Effective design management for small businesses

‘The effective use of design is fundamental to the creation of innovative products,

processes and services. Good design can significantly add value to products, lead to

growth in sales and enable both the exploitation of new markets and the consolidation

of existing ones’1.

Recent studies have shown that effective use of design by small companiescan contribute positively to business performance and competitiveness2.However, studies have also shown that many small companies lack aware-ness of the commercial impact that design investment can have on theirbusiness performance3. The latter study surveyed over 200 projects in smallUK companies that had received a government subsidy to engage the ser-vices of professional designers for a range of activities from new productdevelopment to the redesign of packaging. The study identified some ofthe major causes of design project failure, including:

1 HMSO White Paper on Com-petitiveness (1995)2 Walsh, V, Roy, R, Bruce, Mand Potter, S Winning byDesign, Basil Blackwell, Oxford(1992)3 Bruce, M, Potter, S and Roy,R ‘The Risks and Rewards ofDesign Investment’, Journal ofMarketing Management (1995)

0142-694X/99 $ - see front matterDesign Studies20 (1999) 297–315297PII: S0142-694X(98)00022-2

1999 Elsevier Science Ltd All rights reserved Printed in Great Britain

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Effective design management forsmall businesses

Margaret Bruce, Department of Textiles, UMIST, PO Box 88,Manchester M60 1QD, U.K.Rachel Cooper, Research Unit, University of Salford, Salford, U.K.Delia Vazquez, Department of Textiles, UMIST, PO Box 88,Manchester M60 1QD, U.K.

How small firms invest in design expertise to develop new products andcorporate identities to communicate their services is little understood.The research reported here documented the ways in which smallmanufacturing and service companies use professional design skills andtheir approaches to managing product, engineering and graphic design.Many firms are wary about the potential cost of employing professionaldesigners and are unsure about the commercial outcome of designinvestment. Thus, a need exists to enhance design awareness amongstsmall firms. Those firms that employed design effectively found thatdesign contributed to their business success. However, expertise insourcing, briefing, liaising and evaluating design were varied and sotraining small companies in design management skills is needed also. 1999 Elsevier Science Ltd. All rights reserved

Keywords: design management, design strategy

4 Bolton Report Small Firms:Report of the Committee ofInquiry on Small Firms. Chair-man, J. Bolton. HMSO, London(1971)

I Lack of senior management commitment to design;I Poor financing of projects i.e. allocating insufficient funds to cover

cost;I Incomplete design brief i.e. the brief fails to take account of user needs,

pricing strategy, etc.;I Inappropriate sourcing of design competencies.

Government policy in the UK is focusing on smaller companies to enhancetheir design and innovation capabilities via the use of government agencies.One major thrust is the establishment of agencies, such as Business Linkswhich employ design counsellors to act as intermediaries between smallcompanies and design professionals. The research reported in this paperexplores different approaches to design management by small companies,both manufacturing and service, and identifies how they source, brief andevaluate design. One of the main outcomes of the research was that differ-ences exist between those companies that have had some prior experienceof working with designers and those that have little understanding of therole of design in business. Also, investment in design as a ‘quick fix’ maynot solve other problems that small companies face, such as cash flow,marketing skills etc. A framework for a design management process forsmall companies is presented in this paper.

1 Defining small businessesThe first step towards understanding the context of the study is to definesmall and medium sized businesses/enterprises (SME’s). Various publicagencies have produced definitions, as shown in Table 1.

The DTI’s Small Firms and Business Link Division’s view is as follows:

‘The first thing to emerge is that there is no single definition of what an SME is, this

is because of the wide diversity of businesses... The (Bolton) report (1971)4

recognised that size is relevant to sector, and it also recognised that it may be

298 Design Studies Vol 20 No 3 May 1999


Table 1 Examples of definitions of SME’s

Bolton Report 1971 DTI 1995 European Commission 1996

Owner Managed Small= 0–200 employees Very small (micro)= less than 10employees

Financially independent Medium= 201–500 employees Small= 10–50 employees, annualturnover less than 7 m ECU

Small market share Medium= 51–249 employees,annual turnover under 40 m ECUFinancially Independent—not morethan 25% externally owned

5 Storey, D J UnderstandingThe Small Business Sector(1994)6 McCann, A ‘The UKEnterprise Population, 1979-1991’ The Natwest Review ofSmall Business Trends Vol 3 No1 (1993) pp 5–137 Daly, M and McCann, A‘How Many Small Firms?’Employment Gazette, unpub-lished paper, July (1992)8 Daly, M, Campbell, M, Rob-son, G and Gallager, C ‘JobCreation 1987–1991’, Employ-ment Gazette February (1991)9 Burns, P and Dewhurst, JSmall Business andEntrepreneurship. Second Edi-tion. Basingstoke, Hampshire(1996)

appropriate to measure numbers of employees in some sectors but turnover may be

more relevant in others...Across Government it is more usual to measure size

according to numbers of full time employees or their equivalent...In general the DTI

defines a small firm as fewer than 200 employees and medium sized firm as one with

200–500 employees...in practice a variety of working definitions are adopted

depending on the objectives.’

The precise definition of small businesses is problematic. Any definitionsuffers from an arbitrary exclusion of some companies5. The problem isthat because company size is related to the market it operates in, (as theDTI acknowledge above) there will always be companies that fall outsidea particular definition, that may be worthy of inclusion. The sample in thisstudy does not suffer from these problems because all the companies fallwithin the Bolton definition of small firms, they are owner managed, inde-pendent and have a small market share. The firms are all micro or smallfirms according to DTI and EU definitions. An example is that of a productcompany with 30 employees, a Managing Director who inherited the busi-ness from his father and a market share that encompasses the local area.

2 The SME contextThe next step towards setting the context is to define the size and impactof the SME sector in the UK economy. In 1991 there were 2,697,000businesses in the UK, of these only 3000 were large firms employing morethan 500 people6,7. Almost 2.7 million businesses in the UK are small andmedium sized businesses6,7. Of these 92% are micro firms employing 0–10 employees. Small firms do have a significant impact on new job cre-ation. Between 1987 and 1989, one million additional jobs were createdby firms employing less than ten people, which is almost as many as cre-ated by larger firms8.

The UK SME sector has high ‘birth’ rates and ‘death’ rates compared tothe large business sector in the UK. In each year over 14% of UK SME’shave registered for VAT in the previous 12 months5. In 1990 235,000 newSME’s appeared and 185,000 SME’s died. Studies suggest that many smallbusinesses have a short lifespan, 10% deregister for VAT after one year,50% after 5 years and two-thirds after 10 years9. These figures suggest avery volatile market environment involving rapid change. Research indi-cates that the successful small business needs to be able to adapt to chang-ing markets quickly1. Research also indicates that small firm survival islinked to a diversified customer base and to an ability to regularly introducenew products5. SME’s will occasionally introduce a fundamentally newproduct/service9, but they are more likely to produce a product or servicedifferentiatied from the major players in a particular market. They willtypically occupy a ‘niche’ in the market.

Effective design management for small businesses 299


10 Atkinson, J and Meager, N‘Running to stand still: The SmallBusiness in the Labour Market’in Employment, The Small Firmand the Labour Market, J. Atkin-son and D.J. Storey (eds) Rout-ledge, London (1994)11 Lyons, B R ‘Subcontractingand the Small Business’ End ofAward Report, ESRC, Swindon(1991)12 Oakley, M (ed) Handbook ofDesign Management BasilBlackwell, Oxford (1990)13 Jevnaker, B DevelopingCapabilities for Innovative Pro-duct Designs: A Case Study ofthe Scandinavian FurnitureIndustry in Product Develop-ment: Meeting the Challenge ofthe Design-Marketing Interface,M Bruce and W Biemans (eds) ,Chichester, Wiley (1995)14 Bruce, M and Morris, BApproaches to Design Manage-ment in the Product Develop-ment Process. In Product Devel-opment: Meeting the challengeof the Design-Marketing Inter-face, M Bruce and W Biemans(eds) , Wiley: Chichester (1995)15 Bruce, M and Docherty, C‘It’s All in a Relationship: Com-parative Study of Client-DesignRelationships’ Design StudiesVol 14 No 4 (1993)16 Topalian, A The AltoDesign Management Workbook,Alto (1994)17 NEDO ‘Competencies thatdiscriminate outstanding design-ers’ NEDO Garment and TextileSector Group (1993) Best Prac-tice in design and development.PE International (1993)

3 SME organisational structureMicro businesses have a distinctive organisational structure and managerialstyle, they tend to be owner managed10 and they tend to operate with apersonalised management style and structure. Smaller companiesemploying over ten staff start to appoint non-owner managers10. This sizeof company also tends to move towards more formalised working practiceswith teams of managers with devolved responsibilities11. The major distinc-tion between large and small firms is the presence of the owner-manager,small firms tend to be managed in apersonalisedway9. This may presentproblems as the firm can become over reliant on the skills and experienceof one individual. If they lack awareness about the potential value of designfor their business, or have not the time nor skills to utilise the designprofessional’s skills adequately, then the integration of design com-petencies in their business process may not occur.

4 Small businesses and design managementResearch supports the case that design skills positively affect small busi-ness performance, but only if effectively managed and if the companyhas identified that design management12,13 requires effective methods ofsourcing, briefing and evaluating design. This study focuses on analysingthese three key themes within small businesses.

4.1 SourcingThe acquisition of design skills that are appropriate for the creation andimplementation of new products and for the development of new corporateidentities, packaging and so on can be risky. In the UK, there is a surfeitof design suppliers and the barriers to setting up as a design agency arerelatively small, so both high quality and poor quality design suppliersexist side by side. The larger design firms and those that have been inbusiness for a number of years have some repute but are too expensivefor small companies to use. Buying design skills demands some skills onbehalf of the design buyer to be able to discern the appropriate designexpertise required14. Some degree of ‘personal chemistry’ and trust isneeded between the designer and the client so as to allow for an open andcreative dialogue15. Sourcing design is a critical aspect of design manage-ment16.

The complexity of sourcing appropriate design skills is illustrated by theCompetency Model for Designers shown in Table 1. NEDO17 suggests thata ‘good’ designer should ideally combine all the qualities described inTable 2. The issue is, how can a small company evaluate all these qualitieseffectively within a designer or a design consultancy.



18 Cooper, R and Press, MThe Design Agenda A Guide toSuccessful Design ManagementWiley and Sons, Chichester(1995)19 Alexander, M ‘CreativeMarketing and Innovative Con-sumer Product Design-SomeCase Studies’ Design StudiesVol 6 No 1 (1985) pp X–XX20 Hollins, W and Pugh, SSuccessful product design Lon-don: Butterworth Heineman(1991)

4.2 BriefingResearch has shown that designers encounter problems if the brief is not

prepared correctly2. Studies indicate that a designer needs a great deal of

information, both overt and tacit, in order to produce an effective solution

for the client18,12. The designer needs to have marketing information, such

as details of the target market, the competition, the intended price points,

the objectives underlying the proposed design; details of the mode of pro-

duction and plans and time-scales for implementation19. Otherwise prob-

lems may arise later, which may result in valuable resources being wast-

ed20.

Cooper and Press (1995)18 suggest that a design brief should contain the

following:

I Background to the Company;

I The Design Problem;

I Design Specifications, Product Attributes;

I Consumer And Market Information;

I Costs, Budgets;

I Timescales.



Table 2 Competency Model for Designers

Design Competencies• Objective creativity• Technical• Colour and Conceptual DesignBusiness Orientation Competencies• Organisational, planning• Problem solving• Commercial skillsDriving the Process Competencies• Commitment, enthusiasm, self-confidence• Results orientation• Team orientationPerspective and Framework Compentencies• Gathering and using information• Strategic thinking• Consumer/customer focusInterpersonal Competencies• Builds relationships• Presentational skills• Flexible

NEDO Garment and Textile Sector Group (1993)

4.3 Evaluation of designEvaluation of design can occur in many forms and at various levels withinorganisations (see Table 3). Evaluation can be the assessment of a conceptagainst the brief18, as well as an analysis of the design’s market successmeasured by such criteria as sales performance, increased awareness of theservice, breakeven points, etc2.

5 Design management modelThe above brief literature review has raised issues of sourcing, briefingand evaluation of design. From this a model of the key phases of the designmanagement process has been developed as shown in Figure 1. This modeltakes account of the whole design management process, from recognising aneed for design to briefing, sourcing, launching and evaluation. The modelhighlights critical points in the process and suggests that reviews shouldbe taken at key stages in the design process to allow for full discussionof the implications of the design for resource allocation and subsequentdevelopment. It was used as a heuristic tool for the study. The model wasused as a basis for the interview agenda, and as a framework to explorethe management of design by small companies.

6 MethodologyThe main aims of the research were to:

(1) Document how SMEs use professional design skills;(2) Examine current approaches to design management.

The first phase of the study involved drawing together a conceptual frame-work based on the current best practice literature in design, design manage-ment and new product development. This framework is represented herein the form of a design management model. The second phase consistedof qualitative research through in-depth semi-structured interviews,presented in the form of short case studies. The methodology of the quali-tative case study phase is outlined below.

6.16.1.1 SamplingEight small companies were interviewed and these ranged from service tomanufacturing companies supplying careers advice to IT services to



Table 3 Types of Evaluation

Evaluation of concept against brief (Cooper and Press 1995).Evaluation of product or concept against success in the market place. (Walsh et al.1992.)Evaluation of corporate design strategy and performance against competitors. (Cooper and Press 1995).



Figure 1 Framework for design management. PM= Project Manager

medical treatment. These firms were selected with the help of DesignCounsellors located in different areas. Design Counsellors are employedby government agencies in Business Links and TECs to provide manage-ment advice and training to SMEs. There is bias in the selection in thatthey were chosen due to their known association with design.

6.1.2 Data collectionInvolved interview schedule preparation, and carrying out tape recording,the interviews, plus collection of visual and documentary material suchas company literature. The interview agenda covered: company structure,company history, briefing, sourcing and evaluation methods, companystructure, company history, and marketing policies. Much care was takento cover all the main issues in the interview agenda, respondents wereallowed and encouraged to expand on themes but at times respondentswere directed to backtrack to fully cover the issues.

6.1.3 Data AnalysisInvolved five stages. Stage One was the transcription of tape recordingsand interview notes. Stage Two involved the organisation of the interviewsinto separate issues. Stage Three involved sending the transcripts back tothe respondent for accuracy checks. Stage Four involved gathering all theinformation together and analysing it. Stage Five was the discussion of theresults. As far as possible two researchers visited the companies and sothey were able to discuss the data thus gaining a deeper insight into theissues faced by the companies and to cross check their own observations.

6.1.4 Data ReportingThe resulting data is reported in the form of written case studies. Back-ground information, and information from the interview was integrated intoa full case, with an analysis section and conclusions.

6.1.5 ValidityOf the material was ensured by the using multiple sources of information,cross comparison and by careful sampling of respondents.

6.1.6 ReliabilityOf the research method was promoted by holding all the procedures asconstant as possible. All companies were approached in the same manner,one of the interviewers was present throughout all of the interviews andthis helped to ensure that the same issues were addressed in each company.

6.1.7 Research LimitationsIdeally the sample would be much larger, it could be argued that theseeight companies face unique problems which are not representative of the



wider SME population. It is not possible due to time and resource con-straints to replicate the study on a wider scale and it is felt that the richnessand depth of data will compensate for small sample size.

6.1.8 FindingsThe results are displayed in the taxonomy of design management (Figure2). This paper then presents detailed case study information on three ofthe companies interviewed. Two of the companies sold services to theirclients and were using design to produce a leaflet or a brochure to generatefurther sales. One company was developing a new product design to enablethem to break into a new market. The paper will outline the cases andcompare company practice to the best practice in the literature and thusattempt to draw out some of the issues facing small businesses and theintegration of design in the business process. Due to space constraints inthis paper only summaries of the case studies will be outlined.

7 Taxonomy of design managementThe taxonomy presents the responses collected on the issues of briefing,sourcing and evaluation of design. The taxonomy also records whether thecompany was a manufacturing company or a service company, and whetherthe design project under study was a product design project or a graphicdesign project. The taxonomy allows company comparisons to be made.

Success was defined using the companies’ own criteria, and this rangedfrom meeting the design objectives in the brief to increased awareness ofthe service offering, as well as sales performance, impact on turnover,etc. It was clear that design success was not always evaluated in purelyfinancial terms.

I Sourcing: This category refers to the method the company used tosource the designer, these included personal recommendation, rec-ommendation from a government agency source, a cold call and pastexperience.

I Briefing: This category refers to the method the company used to briefthe designer, these included verbal and written methods.

I Evaluation: This category refers to the method the company used toevaluate the design process, these include the pure cost of the designagainst sales ratio, and evaluation of the design in terms of meetingthe brief.

7.1 Analysis of the taxonomyFrom the sample, it is clear that a variety of design management methods(ie for sourcing, briefing and evaluating design) are employed by small





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21 Potter, S, Roy, R, Capon,C H, Bruce, M, Walsh, V andLewis, J The Benefits and Costsof Investment in Design: UsingProfessional Design Expertise inProduct, Engineering andGraphics Projects. Design Inno-vation Group, the Open Univer-sity and UMIST

businesses. However, where there was a clear objective for embarking onthe design project, for example quality improvement, then the project waslikely to be completed. Personal recommendation was the sourcing methodfor three of the cases and Design Counsellors were also used as an inter-mediary between the SME and design firm.

Graphic projects were more likely to be successful than products, theseare perhaps less complex and risky and require less additional resource formarket implementation. This tentative result reinforces research carried outby Potter et al21.

Whilst the taxonomy provides an overview of the design outcome of theprojects and the type of activity entailed for sourcing, briefing and evalu-ation, the context in which firms are operating and the company cultureare not explored. Vingnettes of three of the companies are presented, whichprovide background and contextual details.

8 Levels of confidenceThe company vignettes highlight three different experiences of small com-panies attempting to integrate design management into their business pro-cess. Vignette 1 demonstrated that extensive design management experi-ence from previous work could be transferred into a small companybecause design awareness and sourcing, briefing and evaluation were fam-iliar activities for the MD. The MD stated that:

‘I recognise the value of design because I come from a publishing background...there

was a clear relationship between cover design and sales levels...I have done a lot of

briefing throughout my working life so briefing wasn’t a problem...I have an

advantage over other small companies in that I was Managing Director of a company

that spent millions on print and design a year, so I have grown up with design’.

Managing Director, Career Advice Service.

Vignette 2 highlighted that the presence ofTransferable Design Manage-ment Skills could aid the design management process. This means thatskills in briefing, in this case had been acquired from experiences in othercompanies, or from work that has related skills, for example solicitors takebriefs from their clients and so are familiar with a briefing process. Vignette3 shows that product design is complex and expensive and that adequatelyconveying technical issues at the briefing stage are critical.

The first point to be made is that small companies, even ones of similarsize and structure, possess different levels of design management expertiseand face different design problems. Where the companies are aware of therole that design could play in their business and have some knowledge of















the management activities involved, then these could be regarded as ‘con-fident’ at design management. However, without this awareness and under-standing, then projects may fall into difficulties and staff in the companieswould require some support to manage a design project effectively. How-ever, skills in related tasks, such as a solicitor taking briefs could assistthe design project in running smoothly.

The main features of the experienced users of design are outlined below.

I Confident about briefing, sourcing and evaluating design.I No external help required to brief, source or evaluate a designer.I Frequent and confident users of design within their business process.I A design awareness fully integrated into the organisation.

Less confident in their approach to design were those companies wheredesign was perceived as risky, in that design may not achieve its objectivesand was likely to be very expensive. Some companies found it very diffi-cult to put a brief together.

As the MD of a Medical Supplies Company explains:

‘The Business Link were very instrumental in the development of our project, we

needed to source a capable designer and they helped us with that. They helped us in

planning, production and even helped us write the design brief that enabled us to

move to the next stage’.

The characteristics displayed by the less confident and more apprehensivecompanies are summarised below.

I All companies needed external help to source a designer, this task wasperceived as highly risky by all inexperienced companies. Personal rec-ommendation acted to lower the perceived risk of sourcing a pro-fessional in an unfamiliar discipline.

Some companies within this group require a lot of external help to compilea brief.

I All these companies were very apprehensive about using design andneeded external trusted agents to recommend designers and to ‘coach’the inexperienced company through the design process.

I Some of these companies were aware of the value of design but verywary of the potential cost. Once a design project had been completedsuccessfully these companies then developed from anawarenessof thevalue of design to aknowledgeof design and the necessary skills need-ed.



I Success was linked to the presence oftransferable design managementskills within the company, such as the briefing skills present in Com-pany 1 and 5.

9 ConclusionsSmall companies have a range of business needs for design, but have vary-ing levels of awareness and competency to manage design effectively. Twodifferent types of companies could be discerned from the study: ‘confident’and ‘apprehensive’ design users. The former companies had had experiencewith design, typically in previous work experience and the latter had littleawareness of design. For the inexperienced design companies, various fac-tors were identified that assisted the effective design outcome: the relativesimplicity of the project, possession of strong briefing skills acquired in adifferent discipline, sourcing skills, such as personal recommendation forma trusted intermediary, and evaluation skills obtained through an intermedi-ary or acquired in a different discipline.

However, employing a professional designer may not be the ‘quick fix’ tosolve the company’s problems. Although, this is not discussed fully in thispaper, the success or otherwise of the design project was influenced bybroader issues facing smaller companies, for example, cash flow, marketingskills, capital investment and so on. For one of the companies, the designconcept was acknowledged as a marked improvement on existing designs,but the company had to find sufficient capital to invest in manufacturingthe new product design. In another company that had no prior experiencein using a professional designer, a clear vision of the target market, ahealthy cash flow and a straight-forward project facilitated success indesign. Even from this small sample, it is evident that design is intimatelyrelated to wider management skills and resources, which have to beaddressed along side the design project. For all of the companies, the bene-fits of design were recognised. Even where the design project had not beenas smooth as intended (see the ‘hot box’ trailer project).

Segmentation of small businesses by design management experience levelsis important. Skill levels can vary and this influences the company’s atti-tude to the design management process, either positively or negatively,therefore steps must be taken to identify these experience levels and totailor the level of aid accordingly. Some companies may need extensivecoaching others may only need to be put in touch with a designer that fitsthe company’s needs.

AcknowledgmentsThis work was part of the Co-Partnership Programme of The Design Coun-cil whose support is gratefully acknowledged.



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Effective design management for small businesses