) and Finland (1875)).[23] In 1907, the Deutscher Werkbund (German Work Federation) was established in Munich by twelve architects and twelve business firms as an state-sponsored effort to better compete with Great Britain and United States by integrating traditional craft and industrial mass-production techniques. The success of the Deutscher Werkbund inspired a group of British designers, industrialists and business people (who have seen the organisation on the Werkbund Exhibition in Cologne in 1914) to found the Design and Industries Association and campaigned for a greater involvement of government in the promotion of good design.[24] In 1944, design management as managing design policies was used by the British Government. The British Design Council was founded by Hugh Dalton, President of the Board of Trade in the British wartime Government, as the Council of Industrial Design, with the objective to promote by all practicable means the improvement of design in the products of British industry. Germany realised the national importance of design as well during the second world war. Between 1933 and 1945, Adolf Hitler instrumentalised design, architecture and propaganda to stage his power, most exemplary shown through the annual Reichsparteitage in Nrnberg on September 5. Heinrich Himmler coordinated several design activities for Hitler, including the all-black SS-uniform (designed by Prof. Karl Diebitsch and Walter Heck in 1933), the Dachau concentration camp (designed by Theodor Eicke and prototype for the other Nazi concentration camps) and the Wewelsburg (redesign commissioned by Heinrich Himmler in 1944). Since the 1990s, the practice of design promotion is evolving and governments have used design to promote design as part of their efforts of fostering technology, manufacturing and innovation.[23] [edit] Promotion and conference (till 2000s)

The Royal Society of Arts in London is one of the first institutions supporting design management, in 1949.

The 15th European International Design Management Conference organised by the Design Management Institute In America, Chicago industrialist Walter Paepcke of the Container Corporation of America founded the Aspen Design Conference in the United States after World War II as a way of bringing business and designers together to the benefit of both. In 1951, the first conference topic, Design as a function of management, was chosen to ensure the participation of the business community. After several years, business leaders stopped attending because the increased participation of designers changed the dialogue, focusing not on the need for collaboration between business and design, but rather on the business community s failure to understand the value of design.[25] The Royal Society of Art Presidential Medals for Design Management was instituted in June 1964 to recognise outstanding examples of design policy in organisations that maintained a consistently high standard in all aspects of design management, throughout all industries and disciplines. With this award the RSA introduced the term design management. In 1965, the first medals were given to four companies (Conran & Co Ltd., Jaeger & Co Ltd., S. Hille & Co Ltd. and W. & A. Gilbey Ltd.)[26] in the category current achievements and two companies (London Transport[27][note 1] and Heal and Son Ltd.[28][note 2]) in the category long pioneering in the field of design management. The medal selection committee included representatives of the RSA council and the faculty of Royal Designers for Industry.

The Design Management Institute (DMI) was founded 1975, at the Massachusetts College of Art in Boston. Since mid-1980s, the DMI is an international non-profit organisation that seeks to heighten awareness of design as an essential part of business strategy and become the leading resource and international authority on design management. One year later the first conference is organised. The Design Management Institute increased its international presence and established the European International Conference on Design Management in 1997, and a professional development programme for design management.[1] In 2007, the European Commission funded the ADMIRE (Award for Design Management Innovating and Reinforcing Enterprises) project in 2007, for two years, as part of the Pro Inno Europe Initiative, which is the EU s focal point for innovation policy analysis, learning and development. The aim was to encourage companies especially SME to introduce Design Management procedures for improving their competitiveness, to stimulate innovation, establish a European knowledge-sharing platform, organise a European Design Management Award and to identify and test new activities to promote Design Management.[29] [edit] Education (till 2000s) Teaching design to managers is pioneered at the London Business School in 1976,[30] and has been taught on a full-time basis since 1982. Peter Gorb, a Life Fellow of the Design Management Institute and a long time Fellow of the RSA, has led the design management department for over 20 years and is seen as a godfather for design management. He defined his design reclassification in 1976, and published his book Design and its use by managers two years later. In 1991, the University of Art and Design Helsinki founded the Institute of Design Leadership and Management and established an international training programme.[31] The International Design Management Conference was organised in the same year by the University of Art and Design Helsinki.[note 3] A few years later, in 1995, the Helsinki School of Economics (HSE), University of Art and Design Helsinki (TaiK), and University of Technology (TKK) cooperate to create the International Design Business Management Programme (IDBM), which aims to bring together experts in different fields within the concept of design business management.[32] The Design Leadership Fellowship at the University of Oxford is founded in 2005. In the same year the Stanford University Institute of Design founded the D-school, a faculty intended to advance multidisciplinary innovation. The Finnish Aalto University was founded in 2010 and is a merger of the three established Finish universities, that cooperate since 1995, on a design management programme: Helsinki School of Economics (HSE), University of Art and Design Helsinki (TaiK), and University of Technology (TKK). [edit] Research The first international research project on design management is initiated by the Design Management Institute and the Harvard Business School, the TRIAD research project in 1989. in the same year the Design Management Review is published by the Design Management Institute, as first magazine (still)

solely focusing on design management.[33] Design and design management have experienced different generations of theories. In its first generation design focused on the object, in the second on the process and in the third on the user.[34] Similar shifts can be seen in management and design management in almost parallel steps. For design management this has been illustrated by Brigitte Borja de Mozota,[35] using Findeli s Bremen Model as a framework. Design management research organised itself into:[36]
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Organisational studies: design in an economic sector[note 4] or design in large firms, such as Philips or Olivetti[note 5] Descriptive studies of specific methods of design management[note 6]

It is difficult to predict where design management research is heading to; but there are still a few white gaps on the landscape of design management research.[37] [edit] Different types Different types of design management exist depending on the type and strategic orientation of the business: [edit] Product design management

Product design management helps to create a distinctive design. The image shows the Saab hockey stick as an automotive design feature. In product focused companies the design management focus lies mainly on product design management, including strong interactions with product design, product marketing, R&D and new product development. This perspective of design management is mainly focused on the aesthetic, semiotic and ergonomic aspects of the product to express the product qualities and manages diverse product groups and product design platforms.[38] [edit] Brand design management

Brand design management helps to align products within the product range and establishes a clear design language. In market and brand focused companies the design management focus lies mainly on brand design management. It can be distinguished into corporate brand management and product brand management. In this perspective of design management the brand is the core, which results in a strong focus on the brand experience, customer touch points, reliability, recognition and trust relations. The design, like all brand elements, is strongly driven by the brand vision and strategy.[38] Corporate brand design management Brand and market focused organisations are concerned with the expression and perception of corporate brand. Corporate design management implements, develops and maintains the corporate identity or brand. This type of brand management is strongly anchored in the organisation to control and influence corporate design activities, the design programme plays the role of a quality programme within many fields of the organisation (internal branding). It is strongly linked to strategy, corporate culture, product development, marketing, organisational structure, and technological development. To achieve a consistent corporate brand, the involvement of silent designers and widespread design awareness among the employees. A creative culture, knowledge sharing processes, a strong vision, design leadership and good work relations support the work of corporate brand management.[38] Product brand design management The main focus of product brand management lies not on the corporate, but on the single product or product family. Product design management is linked to R&D, marketing and brand management and is strongly present in the Fast Moving Consumer Goods (FMCG) industry. It is responsible for the visual expressions of the individual product brand, with its diverse customer brand touch points and the execution of the brand through design.[38] [edit] Service design management

Service design management deals with the newly emerging discipline of service design. The image shows the Car2Go concept from Daimler in Austin, Texas. Service design management deals with the newly emerging field of service design. It is the activity of planning and organizing people, infrastructure, communication and material components of a service, for improving its quality, the interaction between service provider and customers and the customer's experience. The increasing importance and size of the service sector, both in terms of people employed and economic importance, requires services to be accurately designed in order for service providers to remain competitive and to continue to attract customers. Design management focuses traditionally on the design and development of manufactured products. Service design managers can use many theoretical and methodological approaches from product design management. Systematic and strategic management of service design helps the business to gain competitive advantages and to conquer new markets. Companies that pro-actively identify the interests of their customers open up new and profitable opportunities if they develop service offerings that create good and pleasant experiences for the customer. Companies in the service sector are innovating by addressing the IHIP-challenge,[39] they are addressing the Intangibility, Heterogeneity, Inseparability and Perishability of service:
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Services are intangible, they have no physical form and they cannot be seen before purchase or taken home after. Services are heterogen, because unlike tangible products no two service delivery experiences are alike. Services are inseparable, because the act of supplying a service is inseparable from the customer s act of consuming it. Services are perishable, they can not be inventoried.

Based on the specific characteristics of services, service design management differs in several aspects from product design management. For example, the application of international trading strategies of services faces big problems,[40] because the evolution of service from a craftsmanship attitude to industrialisation of services asks for development of new tools, approaches and policies. Whereas

goods can be manufactured centrally and delivered around the globe, services have to be performed at the place of consumption, which makes it not only difficult for global quality consistence,[41] but also for effective cost control. [edit] Business design management Main article: Design thinking

Business design management deals among others with the development of business models. The image shows the business model canvas from Alexander Osterwalder. Business design management deals with the newly emerging field of integrating design thinking into management. In organisation and management theory, design thinking forms part of the Architecture / Design / Anthropology (A/D/A) paradigm, which characterizes innovative, human-centered enterprises. This paradigm also focuses on a collaborative and iterative style of work and an adductive mode of thinking, compared to practices associated with the more traditional Mathematics / Economics / Psychology (M/E/P) management paradigm.[2] Since 2006, the term Business Design is trademarked by the Rotman School of Management, they define business design as the application of design thinking principles to business practice. The designerly way of problem-solving is an integrative way of thinking that is characterized through a deep understanding of the user, creative resolution of tensions, collaborative prototyping and continuous modification and enhancement of ideas and solutions. This approach to problem solving can be applied to all components of business and its management is what business design management is about. Although the Rotman School of Management trademarked the term Business Design, other universities are offering similar academic education concepts, like the Aalto University in Finland with the International Design Business Management (IDBM) programme (since 1995).[31] [edit] Urban design management

Urban design management contributes to the development of urban districts. The image shows the newly build HafenCity Hamburg, Germany. Urban design management involves mediation among a range of self-interested stakeholders involved in the production of the built environment. Such mediation can encourage a joint search for mutually beneficial outcomes, or integrative development. Integrative development links stakeholders at diverse scales and in multiple contexts. Integrative development aims to produce more sustainable solutions by increasing stakeholder satisfaction with the process and content of urban development.[42] Conventional real estate development and urban planning activities are framed in conflicting interests and positional bargaining. Integrative negotiation approaches focusing on mutual gains have been applied in land use planning and environmental management, but not at intersection of real estate development, city design and urban planning. Urban design management involves reordering the chain of events in the production of the built environment according to the principles of integrative negotiation. Such principled negotiation can be used in urban development and planning activities to reach more efficient agreements. The approach of urban design management aims increasing the stakeholders satisfaction both to the process and content of development. This leads to integrative developments and more sustainable ways to produce the built environment.[43] Urban design management offers prescriptive advice for practitioners trying to organise city planning activities in a way that will increase sustainability by increasing satisfaction levels. Real estate development and urban planning often occur at very different decision-making scales. The practitioners involved may have diverse educational and professional backgrounds. They certainly have conflicting interests. Providing prescriptive advice for differing, possibly conflicting, groups requires construction of a framework that accommodates all of their daily activities and responsibilities. Urban design management provides a common framework to help bring together the conventional practices of urban and regional planning, real estate development, and urban design. The work on Integrative Negotiation Consensus Building[44] and the Mutual Gains Approach[45] has provided a helpful theoretical framework for developing the theory of urban design management. Negotiation theory provides a useful framework for merging the perspectives of urban planning, city design, and real estate project proposals regarding production of the built environment. Interests, a key construct in negotiation theory, is an important variable that will allow integrated development, as

defined above, to occur. The path-breaking work of Roger Fisher and William Ury (1981) Getting to yes advises negotiators to focus on interests and mutual gains instead of bargaining over positions.[46] [edit] Architectural management Main article: Architectural management

Architectural design management contributed to the development of Heathrow Terminal 5 and Heathrow express by managing the design development and applying visionary leadership. Architectural management can be defined as an ordered way of thinking which helps to realise a quality building for an acceptable cost or as a process function with the aim of delivering greater architectural value to the client and society. A research by Kiran Gandhi describes architectural management as a subject of practical aspects for an architect to successfully operate his practice.[47] The term architectural management has been in use since the 1960s.[20] The evolution of the field of architectural management has not been a smooth affair. Architectural practice was merely considered a business until after the Second World War, and even then practitioners appeared to be concerned about the conflict between art and commerce, demonstrating indifference to management. There was apparent conflict between the image of an architect and an the need for professional management of the architectural business. Reluctance to embrace management and business as an inherent part of architectural practice could also be seen in architectural education programmes and publications. It appears that the management of architectural design, as well as architectural management in general, is still not being given enough importance. Architectural management falls into two distinct parts: office or practice management and project management. Office management provides an overall framework within which many individual projects are commenced, managed and completed. Architectural management extends between the management of the design process, construction and project management, through to facilities management of buildings in use. It is a powerful tool that can be applied to the benefit of the professional service firms and the total building processes, yet it continues to receive too little attention both in theory and in practice.[48][49][50][51] [edit] Business [edit] Value for business

Design plays a vital role in product and brand development and is of great economic importance for organisations and companies. Creativity and design in particular (as an activity: design skills, methods and processes) play a growing role in creating products and services with high added value to consumers. Within the world exports of all creative industry products (goods and services), design generates 50% of the revenue in the creative industry (the creative workforce is 3.1% of the total employment in the EU, who creates a revenue that is 2.6% of the EU gross value added with an unprecedented average annual growth rate of 8.7 per cent between 2000 and 2005).[52][note 7] The increasing importance of creative industries (and especially design) in knowledge-intense industries is reflected not only in the policies and studies on EU level, but has initiated design and creative policies and programmes in the most advanced economies. Furthermore design and creativity has been recognised on regional and local level as a driver for competitiveness, economic growth, job engine and citizen satisfaction. The investment in creative and cultural industries are underlined as a significant component in EU growth in the Lisbon Strategy and the Europe 2020 strategy.[53] Designers are increasingly involved in innovation issues. To better understand the value of design and its role in innovation, the EU hold a public consultation on the basis of their publication Design as a driver of usercentred innovation[29] and published the Mini study Design as a tool for innovation.[54] The report highlights the importance of design in user-centred innovation and recommended the integration of design in the EU innovation policy. In addition to the design share in the export of all creative industry products, design can also have a positive impact on all business performance indicators, from turnover and profit to market share and competitiveness.[55] Design management research results can be classified as follows:[36]
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Design improves the performance of the innovation policy and of the communications policy of the firm[note 8] Design improves the global performance of the firm; it is a profitable investment[note 9] Design is a profession that creates value on a macro economic level[note 10] Design improves the competitive edge of a country in the international competition; it develops exports[note 11] Design can help the restructuring of an economic sector in regional economic policy [note 12]

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If and how the design management is applied in a company correlates with the importance and integration of design in the company, but depends also on industry type, company size, ownership for design and type of competitive competence. A research from the Danish Design Centre (DDC) led to the Danish Design Ladder, which shows how companies interpreted and applied design in different depths:[56] 1. non-design: Companies that do not use design (15% in 2007). 2. design as styling: Companies that use design as styling appearance (17% in 2007). 3. design as process: Companies that integrate design into the development process (45% in 2007).

4. design as innovation: Companies that consider design as key strategic element (21% in 2007). The research showed that companies that considered design on a higher level of the ladder were constantly growing. Additionally, the Danish Design Centre published an Evaluation of the Importance of Design in 2006 with the result that most companies considered design as promoter for innovation (71%), as growth potential for the company (79%) and to make products more user friendly (71%). With increasing importance of design for the company, also design management gets more important. The value of design can be leveraged if it is managed very well, research by Chiva and Alegre shows that there is no link between the level of design investment and business success, but instead a strong correlation between design management skills and business success.[57][58] This means efficient and effective design management is crucial for maximising the value of design. Effective design management increases the efficiency of operations management and process management, it has a significant positive impact on process management, quality performance (internal and external quality) and operating performance.[59][60] To measure and communicate the value of design management, Borja de Mozota suggests to adapt the Balanced Score Card model and structure the value in following four categories:[35]
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Internal business processes: Design management as innovation process. Design management providing improvements in company performance and processes, these innovations and processes being totally invisible for outsiders. Learning and growing: Beyond advanced design management. Design explicit knowledge applied to strategic focus and improve the quality of staff. Customer and brand: Design management as perception and brand. Design knowledge applied to corporate difference building and strategic positioning. Financial: The historic design management economic model. Design management explicit and measurable value for company reputation and stock market performance.

[edit] Relation to other disciplines and departments In companies three different orientations for the choice of design management can be identified. These orientations influence the perception of management and responsibility of design managers in the organisation. The strategic orientations are market focus, product focus and brand focus.[38]
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Product-driven organisations often have design responsibility in their research and development (R&D) departments. Market-focus driven organisation often have design responsibility in their marketing departments. Brand-focus driven organisations often have design responsibility in corporate communication.

Depending on the strategic orientation, design management overlaps with the other management branches to different extents: Marketing management: The concepts and elements of brand management overlap with those of design management. In practice design management can be part of the job profile of a marketing manager, though the discipline includes aspects that are not in the domain of marketing management. This intersection is called brand design management and consists of the elements positioning, personality, purpose, personnel, project and practice,[note 13] with the objective to increase brand equity.[61] Operations management: On the operational level design management deals with the management of design projects. Processes and tools from operations management can be applied to design management in the execution of design projects. Strategic management: Due to the increasing importance of design as a differentiator and support of brand equity, design management deals with strategic design issues and supports the strategic direction of the enterprise. The debate on design thinking suggests the integration of design thinking into strategic management. Design thinking and strategic thinking have some commonalities in their characteristics, both are synthetic, adductive, hypothesis-driven, opportunistic, dialectical, inquiring and value-driven.[62] Innovation management: The value of the coordinating role of design in New Product Development has been well documented. Design management can help to improve innovation management, which can be measured by three variables: Design management reduces time-to-market by improving sources and communication skills and developing cross-functional innovation. It stimulates networking innovation by managing product and customer information flows with internal (e.g. teams) and external (e.g. suppliers, society) actors. Design management improves the learning process by promoting a continuous learning process.[63] [edit] Hierarchy Like the management of strategy, design can be managed on three levels: strategic (corporate level or enterprise wide), tactical (business level or individual business units) and operational (individual project level). These three levels have been termed differently by various authors over the last 50 years. Terms used to describe levels of strategy management and design management[64] strategic level corporate strategy tactical level business strategy operational level functional strategy author / source Haberberg and Rieple, 2001 [65] Johnson and Scholes, 1999 [66]

corporate strategy

business strategy

operational strategy

business management / office management corporate / innovation design management design policy management strategic design management strategic (macro) corporate design management anticipative / strategic design management strategic design management board / top function design agency management N/A

individual project / job management design project management operational design management operational design management team / individual (micro) design project management operational design management operational design management design activity function design project management

Brunton, 1964 [20]

Topalian, 1980 [67]

Oakley, 1984 [68]

N/A

Olins, 1985 [69] Francis and Fischbacher, 1996 [70] Chung, 1998 [71]

organisational (meso) design organisation management functional design management tactical design management middle / business function design resource management

de Mozota, 1998 [63]

Joziasse, 2000 [72]

Cooper, 2005 [73]

design strategy management

Kootstra, 2006 [38]

Operational design management deals among other things with individual design projects and teams. Standing by the scale model's left front fender is Richard Teague, a design manager at American Motors Corporation (AMC) in 1961. Operational level Operational design management is concerned with the management of individual design projects and design teams. Its goal is to achieve the objectives set by strategic design management. Success of good design management can be made tangible by measuring the quality of operational design management outcomes.[38] It includes the selection and management of design suppliers and encompasses the documentation, supervision and evaluation of design processes and results. It deals with personal leadership, emotional intelligence and the cooperation with / management of internal communications. Regular management functions, tools and concepts can often be applied to the management of design on operational level. It is implemented to achieve specific design objectives and manage the judgment of design proposals. It can help to build brand equity through the consistent creation and implementation of high quality design solutions, that best fit the brand identity and desired consumer experience, in the most efficient way. Depending on type of company and industry the following job titles are associated with this role: operational design manager, senior designer, team leader, visual communication manager, corporate design coordinator etc.

Tactical design management deals among other things with creating awareness for design issues in the company. Training meeting in an eco-design stainless steel company in Brazil. Tactical level Tactical design management addressed the organisation of design resources and design processes. Its goal is to create a structure for design in the company, bridging the gap between objectives set through strategic design management and the implementation of design on operational level.[38] It defines how design is organised within the company. This includes the coordination of different design projects and activities through a central body. It deals with defining activities, developing design skills and competencies, managing processes, systems and procedures, assigning of roles and responsibilities, developing innovative products and service concepts and finding new market opportunities. Outcomes of tactical design management are related to the creation of a structure for design within the company, to build (internal) resources and competencies for the implementation of design. Depending on type of

company and industry the following job titles are associated: tactical design manager, design director, design & innovation manager, brand design manager, new product development (NPD) manager, visual identity manager etc.

Strategic design management deals among other things with envisioning the future. Visionary automotive concept BMW GINA, BMW Museum, Munich, Germany. Strategic level Strategic design management involves the creation of the strategic, long-term vision and planning for design and deals with defining the role of design within the company. The goal of strategic design management is to support and strengthen the corporate vision, by creating a relationship between the design and corporate strategy.[38] It includes the creation of design, brand and product strategies, ensuring that design management becomes a central element in the corporate strategy formulation process. Strategic design management is responsible for the development and implementation of a corporate design programme that influences the design vision, mission and positioning. It allows design to interact with the needs of corporate management and focuses on the long-term capabilities of design. Where strategic design management is applied, there is often a strong belief in the potential to differentiate and gain competitive advantage by design. As a result, design thinking becomes integrated in the corporate culture. Depending on type of company and industry the following job titles are associated: strategic design manager, chief design officer, vice president design and innovation, chief creative officer, innovation design director etc. [edit] Role and responsibility Design management is not a standard model that can be projected onto every enterprise, nor is there a specific way of applying it that would lead to guaranteed success. Design management processes are carried out by humans with different responsibilities and backgrounds, who work in different industries and enterprises with different sizes and traditions, whilst having different target groups and markets to serve. Design management is multifaceted and so are the different applications of and views on design management. The function of design management in an organisation depends on its tasks, authority and practice.[74] Task

Similar tasks can be grouped into categories to describe the job profile of a design manager. Different categories in management that encompass design were defined by several authors, those tasks occur on all three design management levels (strategic, tactical and operational): Terms used to describe categories of tasks of design managers strategy and personnel and purpose organisation strategy and N/A purpose strategy and human resources policy N/A N/A organisational culture and presence N/A practice and process author / source Topalian, 1980 [67] Oakley, 1984 [68] Hetzel, 1998 [75] Blaich, 1998 [76] Chung, 1998 [71] Powell, 1998 [77]

projects

projects

N/A

N/A

projects

N/A

N/A

N/A

process

strategy and human and N/A policy material resources strategy organisation and human resources information resources organisation culture

N/A

N/A

projects

N/A process, practice and support

strategy and human resources purpose

projects

human resources, strategy and organisational organisational vision culture structure

N/A

process, tools Joziasse, and 2000 [72] methodologies de Mozota, 2003 [63]

strategy, planning

information and structure, finance, communication, project management evaluation human resources link to R&D, link to branding projects, planning and scheduling, implementation, monitoring,

people and strategy and structure, policy investment and formation, finance, training goals, targets, and learning,

communication

process planning, evaluation

Cooper, 2005 [73]

objectives

resourcing

documentation

Authority and position The authority and position of the design management function has a huge influence on what the design manager does in his or her daily job. Kootstra (2006) distinguishes design management types by its organisational function:[38] Design management as line function, design management as staff function and design management as support function. Design management as a "line function" is directly responsible for design execution in the primary organisational process and can take place on all levels of the design management hierarchy. The main attributes for design managers in the line is the extensive authority and the direct responsibility for the result. Design management as staff function is not directly responsible for design execution in the primary organisational process, but consults as a specialist on all levels of the design management hierarchy. The main attributes for design managers in this function is their limited authority and their function to consult line managers and staff. When the design process is defined as a secondary organisational process, design management is seen as "supportive function". In this function it has only a supportive character, classifying the design manager as a creative specialist towards product management, brand management, marketing, R&D and communication.[38] Other authors use different concepts to describe the authority and position of design management, they can be grouped as follows: Terms used to describe categories of position and authority of design management organisational structure & decisionmaking
y

leadership / collaboration / management style intergroup conflict

process integration

author / source

centralisation vs. decentralisatio n design at toplevel management

y y

flexibility vs. consistency autonomy vs. control

pre-development activities product development and testing commercialisation Cooper, 2005 [73]

grouping of activities

y y

N/A

N/A

Design made without interorganis N/A ational cooperation (subcontract)

Mozota, 2003 [63]

design made with interorganis ational cooperation (companywide design culture) making design together (network) design made alone (internalisati on, selling design expertise)

y y y

staff-function line-function supportfunction

y

N/A

N/A

N/A

Kootstr a, 2006
[38]

functional structure (basic structure) independent project N/A organisation (self-contained group) matrix organisation

design champion design policy design programme design as function (like a design department) design as infusion (everyone is N/A Stamm, 2005 [78]

y y

concerned with design, silent designers)

y

Fuzzy Front End (FFE) Product Development Process (PDP) Market Operations (MO) Buckler, 1997 [79]

N/A

N/A

N/A

[edit] Politic (since 2010s) Today almost every developed country has some kind of design promotion programme and the Design Management Institute has dedicated three issues to design policy development.[23] Although initiatives promote design in different complexities, scopes and focuses specific targets tend to address general or economic objectives:[80]
y

support business: increased use of design by companies, particularly by small and medium enterprises (SMEs), and growth of the design sector (use dimension); promote to public: increased exports of design and design sector, and attractiveness to international investment (international dimension); educate designers: improved design education and research (academic dimension).

A very comprehensive analysis on the situation of design on national level in Britain is the Cox review. The chairman of the Design Council, Sir George Cox, published the Cox review of creativity in Business (2005)[81] to communicate the competitive advantage of design for the British industry. Innovation policies have been excessively focused on the supply of technologies and neglected the demand side (the user). There have been several initiatives by the European Commission to support and research on design and design management in recent years.[note 14][82] However a European-wide policy to support design was never planned, due to the inconsistency and differences of national design policies.[note 15] Against this background it is interesting to see that there are plans to include design into the EU innovation policy. [edit] Education (since 2010s)

Design management was first taught at the London Business School, in 1976. Design management was first taught on a business school, since teaching design to managers is pioneered at the London Business School in 1976[30] and the first programme of design management on a design school started in the 1980s at the Royal College of Art, DeMontfort, Middlesex, Staffordshire. Although in the UK many of the courses have not been sustainable, for instance the RSA course was closed, so was the Westminster MBA. However other courses came through and continue for example Brunel, Salford, and Lancaster. The BusinessWeek publishes every year a list of the best programmes that combines design thinking with business thinking (D-schools 2009[83] and D-school programmes to watch 2009[84]). The article Finland worlds innovation hot spot in the Harvard Business Review shows the interest of business leaders on the blended education of design and management.[85] Business Schools realised the need and developed new academic curricula (e.g. Rotman School of Management, Wharton University of Pennsylvania and MIT Sloan Executive Education). Integrated education models are emerging in the academic world, a model which is referred to as Tshape and -shaped education.[86] T-shaped professionals are educated to have general knowledge in a few disciplines (e.g. management and engineering) and specific, deep knowledge in a single domain (e.g. design). This model also applies to companies, when they shift their focus from small T innovations (innovations involving only one discipline, like chemists) to big T innovations (innovations involving several disciplines, like design, ethnography, lead user etc.). Like in education, this shift makes it essential to break down silos of departments and disciplines of knowledge.

Innovation
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The term innovation derives from the Latin word innovatus, which is the noun form of innovare "to renew or change," stemming from in-"into" + novus-"new". Although the term is broadly used, innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that affect markets, governments, and society. Innovation differs from invention or renovation in that innovation generally signifies a substantial change compared to entirely new or incremental changes.

Contents
[hide]
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1 Inter-Disciplinary Views o 1.1 Society o 1.2 Business and Economics o 1.3 Organizations 2 Processes o 2.1 Sources of Innovation o 2.2 Value of Experimentation o 2.3 Goals/Failures o 2.4 Diffusion 3 Measures o 3.1 Organizational Level o 3.2 Political Level o 3.3 Indicators 4 Measurement Indices o 4.1 Global Innovation Index 5 Government Policies 6 See also 7 References 8 External links

[edit] Inter-Disciplinary Views

[edit] Society
Due to its widespread effect, innovation is an important topic in the study of economics, business, entrepreneurship, design, technology, sociology, and engineering. In society, innovation aids in comfort, convenience, and efficiency in everyday life. For instance, the benchmarks in railroad equipment and infrastructure added to greater safety, maintenance, speed, and weight capacity for passenger services. These innovations included wood to steel cars, iron to steel rails, stove-heated to steam-heated cars, gas lighting to electric lighting, diesel-powered to electric-diesel locomotives. By mid-20th century, trains were making longer, more comfortable, and faster trips at lower costs for passengers.[1] Other areas that add to everyday quality of life include: the innovations to the light bulb from incandescent to compact fluorescent and LEDs which offer longer-lasting, less energy-intensive, brighter technology; adoption of modems to cellular phones, paving the way to smart phones which meets anyones internet needs at any time or place; cathode-ray tube to flat-screen LCD televisions and others.

[edit] Business and Economics

Main article: innovation economics In business and economics, innovation is the catalyst to growth. With rapid advancements in transportation and communications over the past few decades, the old world concepts of factor endowments and comparative advantage which focused on an areas unique inputs are outmoded for todays global economy. Now, as Harvard economist Michael Porter points out competitive advantage, or the productive use of any inputs, which requires continual innovation is paramount for any specialized firm to succeed.[2] As the classic economist, Joseph Schumpeter, who contributed greatly to the study of innovation, argued that industries must incessantly revolutionize the economic structure from within, that is innovate with new processes and products, such as the shift from the craft shop to factory. He famous asserted that creative destruction is the essential fact about capitalism.[3] In addition, entrepreneurs continuously look for better ways to satisfy their consumer base with improved quality, durability, service, and price which come to fruition in innovation with advanced technologies and organizational strategies. [4] One prime example is the explosive boom of Silicon startups out of the Stanford Industrial Park. In 1957, dissatisfied employees of Shockley Semiconductor, the company of Nobel laureate and co-inventor of the transistor William Shockley, left to form an independent firm, Fairchild Semiconductor. After several years, Fairchild developed into a formidable presence in the sector. Eventually, these founders left to start their own companies based on their own, unique, latest ideas, and then leading employees started their own firms. Over the next 20 years, this snowball process launched the momentous startup company explosion of information technology firms. Essentially, Silicon Valley began as 65 new enterprises born out of Shockleys eight former employees. [5]

[edit] Organizations

In the organizational context, innovation may be linked to positive changes in efficiency, productivity, quality, competitiveness, market share, and others. All organizations can innovate, including for example hospitals, universities, and local governments. For instance, former Mayor Martin OMalley pushed the City of Baltimore to use CitiStat, a performance-measurement data and management system that allows city officials to maintain statistics on crime trends to condition of potholes. This system aids in better evaluation of policies and procedures with accountability and efficiency in terms of time and money. In its first year, CitiStat saved the city $13.2 million.[6] Even mass transit systems have innovated with hybrid bus fleets to real-time tracking at bus stands. In addition, the growing use of mobile data terminals in vehicles that serves as communication hubs between vehicles and control center automatically send data on location, passenger counts, engine performance, mileage and other information. This tool helps to deliver and manage transportation systems.[7] Still other innovative strategies include hospitals digitizing medical information in electronic medical records; HUDs HOPE VI initiatives to eradicate citys severely distressed public housing to revitalized, mixed income environments; the Harlem Childrens Zone that uses a community-based approach to educate local area children; and EPAs brownfield grants that aids in turning over brownfields for environmental protection, green spaces, community and commercial development.

[edit] Processes
[edit] Sources of Innovation
There are several sources of innovation. In the linear model of innovation the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation. Another source of innovation, only now becoming widely recognized, is end-user innovation. This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. MIT economist Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, Sources of Innovation.[8] In addition, the famous robotics engineer Joseph F. Engelberger asserts that innovations require only three things: 1. A recognized need, 2. Competent people with relevant technology, and 3. Financial support. [9] Innovation by businesses is achieved in many ways, with much attention now given to formal research and development (R&D) for "breakthrough innovations." R&D help spur on patents and other scientific innovations that leads to productive growth in such areas as industry, medicine, engineering, and government.[10] Yet, innovations can be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to emerge from R&D, while more incremental innovations may emerge from practice but there are many exceptions to each of these trends. An important innovation factor includes customers buying products or using services. As a result, firms may incorporate users in focus groups (user centred approach), work closely with so

called lead users (lead user approach) or users might adapt their products them selves. U-STIR, a project to innovate Europes surface transportation system, employs such workshops. [11] Regarding this user innovation, a great deal of innovation is done by those actually implementing and using technologies and products as part of their normal activities. In most of the times user innovators have some personal record motivating them. Sometimes user-innovators may become entrepreneurs, selling their product, they may choose to trade their innovation in exchange for other innovations, or they may be adopted by their suppliers. Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the users or communities of users can further develop technologies and reinvent their social meaning.[12]

[edit] Value of Experimentation

When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences can't be tested through traditional market research methods. Pilot programs for new innovations set the path in stone too early thus increasing the costs of failure. On the other hand, the good news is that recent years have seen considerable progress in identifying important key factors/principles or variables that affect the probability of success in innovation. Of course, building successful businesses is such a complicated process, involving subtle interdependencies among so many variables in dynamic systems, that it is unlikely to ever be made perfectly predictable. But the more business can master the variables and experiment, the more they will be able to create new companies, products, processes and services that achieve what they hope to achieve.[13][14]

[edit] Goals/Failures
Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning. One driver for innovation programs in corporations is to achieve growth objectives. As Davila et al. (2006) notes, "Companies cannot grow through cost reduction and reengineering alone... Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results." [15] One survey across a large number of manufacturing and services organizations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by: Improved quality, Creation of new markets, Extension of the product, range, Reduced labor costs, Improved production processes, Reduced materials, Reduced environmental damage, Replacement of products/services, Reduced energy consumption, Conformance to regulations.[15] These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organisation be it a manufacturing facility, marketing firm, hospital or local government. Whether innovation goals are successfully achieved or otherwise depends greatly on the environment prevailing in the firm.[16]

Conversely, failure can develop in programs of innovations. The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organization and outside its influence of control. Others will be internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself. Common causes of failure within the innovation process in most organisations can be distilled into five types: Poor goal definition, Poor alignment of actions to goals, Poor participation in teams, Poor monitoring of results, Poor communication and access to information. [17]

[edit] Diffusion

Main article: Diffusion of innovations Once innovation occurs, innovations may be spread from the innovator to other individuals and groups. This process has been proposed that the life cycle of innovations can be described using the 's-curve' or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself. At some point customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its life cycle growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return. The s-curve derives from an assumption that new products are likely to have "product Life". i.e. a start-up phase, a rapid increase in revenue and eventual decline. In fact the great majority of innovations never get off the bottom of the curve, and never produce normal returns. Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that current yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.[18]

[edit] Measures
There are two fundamentally different types of measures for innovation: the organizational level and the political level.

[edit] Organizational Level

The measure of innovation at the organizational level relates to individuals, team-level assessments, and private companies from the smallest to the largest. Measure of innovation for organizations can be conducted by surveys, workshops, consultants or internal benchmarking. There is today no established general way to measure organizational innovation. Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation process efficiency, employees' contribution and motivation, as well benefits for customers. Measured values will vary widely between businesses, covering for example new product revenue, spending in R&D, time to market, customer and employee perception & satisfaction, number of patents, additional sales resulting from past innovations. [19]

[edit] Political Level

For the political level, measures of innovation are more focused on a country or region competitive advantage through innovation. In this context, organizational capabilities can be evaluated through various evaluation frameworks, such as those of the European Foundation for Quality Management. The OECD Oslo Manual (1995) suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. These standards are used for example in the European Community Innovation Surveys. [20] Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product). Whether this is a good measurement of innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. The traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R&D should be 3% of GNP. [21]

[edit] Indicators
Many scholars claim that there is a great bias towards the "science and technology mode" (S&Tmode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is widely ignored. For an example, that means you can have the better high tech or software, but there are also crucial learning tasks important for innovation. But these measurements and research are rarely done. A common industry view (unsupported by empirical evidence) is that comparative costeffectiveness research (CER) is a form of price control which, by reducing returns to industry, limits R&D expenditure, stifles future innovation and compromises new products access to markets.[22] Some academics claim the CER is a valuable value-based measure of innovation which accords truly significant advances in therapy (those that provide 'health gain') higher prices than free market mechanisms.[23] Such value-based pricing has been viewed as a means of indicating to industry the type of innovation that should be rewarded from the public purse.[24]

The Australian academic Thomas Alured Faunce has developed the case that national comparative cost-effectiveness assessment systems should be viewed as measuring 'health innovation' as an evidence-based concept distinct from valuing innovation through the operation of competitive markets (a method which requires strong anti-trust laws to be effective) on the basis that both methods of assessing innovation in pharmaceuticals are mentioned in annex 2C.1 of the AUSFTA.[25][26][27]

[edit] Measurement Indices

Several indexes exist that attempt to measure innovation include:
y y

y y y y

The Innovation Index, developed by the Indiana Business Research Center, to measure innovation capacity at the county or regional level in the U.S.[1] The State Technology and Science Index, developed by the Milken Institute is a U.S. wide benchmark to measure the science and technology capabilities that furnish high paying jobs based around key components.Technology and Science Index The Oslo Manual is focused on North America, Europe, and other rich economies. The Bogota Manual, similar tot the above focuses on Latin America and the Caribbean countries. The Creative Class developed by Richard Florida The Innovation Capacity Index (ICI) published by a large number of international professors working in a collaborative fashion. The top scorers of ICI 2009-2010 being: 1. Sweden 82.2; 2. Finland 77.8; and 3. United States 77.5. [2] The Global Innovation Index is a global index measuring the level of innovation of a country, produced jointly by The Boston Consulting Group (BCG), the National Association of Manufacturers (NAM), and The Manufacturing Institute (MI), the NAM's nonpartisan research affiliate. NAM describes it as the "largest and most comprehensive global index of its kind".[28]

[edit] Global Innovation Index

This international innovation index is part of a large research study that looks at both the business outcomes of innovation and government's ability to encourage and support innovation through public policy. The study comprised a survey of more than 1,000 senior executives from NAM member companies across all industries; in-depth interviews with 30 of the executives; and a comparison of the "innovation friendliness" of 110 countries and all 50 U.S. states. The findings are published in the report, "The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge."[29] The report discusses not only country performance but also what companies are doing and should be doing to spur innovation. It looks at new policy indicators for innovation, including tax incentives and policies for immigration, education and intellectual property. The latest index was published in March 2009.[30] To rank the countries, the study measured both innovation inputs and outputs. Innovation inputs included government and fiscal policy, education policy and the innovation environment. Outputs included patents, technology transfer,

and other R&D results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth. The following is a list of the twenty largest countries (as measured by GDP) by the International Innovation Index: Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Country Overall South Korea 2.26 United States 1.80 Japan 1.79 Sweden 1.64 Netherlands 1.55 Canada 1.42 United Kingdom 1.42 Germany 1.12 France 1.12 Australia 1.02 Spain 0.93 Belgium 0.86 China 0.73 Italy 0.21 India 0.06 Russia -0.09 Mexico -0.16 Turkey -0.21 Indonesia -0.57 Brazil -0.59 Innovation Inputs 1.75 1.28 1.16 1.25 1.40 1.39 1.33 1.05 1.17 0.89 0.83 0.85 0.07 0.16 0.14 -0.02 0.11 0.15 -0.63 -0.62 Innovation Performance 2.55 2.16 2.25 1.88 1.55 1.32 1.37 1.09 0.96 1.05 0.95 0.79 1.32 0.24 -0.02 -0.16 -0.42 -0.55 -0.46 -0.51

[edit] Government Policies

Given the noticeable effects on efficiency, quality of life, and productive growth, innovation is a key factor in society and economy. Consequently, policymakers are working to develop environments that will foster innovation and its resulting positive benefits. For instance, experts are advocating that the U.S. federal government launch a National Infrastructure Foundation, a nimble, collaborative strategic intervention organization that will house innovations programs from fragmented silos under one entity, inform federal officials on innovation performance metrics, strengthen industry-university partnerships, and support innovation economic development initiatives, especially to strengthen regional clusters. Because clusters are the geographic incubators of innovative products and processes, a cluster development grant program would also be targeted for implementation. By focusing on innovating in such areas as precision manufacturing, information technology, and clean energy, other areas of national concern would be tackled including government debt, carbon footprint, and oil dependence. [10]

The U.S. Economic Development Administration understand this reality in their continued Regional Innovation Clusters initiative. [31] In addition, federal grants in R&D, a crucial driver of innovation and productive growth, should be expanded to levels similar to Japan, Finland, South Korea, and Switzerland in order to stay globally competitive. Also, such grants should be better procured to metropolitan areas, the essential engines of the American economy. [10] Many countries recognize the importance of research and development as well as innovation including Japans Ministry of Education, Culture, Sports, Science and Technology (MEXT) [3]; Germanys Federal Ministry of Education and Research [4]; and the Ministry of Science and Technology in the Peoples Republic of China [5]. Furthermore, Russias innovation programme is the Medvedev modernisation programme which aims at creating a diversified economy based on high technology and innovation. Also, the Government of Western Australia has established a number of innovation incentives for government departments. Landgate was the first Western Australian government agency to establish its Innovation Program.[6]