TO WHICH EXTENT CAN MEDIUM SIZED ENTERPRISES LEARN DESIGN DRIVEN INNOVATION?

THE CASE OF THE GERMAN RETAIL INDUSTRY

The global, European and German retail industry is facing significant structural changes. The most far-reaching structural change, perhaps, concerns the relationship between retailers and their customers. Regardless of whether it is the distribution channel or the method of delivery and payment - the consumer has the choice. They are increasingly deciding about the where, the when, the how and the what of purchasing, choosing the option that suits them best (Peighambari, Sattari, Kordestani & Oghazi, 2016).

For the companies, it is no longer enough to just get information about the customer. Rather, they must enter in a dialogue since customers are used to exchange information with others about products and their suppliers. Customers and users evaluate shops and their services; they want to be supplied quickly and at any time.

However, many German retailers have great difficulties in fulfilling exactly these new requirements. Responsible for this are not only the online boom and changing consumer behaviors. Internal operational challenges also seem to be a reason (Meinel, Maier, Wagne & Voigt, 2017).

Many companies in the German retail industry have been operating in crisis mode for some time now. Thus, it remains to be seen whether the number of insolvencies in this sector will increase.

The insolvency of one of the biggest retailers, Gerry Weber (2017: 6900 employees), at the beginning of 2019 is no exception - exactly the opposite is the case: even the retailer Esprit (2017: 6500 employees) or Tom Tailor (2017: 6000 employees) are not running smoothly at the moment.

In recent years, the crisis seems to have become somewhat of a constant companion of this industry. In 2017 four traditional German companies had to file for bankruptcy (Hock, 2019). It seems that the insolvencies of one of the largest retailers in 2016, with almost 10,000 employees, was just the beginning. The insolvencies described here are a total of more than 25,000 employees in Germany, whereby more than 125,000 employees alone work in the textile and clothing industry (McKinsey, 2018).

But what are the reasons for this situation? Why do other companies perform significantly better than the once mentioned above? It will be a great challenge to find answers to these questions. It is however clear that the companies presented here must find ways to generate value for both internal and external components.

Implementing design driven innovation could be such a possible value generator. Many of the best performing companies in the world already established design driven innovation at the core of their business - and it is supposed to pay off.

Figure 1 expresses, that companies which are design-oriented, perform significantly better. This is presented through the so- called Design Value Index, which is based on a series of criteria reflecting best practices in design management. It can be clearly seen that these companies generate a yield of 211% in comparison to the S&P 500 (Westcott, 2016).

It is apparent that the figures are not lying, thus it must be questioned what the significant difference between those companies is. Do design driven individuals learn, work, lead or manage differently? Or does even the whole organization learn, work, lead or manage differently? There must be a significant difference.

In this respect, the central question of the following articles tries to go to the bottom of the gap between those who already established design driven innovation, and those who did not establish such a way of working. The question ist: "To which extend can medium sized enterprises learn design driven innovation?"or in other words "Does Design Thinking has a reason for existence?"

(additional articles follow)