# Innovation Assessment for SMEs: Insights from ISO 56002 & PII Framework

Natalia Karstegl, Manon Enjolras, Frédérique Mayer

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Natalia Karstegl, Manon Enjolras, Frédérique Mayer. Innovation Assessment for SMEs: Insights from ISO 56002 & PII Framework. XXXVI ISPIM Innovation Conference, The International Society for Professional Innovation Management (ISPIM), Jun 2025, Bergen (NO), Norway. hal-05300118

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# Innovation Assessment for SMEs: Insights from ISO 56002 & PII Framework

## Natalia Karstegl*

Université de Lorraine, ERPI, F-54000, Nancy, France.

E-mail: natalia.karstegl@univ-lorraine.fr

## Manon Enjolras

Université de Lorraine, ERPI, F-54000, Nancy, France

E-mail: manon.enjolras@univ-lorraine.fr

## Frédérique Mayer

Université de Lorraine, ERPI, F-54000, Nancy, France

E-mail: frederique.mayer@univ-lorraine.fr

* Corresponding author

**Abstract:** Innovation is essential for the competitiveness of small and medium-sized enterprises (SMEs), yet many lack structured innovation management practices. This paper presents a combined methodology integrating the ISO 56002 Innovation Management System with the Potential Innovation Index (PII) to assess and enhance innovation capacity in SMEs. Using a chemical trading sector company as a case study, the research applies PII as a diagnostic metric tool to identify innovation strengths and gaps, followed by the implementation of ISO 56002 principles to build a structured process recommendation. The methodology is designed to be practical, scalable, and aligned with the unique constraints of SMEs, including limited resources and informal innovation practices. The results demonstrate how a dual-framework approach enables better strategic alignment, process formalization, and performance monitoring. This study contributes to the innovation management field by offering an adaptable assessment model that supports continuous improvement and innovation maturity in SMEs.

**Keywords:** Innovation Management, ISO 56002, Potential Innovation Index, SMEs, Framework, Innovation Assessment, Innovation Performance, Innovation Capability.
# 1 Introduction

For small and medium-sized enterprises (SMEs), the ability to innovate—and to do so swiftly—is more critical than ever. It's no longer a question of whether SMEs should engage in innovation, but how they can intentionally foster, manage, and sustain innovation activities. Building long-term innovation capabilities is essential for SMEs to remain competitive, respond to market changes, and create value. Equally important is their ability to capture the benefits of innovation through structured and strategic efforts. With suited organizational structures and less bureaucracy, SMEs can experiment with new ideas and implement changes more rapidly than larger corporations. Additionally, the entrepreneurial spirit within SMEs fosters creativity and risk-taking, encouraging a culture where new ideas can be tested and refined efficiently.

However, many SMEs struggle to implement structured innovation management due to resource constraints, lack of formal processes, and limited strategic alignment (Modi and Rawani, 2020). Unlike large corporations with dedicated research and development (R&D) units, SMEs often rely on informal and reactive approaches to innovation, making it difficult to sustain long-term innovation performance (Cerezo-Narváez et al., 2019). To address these challenges, standardized innovation assessment frameworks can provide SMEs with structured guidance on managing and enhancing their innovation capabilities (Silva et al., 2021) (Kihlander, Magnusson and Karlsson, 2024).

Moreover, SMEs often focus on target markets, allowing them to develop specialized and innovative solutions that larger firms may overlook (Didonet and Diaz-Villavicencio, 2020). Their ability to collaborate with universities, research institutions, and industry partners further enhances their access to new knowledge, funding, and technology (Muñoz et al., 2022). Many SMEs also embrace digital transformation, leveraging AI, cloud computing, and automation to drive efficiency and innovation (Khan, Johl and Johl, 2021a). By structuring their innovation efforts with established frameworks, SMEs can strategically enhance their innovation capacity, ensuring sustainable growth and competitiveness (Santos and De Almeida, 2022).

This research explores how SMEs need simplified, cost-effective processes that balance structure with flexibility to enable innovation without overwhelming their limited resources (Hervás-Oliver et al., 2021). The systematic approach of the recent international standard about Innovation Management System (ISO 56002) with a research-oriented evaluation framework that deploys metrics about innovation practices, the Potential Innovation Index (PII), our work aims to develop a methodology that reduces uncertainty and enables SMEs to make informed, data-driven decisions about their innovation efforts.

The innovation assessment process for SMEs embarks with the Potential Innovation Index (PII) (Galvez et al., 2013) (Enjolras et al., 2019), which serves as a diagnostic tool to evaluate their innovation potential. By applying the PII framework, SMEs can systematically assess key areas such as leadership commitment, resource allocation, market responsiveness, and technological capabilities. This initial evaluation helps identify strengths, such as strong customer engagement or a culture of creativity, as well as weaknesses, such as limited R&D investment or lack of structured innovation management. The insights gained from the PII assessment provide SMEs with a clear understanding of their current innovation maturity, enabling them to set realistic goals and prioritize improvement areas (Boly et al., 2022). Once the assessment is complete, SMEs can apply the ISO 56002 framework to develop structured innovation processes. This involves
implementing systematic management principles, such as defining an innovation strategy, fostering an innovation-driven culture, and establishing continuous monitoring mechanisms (Sharma *et al.*, 2022).

The paper is structured in six sections, including this introduction. Section II synthesizes the literature review covering previous works related to our study. Section III briefly presents the research methodology. Section IV presents empirical results of the application of the PII in a French cosmetics company, and the recommendations based on the resulted data. Finally, section V synthesizes the concluding remarks and future research developments.

# 2 Prior Literature and Framework Development

## Introduction

Innovation is widely recognized as a key driver of competitiveness and long-term sustainability for Small and Medium-sized Enterprises (SMEs). Despite their agility and entrepreneurial spirit, SMEs often lack the structured processes and resources needed to systematically manage innovation. Their innovation efforts tend to be informal, opportunistic, and heavily reliant on individual leadership, making it challenging to measure, replicate, or scale innovation outcomes effectively. Therefore, there is a growing demand for tools and frameworks that help SMEs evaluate their innovation capabilities and build structured systems to support sustainable innovation (Pertuz and Pérez, 2021).

SMEs contribute significantly to economic development and are key drivers of innovation, especially in dynamic markets. Despite their innovative potential, SMEs often face more challenges than large organizations in managing innovation systematically (Dambiski Gomes de Carvalho *et al.*, 2021). Specifically, they present limited access to funding, skilled personnel, and time for dedicated innovation activities, since they often focus on day-to-day operations, leaving little room for strategic innovation management.

SMEs usually present a lack of structured processes, as they are typically less formalized and lack the structured innovation processes and systems seen in larger organizations. SMEs struggle to assess their innovation capabilities and identify areas for improvement due to a lack of appropriate metrics or tools. Innovation activities often carry high levels of uncertainty, making SMEs hesitant to invest in long-term, risky innovation projects (Hidalgo and Albors, 2008). Although standards like ISO 56002 exist, SMEs find them complex, resource-intensive, and challenging to adopt without external support (Modranský, Jakabová and Oláh, 2020).

Many governments have introduced innovation support programs targeting SMEs, such as funding schemes, tax incentives, and innovation clusters. For example, Horizon Europe and EUREKA programs support collaborative innovation among SMEs (Hervás-Oliver *et al.*, 2021). National innovation agencies provide grants and tools for SMEs to adopt systematic innovation practices. From an industry perspective, some sectors (e.g., manufacturing, IT) have developed customized tools and practices to address innovation challenges within specific industries (Dossou-Yovo and Keen, 2021). However, generic frameworks and tools often fail to account for sector-specific or region-specific factors that influence innovation in SMEs.
Innovation Management System

An Innovation Management System (IMS) is a structured framework that organizations use to systematically foster, manage, and implement innovation. It includes policies, processes, tools, and strategies that guide organizations in generating new ideas, developing innovative solutions, and integrating them into business operations.

An IMS ensures that innovation is not a random or occasional effort, but a continuous,
strategic process aligned with an organization's overall goals. It involves elements such as
leadership commitment, culture, strategy, resources, processes, and measurement systems
to drive sustainable innovation. Standards like ISO 56002 and ISO 56001 provide
guidelines and requirements for implementing an effective IMS (Hyland and Karlsson,
2021).

ISO 56002:2019 is a guideline for establishing, implementing, and maintaining an Innovation Management System (IMS). It provides a systematic framework for organizations to foster and manage innovation effectively, helping them align innovation activities with their strategic goals and adapt to dynamic market conditions. The standard is structured around the Plan-Do-Check-Act (PDCA) cycle, emphasizing continuous improvement. Key areas include understanding the organization's context, leadership commitment, resource allocation, operational processes for innovation (from idea generation to value realization), and performance evaluation, as seen in Figure 3. It supports innovation in all forms—products, services, processes, or business models—while fostering collaboration, managing risks, and encouraging a culture of creativity.

<figure><img src="image_1.png" /><figcaption>**Figure 3** Overview Structure of ISO 56002.
Source: (Kihlander, Magnusson and Karlsson, 2024).</figcaption></figure>

ISO 56002 is applicable to organizations of all sizes and sectors, aiming to integrate
innovation into their business processes systematically. It helps organizations enhance
competitiveness, manage uncertainties, and sustain value creation in evolving
environments. As part of the ISO 56000 family, ISO 56002 works alongside standards like
ISO 56003 (innovation partnerships) and ISO 56005 (intellectual property management)
to provide comprehensive support for innovation management. ISO 56001:2024, the
newest of the series and published in September 2024, introduces a certifiable standard for innovation management systems, building upon the guidance provided by ISO 56002. This new standard offers organizations a structured framework to systematically embed innovation into their core operations, ensuring alignment with overall business strategies.

Currently, previous efforts to address innovation management challenges in SMEs have resulted in useful tools, frameworks, and policies. For instance, the ISO 56000 family and, specifically, ISO 56002:2019, aims to provide a systematic approach to innovation management, but its implementation can be overwhelming for resource-constrained SMEs (Hyland and Karlsson, 2021). Other frameworks like Stage-Gate or EFQM also offer structured approaches, but they tend to be more focused on specific aspects, such as project management or quality (Van Thanh and Hiep, 2023). Many existing frameworks and tools are not fully exploited by SMEs because they are not specifically designed for their unique challenges (Sharma et al., 2022). Tools like PII (Potential Innovation Index) (Galvez et al., 2013) focus on assessment, while the Balance Scorecard and KPIS focuses on measuring innovation performance (Bamel et al., 2022), leaving a gap in integrating measurement with systematic management.

## Literature Review

Table 1 presents the relevant literature identified through a systematic search in the Web of Science (WOS) database using the query "ISO 56002" AND "FRAMEWORK", during the timeframe 2019-2024, given that the standard was released in 2019, and 2024 in which the family of the standard was updated. This search aimed to identify studies that explore the application of combined frameworks in the context of Innovation Management. (Khan, Johl and Johl, 2021b) proposed the adoption of green innovation reporting and ISO 56002:2019 to firm sustainable development goal; (Santos and De Almeida, 2022) presents a self-assessment model for evaluating innovation management systems of science and technology institutions (STIs), integrating the Analytic Network Process (ANP) and the Importance-Performance Analysis (IPA) methods in the context of a Brazilian STIs. (Mir, Llach and Casadesus, 2022) confirms that at least three main dimensions of Innovation Capabilities influence positively the Innovation Performance, with Dynamic Capabilities clearly as a positive contributor to the later. (Barboza et al., 2024) explores the relationship between ISO 56002 guidelines and technology transfer, and (Kihlander, Magnusson and Karlsson, 2024) studies two early adopters that have used ISO 56002 2019 to design their innovation management systems.

<table><caption>**Table 1** Articles related to the study of combined frameworks of ISO 56002 Innovation Management System.</caption><thead><tr><td>Authors</td><td>Article Name</td><td>Year</td></tr></thead><tbody><tr><td>Khan, PA; Johl, SK; Johl, SK</td><td>Does adoption of ISO 56002-2019 and green innovation reporting enhance the firm sustainable development goal performance? An emerging paradigm</td><td>2021</td></tr><tr><td>Santos, MDB; de Almeida, MFL</td><td>Self-Assessment Model based on the ISO 56002:2019 Standard for Evaluating Innovation Management Systems of Science and Technology Institutions</td><td>2022</td></tr></tbody></table>
<table><tr><td>Mir, M; Llach, J; Casadesus, M</td><td>Degree of Standardization and Innovation Capability Dimensions as Driving Forces for Innovation Performance</td><td>2022</td></tr><tr><td>Barboza, BML; Kovaleski, JL; Zola, FC; Chiroli, DMD</td><td>Connecting the Dots: Bridging Innovation Management and Technology Transfer Through ISO 56002</td><td>2024</td></tr><tr><td>Kihlander, I; Magnusson, M; Karlsson, M</td><td>Critical Factors to Consider When Designing an Innovation Management System</td><td>2024</td></tr></table>

Source: Own elaboration through WOS Search.

By integrating the standard, it helps establish a common language and set of principles around innovation. This helps align diverse frameworks, ensuring consistent interpretation and reducing ambiguity when combining or integrating methodologies. Regarding this study, SMEs can transition from an improvised approach to a well-structured system that promotes long-term innovation. To ensure sustained progress, SMEs should periodically reassess their innovation capacity using the *PII framework*. This ongoing evaluation helps track improvements, measure the effectiveness of implemented strategies, and refine innovation practices based on new insights. By continuously iterating between assessment, implementation, and monitoring, SMEs can enhance their innovation capabilities, drive competitiveness, and achieve sustainable growth. In the following section, we explain in detail the PII framework.

## 3 Methodology

### Methodological Background: The Potential Innovation Index (PII)

The Potential Innovation Index (PII), developed by ERPI of the Université de Lorraine, is a benchmarking tool designed to evaluate and compare the innovation capabilities of companies, particularly small and medium-sized enterprises (SMEs), across different cultural and geographical contexts. It assesses firms' internal practices related to innovation to identify strengths, weaknesses, and opportunities for improvement (Galvez et al., 2013).

The PII has been particularly useful in examining the innovation challenges faced by traditional sector SMEs. Studies using the PII have highlighted that over half of the evaluated companies showed low innovation performance, regardless of their sector or location. This underscores the need for tailored strategies to support innovation that consider local cultural and contextual factors. The tool not only facilitates self-assessment for firms but also aids policymakers in designing targeted support mechanisms for enhancing innovation ecosystems (Boly et al., 2014). This methodology has been applied in international comparisons to reveal patterns in innovation behavior and its correlation with regional innovation policies and practices, providing insights for improving innovation management and competitiveness globally (Muñoz et al., 2022).

Since the 2000s, the focus of innovation measurement has gradually shifted towards the study of companies' internal processes, and in particular the identification of innovation-enhancing activities (Boly et al., 2014). At the root of the PII lies the desire to identify “good practices” that have a positive impact on innovation, and to build a relevant
evaluation framework. Thus, PII is based on the six most important dimensions of innovation cited in the literature: (1) Strategy, (2) Idea Generation, (3) Design, (4) Project Management, (5) Human Resources and (6) Knowledge Management (Dethine, Enjolras and Monticolo, 2020).

Each of these dimensions includes several activities, each integrating several observable phenomena, as seen in Figure 2. An observable phenomenon can be defined as the tangible, verifiable proof(s) of an activity routinely carried out within the company (e.g. presence of a data centralization tool, job card, etc.). Observable phenomena thus act as indicators for assessing the activity in question. If these observable phenomena are present within the company, the activity they characterize can be under control. The PII thus comprises 6 dimensions, broken down into 20 activities to which over a hundred observable phenomena are associated (Rejeb et al., 2008) (Galvez et al., 2013) (Enjolras et al., 2019).

<figure><img src="image_2.png" /><figcaption>**Figure 1** Structure of the PII.</figcaption></figure>

Source: (Boly et al., 2014) (Enjolras et al., 2019).

The creation of a benchmark responds to the need to integrate the evaluation of all practices into a single indicator that provides an overall measure of a company's capacity to innovate. (Corona-Armentats, Guimaraes and Boly, 2007) chose to use weighted average, ELECTRE I and AHP as multi-criteria grouping methods, to compare the influence of the method on the result. For each method, he obtained a ranking of the companies evaluated (20), according to four categories defined by (Michel. Godet, 2007): Proactive, Preactive, Reactive and Passive. Each of these categories represents a company's role and attitude in dealing with its environment.

Those categories are based on the classification proposed by (Michel. Godet, 2007), and determines the global indicator of overall innovation capability of the firm (Enjolras et al., 2019). As a result, the current PII model structure presented in Figure 1 allows the classification of the company into four categories or girds of innovation maturity
performance: Proactive, Preactive, Reactive and Passive, and gives an automatic
recommendation generation to the enterprise, as shown in Figure 2.

<figure><img src="image_3.png" /><figcaption>**Figure 2** Categories of Innovation Maturity Performance.</figcaption></figure>

Source: (Boly *et al.*, 2014) (Enjolras *et al.*, 2019).

The methodology defines six main innovation practices (IP), also called dimensions, subdivided into 20 activities, as shown previously in Figure 1, and their associated weight, which is divided equally in the 6 practices and later, the 20 activities, as seen in Table 2. All of the above have been defined based on a bibliographic investigation and a consultation with innovation experts. Note that the list can be enhanced or modified as innovation management practices emerge.

<table><caption>**Table 2** Weight Criteria of the PII</caption><thead><tr><th>Dimensions</th><th>Weight Of Dimension</th><th>Activities</th><th>Weight Of Activity</th></tr></thead><tbody><tr><td rowspan="3">Strategy</td><td rowspan="3">16.70%</td><td>Vision</td><td>0.2</td></tr><tr><td>Networks</td><td>0.2</td></tr><tr><td>Customer Relations</td><td>0.2</td></tr><tr><td rowspan="4">Idea Generation</td><td rowspan="4">16.70%</td><td>Financial Agility</td><td>0.2</td></tr><tr><td>Intellectual Property</td><td>0.2</td></tr><tr><td>In-House Creativity</td><td>0.33</td></tr><tr><td>Customer/ Supplier Involvement</td><td>0.33</td></tr><tr><td rowspan="5">Design</td><td rowspan="5">16.70%</td><td>Monitoring</td><td>0.33</td></tr><tr><td>R&D</td><td>0.25</td></tr><tr><td>Technical Resources</td><td>0.25</td></tr><tr><td>Methods For Design</td><td>0.25</td></tr><tr><td>Digital Resources</td><td>0.25</td></tr></tbody></table>
<table><tr><td rowspan="3">Project Management</td><td rowspan="3">16.70%</td><td>Phasing And Milestones</td><td>0.33</td></tr><tr><td>Roles And Organization</td><td>0.33</td></tr><tr><td>Multi-Project Management</td><td>0.33</td></tr><tr><td rowspan="2">Human Resources</td><td rowspan="2">16.70%</td><td>Encouraging Innovation</td><td>0.33</td></tr><tr><td>Communication</td><td>0.33</td></tr><tr><td rowspan="3">Knowledge Management</td><td rowspan="3">16.70%</td><td>Skills Management</td><td>0.33</td></tr><tr><td>Continuous Improvement</td><td>0.5</td></tr><tr><td>Knowledge Capitalization</td><td>0.5</td></tr></table>

Source: Own elaboration based on (Rey J et al., 2013).

The multicriteria computation of the innovation index is based on the FlowSort algorithm, as outlined by (Nemery et al., 2012). This method integrates the firm's responses to the assessment questionnaire with the weighted criteria detailed in Table 2. Once the Potential Innovation Index (PII) is calculated for each evaluated firm, its value enables classification according to the innovation typology proposed by (M. Godet, 2007). This typology categorizes firms into four profiles—Proactive, Preactive, Reactive, and Passive—based on the nature and maturity of their innovation systems.

This classification functions as a strategic diagnostic tool, enabling entrepreneurs to better understand their current level of commitment to innovation and informing decision-making aimed at strengthening their innovation capabilities. Furthermore, the methodology offers policymakers a valuable benchmarking instrument to assess innovative performance across firms at a sectoral or regional level, thereby supporting the formulation of targeted industrial policies and facilitating more effective allocation of support resources (Rey J et al., 2013).

## Research Methodology

The Potential Innovation Index (PII) serves as an initial diagnostic tool to evaluate an SME's innovation potential. By assessing key innovation dimensions, PII provides a quantitative measure of an organization's strengths and weaknesses in innovation capabilities. This tool enables SMEs to identify gaps and areas for improvement before implementing a structured innovation strategy.

The ISO 56002 Innovation Management System provides a comprehensive framework for SMEs to establish, maintain, and improve their innovation management practices. It offers structured principles, including leadership commitment, innovation strategy alignment, resource allocation, and risk management. By integrating PII findings, SMEs can tailor ISO 56002 principles to their specific needs, ensuring a scalable and sustainable innovation system.

The innovation practices of the Potential Innovation Index (PII) align closely with the seven key elements of ISO 56002, creating a complementary relationship that allows organizations—particularly SMEs—to assess and strengthen their innovation capabilities in a structured and measurable way. PII assesses innovation maturity through observable practices and outputs, while ISO 56002 guides how to design and manage innovation systems. Together, PII diagnoses current capabilities and ISO 56002 structures the path toward improvement. This relationship enables SMEs to move from reactive or ad hoc innovation to a strategic, system-based approach with measurable outcomes.
Table 3 shows how PII's six levels and associated practices map onto ISO 56002 key elements:

<table><caption>**Table 3** Innovation Practices of PII integrated into ISO 56002 Key Elements.</caption><thead><tr><td>ISO 56002 Element</td><td>Relevant PII Practice Areas</td><td>Relationship/Alignment</td></tr></thead><tbody><tr><td>Context of the Organization</td><td>Strategic Orientation</td><td>Both emphasize aligning innovation with market dynamics and internal/external strategic analysis.</td></tr><tr><td>Leadership</td><td>Commitment, Innovation Culture, Innovation Governance</td><td>Leadership support, cultural influence, and resource allocation are central to both frameworks.</td></tr><tr><td>Planning</td><td>Innovation Planning and Risk Management</td><td>Each stresses structured innovation planning and proactive risk management aligned with business goals.</td></tr><tr><td>Support</td><td>Human Resources, Training, Infrastructure, Financial Support</td><td>Focus on enabling innovation through skilled teams, tools, funding, and infrastructure.</td></tr><tr><td>Operations</td><td>Idea Management, Collaboration, Process Integration</td><td>Both require systematic processes for idea generation, development, and implementation.</td></tr><tr><td>Performance Evaluation</td><td>Innovation Metrics and KPIs</td><td>Shared emphasis on using indicators to track innovation outcomes and guide decisions.</td></tr><tr><td>Improvement</td><td>Feedback and Learning</td><td>Continuous improvement through feedback loops and learning mechanisms is core to both approaches.</td></tr></tbody></table>

Source: Own elaboration based on (Galvez, 2015) (ISO 56002:2019(en), Innovation management — Innovation management system — Guidance; Silva, 2021)

The proposed methodology follows a three-step cycle:

1. Assessment: SMEs conduct a PII-based evaluation to measure their innovation readiness.

2. Implementation: Based on assessment results, SMEs adopt ISO 56002 principles to develop structured innovation processes and management systems.

3. Monitoring and Refinement: SMEs periodically reapply PII to track progress, refine strategies, and ensure continuous innovation improvement.

This methodology ensures a data-driven approach where SMEs can make informed decisions and adjust their innovation strategies dynamically (Hoang, Dupont and Camargo, 2019) (Muñoz et al., 2022).
In the following section, we present the case study context and the empirical results of the PII implementation, along with the recommendations from the standard.

# 4 Case Study Outcomes and Empirical Results

## Case Study and Results

The company used for this study was evaluated in their innovation capabilities using a questionnaire following the methodology exposed in section 3. Each dimension and their activities were asked with a question and evaluated in a maturity grid from level 1 to level 5, the first being that the activity is not defined or non-existence, and level 5 being the activity fully implemented and integrated within the company. The data collection for the evaluation is gathered with an online interview with a representative of the company, with an average duration of 45 minutes.

This case study examines a French small-to-medium enterprise (SME) founded in 1990 to facilitate the export of chemical and pharmaceutical products. A strategic acquisition enabled the firm to internalize production capabilities through a specialized chemical synthesis facility, significantly expanding its innovation and manufacturing potential.

Currently, the company provides a broad range of services, including the sourcing, development, and production of raw materials for the pharmaceutical and cosmetic sectors. Leveraging a combination of specialized expertise and an international supply network, the firm emphasizes innovation, quality, and operational efficiency to meet evolving industry demands. The subsidiary that was asked to participate in the case study is comprised of 9 employees, that foresee the chemicals trading sector of the company.

After the evaluation of each activity within the maturity grid to level 1 to 5, and based on the methodology in section 3, Figure 3 shows the evaluation of each dimension or innovation practice. The highest evaluation belongs to Knowledge Management with 3.5 on average and Strategy with 3.2, and the lowest is Human Resources with 1.7 on average, and the rest of the activities present similar levels between 2 and 3.

<figure><img src="image_4.png" /><figcaption>**Figure 3** Results of the evaluation of each dimension.
Source: Own elaboration.</figcaption></figure>
Following the application of the PII, and using the methodology presented in section 3, the main objective is to classify the company within one of the four categories or profiles depending on their innovation maturity, which after the final calculations using the methods already presented, results in the flux of -0.1336, that classifies the company in the reactive zone, as shown in Figure 4.

A company positioned in the Reactive zone of the Potential Innovation Index (PII) typically responds to external changes rather than anticipating them. It operates with a short- to medium-term vision and lacks a proactive innovation strategy. Innovation efforts are driven by necessity, often emerging as adaptive responses to market or technological shifts. While the organization may possess some internal capacity to manage innovation projects, it generally follows industry trends rather than leading them. This positioning reflects moderate innovation potential, highlighting the need for stronger strategic alignment, anticipatory capabilities, and a more structured innovation approach.

<figure><img src="image_5.png" /><figcaption>**Figure 4** Resulting profile of the case study company.</figcaption></figure>

Source: Own elaboration.

## Recommendations from ISO 56002:2019

For small and medium-sized enterprises (SMEs), the ability to innovate systematically and adaptively is not optional, it is fundamental to long-term competitiveness. Drawing on ISO 56002, innovation must be managed as a structured, organization-wide system that aligns strategy, leadership, and processes to foster continual value creation. Simultaneously, the Potential Innovation Index (PII) provides a diagnostic framework to assess SME's readiness and capacity for innovation across key functional areas. Together, these frameworks emphasize that innovation in SMEs should be deliberately induced, monitored, and improved through integrated governance, clear objectives, resource allocation, and performance metrics. Building such capabilities enables SMEs to
institutionalize innovation, reduce ad-hoc efforts, and maximize the return on new ideas, technologies, and market opportunities.

Following the analysis of the case study and the firm's current innovation maturity level, this section presents a set of strategic recommendations derived from the ISO 56002 Innovation Management System standard. These recommendations, as shown in Table 4, aim to guide the organization in enhancing its innovation capabilities in a structured and sustainable way. Drawing on the seven key elements of ISO 56002—*Context of the Organization, Leadership, Planning, Support, Operations, Performance Evaluation, and Improvement*—each recommendation is aligned with observed gaps and strengths identified in the assessment.

<table><caption>**Table 4** Recommendations from ISO 56002 based on results of PII.</caption><thead><tr><td>ISO 56002 Element</td><td>Current Reactive Behaviour</td><td>Recommendation</td><td>Improvement Objective</td></tr></thead><tbody><tr><td>Context</td><td>Limited understanding of external/internal factors; reacts only to evident change</td><td>Conduct strategic environmental scanning (SWOT, PESTEL, market analysis)</td><td>Anticipate trends and plan innovation efforts accordingly</td></tr><tr><td>Leadership</td><td>Management provides minimal direction/support for innovation</td><td>Embed innovation into the company's mission and ensure leadership sponsorship</td><td>Establish a committed innovation culture driven by leadership</td></tr><tr><td>Planning</td><td>Innovation occurs informally or reactively without a structured plan</td><td>Develop and communicate a formal innovation strategy aligned with business goals</td><td>Enable proactive, goal-oriented innovation planning</td></tr><tr><td>Support</td><td>Lack of resources, training, or infrastructure for innovation</td><td>Allocate resources, upskill teams, and deploy collaboration tools</td><td>Empower employees and enable effective innovation practices</td></tr><tr><td>Operations</td><td>Ad hoc or uncoordinated innovation activities</td><td>Implement clear processes for ideation, development, and commercialization</td><td>Ensure consistent and manageable innovation execution</td></tr><tr><td>Evaluation</td><td>No regular monitoring or metrics for innovation performance</td><td>Define KPIs (e.g., number of ideas, success rate) and conduct regular reviews</td><td>Monitor innovation progress and adjust strategies as needed</td></tr><tr><td>Improvement</td><td>Lessons from innovation projects are rarely captured or reused</td><td>Institutionalize feedback loops and lessons learned into processes</td><td>Create a continuous improvement loop for learning and adaptation</td></tr></tbody></table>

Source: Own elaboration.

After the first set of recommendations derived from the key elements of ISO 56002, tailored to the findings of the PII evaluation, a more explanatory section follows. ISO 56002 provides a systematic and integrated approach to managing innovation, and its adoption is especially relevant for SMEs, offering them a scalable structure to embed
innovation into their core strategy and operations. By aligning the diagnostic findings from PII with the operational guidance of ISO 56002, organizations are better equipped to institutionalize innovation, move from reactive practices to proactive systems, and ensure that innovation efforts are purposeful, measurable, and sustainable.

1. Context of the Organization

For SMEs operating at a reactive innovation level, understanding their context is essential. This includes identifying both internal capabilities and external pressures that influence innovation efforts. Companies should begin with a structured innovation audit using tools such as SWOT and PESTEL analyses. These tools help clarify where the company stands in relation to competitors, customers, and technological trends. By mapping internal strengths and external opportunities, the organization can more effectively align its innovative ambitions with market needs and environmental constraints.

2. Leadership

Strong leadership is critical in moving beyond reactive innovation. The management team should clearly articulate a vision that recognizes innovation as a core driver of business growth. This vision must be consistently communicated across the organization to build a shared sense of purpose. Leaders must also lead by example—allocating time, resources, and visibility to innovation activities. Establishing dedicated innovation roles or committees can ensure responsibility and accountability, thereby fostering a culture where new ideas are encouraged and acted upon.

3. Planning

Strategic planning transforms ad-hoc innovation into deliberate progress. SMEs should define specific, measurable innovation objectives that support broader business goals. These can include KPIs such as the number of new ideas submitted per quarter, conversion rate of ideas to projects, or percentage of revenue from new products. Innovation plans should be embedded in the company's business planning cycles, ensuring that innovation is not treated as a one-off effort but as an integral part of long-term growth strategy.

4. Support

Innovation requires both tangible and intangible resources. SMEs must ensure that their teams have access to the training, time, and tools needed to innovate effectively. This includes establishing internal knowledge-sharing platforms, facilitating cross-departmental collaboration, and providing basic funding for prototyping or small-scale experiments. Building innovation capabilities also involves nurturing a psychologically safe environment where employees feel comfortable sharing unconventional ideas without fear of failure or criticism.

5. Operations

To shift from reactive to proactive innovation, SMEs should systematize their innovation processes. This means creating a structured yet flexible workflow for idea management—from ideation and evaluation to development and implementation. Even simple tools, such as idea boxes, digital platforms, or regular innovation workshops, can create a visible and repeatable innovation pipeline. Integrating innovation into daily operations ensures it becomes a continuous, rather than sporadic, effort.
## 6. Performance Evaluation

Monitoring progress is crucial for reinforcing innovation behaviors. SMEs should select relevant performance indicators and set benchmarks to assess both inputs (e.g., number of ideas generated) and outputs (e.g., projects completed or revenue impact). Establishing regular review meetings and visual dashboards helps maintain momentum and ensures that lessons learned from past initiatives are used to refine future practices. Transparency in performance also boosts employee engagement in innovation efforts.

## 7. Improvement

Continuous improvement ensures that the innovation system evolves with the business. SMEs should establish feedback loops at key stages of the innovation process. This includes conducting post-project evaluations, gathering customer and employee feedback, and running periodic innovation retrospectives. Capturing what worked and what didn't help the organization build institutional knowledge and avoid repeating mistakes. Over time, these iterative improvements solidify innovation as a core organizational capability.

# 5 Conclusions and Future Development

This study explored the integration of the ISO 56002 Innovation Management System and the Potential Innovation Index (PII) as a comprehensive approach for assessing and enhancing innovation capabilities within SMEs. While PII provides a practical diagnostic tool for evaluating innovation maturity through observable activities and structured levels, ISO 56002 offers a strategic and systemic framework to guide the design, implementation, and continuous improvement of innovation practices.

The application of this combined methodology to a French chemicals trading sector SME demonstrated the value of using PII to identify existing strengths and gaps and leveraging ISO 56002 to guide structured innovation development. By aligning diagnostic results with actionable system elements—such as leadership, planning, and performance evaluation, SMEs can move from reactive innovation behaviors to more proactive and integrated innovation management.

Building on the findings of this study, future development should focus on validating the combined PII-ISO 56002 methodology across a broader range of sectors and organizational contexts. This would help assess its adaptability, scalability, and effectiveness in diverse innovation ecosystems beyond the cosmetics industry. Longitudinal studies could also be conducted to evaluate how the implementation of ISO 56002 influences innovation performance over time when guided by PII assessments.

Ultimately, this integrated model has the potential to evolve into a practical innovation management tool for continuous learning, strategic guidance, and competitive advantage.
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