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Evaluating Design Innovation and Investment in Brazil

Country
Brazil
Funder
State Government
Time
2 years
Design support
DUCO

Background

 As part of the Paraná Innovador ProgrammeDUCO was commissioned to evaluate how companies in the state of Parana (southern Brazil) are using design. The 2-year programme was run by Centro Brasil Design and financed by the State Government. The challenge of the evaluation exercise was to analyse how effective businesses are at  developing new products and how they can improve their results in both the long and short term.
 
To collect the necessary data for this analysis, each participant in the programme completed a questionnaire about the design and management practices in their business. In return they each received a Design Diagnostic report,  an overall assessment of their company’s ability to manage design and to translate new ideas into marketable products. This report also supported the consultation between business managers and design advisors with the addition of case material to support any issues it raised.

How design helped

The high quality and volume of data collected during the programme made it possible for a thorough review of the design, management, and innovation practices of businesses in the state of Paraná.  To provide a context for the analysis the Paraná dataset was compared against an equivalent dataset representing Brazilian companies, another dataset representing high growth companies and a third dataset representing companies with successful innovation results. 

Interpreting the data into meaningful insights required several statistical methods and exercises. To illustrate how effective Paraná manufacturing companies are in developing new products and to identify what can be done to improve their performance, figures from their combined design and R&D investment, and sales from new to market products were plotted alongside the high growth and high innovator datasets (see graph below). 

Outcome

  • 200+ metrics of data analysed
  • 11 key insights discovered
  • 3% increase in sales from every 1% investment in design

From summarising the plots into four categories it was clear to see the majority of Paraná companies are categorised as low design and R&D investors with low return, while the ideal situation for a company is to have a high return for its investment (top quadrants in the graph). By comparing this category against the data of companies from the other three categories it was possible to demonstrate key attributes that Paraná companies should adapt, as well as to avoid, in order improve their return on investment.

For example:

  • Paraná companies need to be more design competitive e.g. faster development times, more sophisticated products. Designers should be better informed with good design research.
  • There needs to be a greater proportion of a company’s product range consisting of new to market products, ideally 24% to 42% of the product range, the Paraná average is 12%.
  • Top management should be supporting design by making it more integral to the business strategy, performing strong financial and business analysis on design.
  • The level of design investment must be matched by an ability to manage the investment i.e. big budgets needs strong management 

By analysing over 200 metrics of data (including design strategy, contribution of design, design resources, investment) it was possible to build a complete picture of the design practice, management and performance of Paraná companies. Several notable observations were identified in an evaluation report provided to Centro Brasil Design, they include:

  • Paraná companies do not realise the potential contribution of design to key business indicators: turnover, profits and market share, to the same extent as high growth and high innovation companies.
  • The majority of companies in the programme regard design as an ad-hoc or isolated project activity. For 30% of the companies design is an integral part of how their organisation functions.
  • The main difficulty for companies in Paraná is the integration of design with the company’s strategy. This causes new product launches to fail due to a lack of expertise and poor integration with the company structure.
  • In Paraná, in general for each 1% of all investment dedicated to design, it generates a 3% increase in sales. 

The evaluation report provided to Centro Brasil Design stressed the key challenge for future programmes is to change the mind-set that design is not a one-off star design project.  Instead they should build on this learning experience and make design an integral part of their business. Furthermore the design management capability of current design users in Paraná needs to improve if investment in design is going to increase and if the number of new to market products is to increase. 
 

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