This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Design Policy of Local Government and SME’s
Innovation in Japan
Koichi Hasegawa*
Kyushu University, 6-10-1, Hakozaki, Higashi-ku, Fukuoka, 812-8581,
Japan.
E-mail: hasegawa@sti.kyushu-u.ac.jp

Akiya Nagata
Kyushu University, 6-10-1, Hakozaki, Higashi-ku, Fukuoka, 812-8581,
Japan.
E-mail: a-nagata@econ.kyushu-u.ac.jp
Abstract: In this paper, we report on our attempt to examine the effect that thedesign policy of Japanese local governments has on SME and thus to clarify thefactors that contribute to an effective design policy. The results of ourquestionnaire survey made clear that the main players of the design policy are
prefectural governments and ordinance-designated cities. The case survey weconducted revealed that the design policy has been advancing further with thepassage of time. The survey results indicate that it is effective to provide
comprehensive support to SME technology-based matching and productdevelopment project in order for B2B enterprises to promote B2C businessactivity. Small and medium enterprises lack recognition of the significance andeffect of design utilization. Initiatives for enlightening on the designing activity
may be vital for further enlarging the effect of future design policy.
Keywords: design policy; SME’s R&D; technology-based matching

1 Introduction
In this paper, we focused on the design policy of local governments and how suchpolicy influences the innovation of small and medium enterprises. In the economic
activity of Japan, small and medium enterprises are playing a major role. As of February
2012, there were about 3.86 million companies in Japan. Of these, 3.85 million are
considered to be small or medium enterprises, accounting for 99.7% of the total number.
(Ministry of Economy, Trade and Industry, 2013) And, 69.7% of all employees are hiredby small and medium enterprises. In the aspects of the sheer number of companies andthe scale of employment, it is impossible to underestimate the small and medium
enterprises when giving consideration to Japanese economy. However, the managementfoundation of those enterprises is fragile. Shikano (2008) conducted an analysis of theaverage scale of the small and medium enterprises by using their financial management
database. He points out that the mean figures of the company scale are 6 employees,
turnover of JPY 125 million, total assets of JPY 84 million, and company capital of JPY
10 million – lower than the initial estimations.

1This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Between 2009 and 2012, the number of small and medium enterprises in Japandecreased 8.3% from 4.20 million to 3.85 million. The bankruptcy of Lehman Brothers is
considered to be responsible for that, either directly or indirectly. Having such a fragile
management foundation as mentioned above, the key management issue for those small
and medium enterprises is how to disperse the management risks in order to survive
economic downturns.
One of the ways to disperse such risks is to have more diverse business partners. It has
been pointed out that the business structure of Japanese manufacturing sector used to becentered on transactions among affiliated company groups to ensure long-term businessstability, but such a business structure has been presumably changing since 1990’s. The
Small and Medium Enterprise Agency of Japanese government analyzed the status ofdiversification of business partners by using their database containing 140,000
manufacturers. The results indicate that only 40% of their transactions are conducted withenterprises in vertical business affiliations while 60% is conducted with independent
enterprises. (The Small and Medium Enterprise Agency, 2007) However, despite thechanges in business relationships, approximately only half of the small and medium
enterprises came to have more suppliers and sales contacts along with the passage of time
while the other half had either the same or even less number of business partners. Those
enterprises which had an increased number of sales contacts point out increased sales andrisk dispersion as the main advantages of their business diversification. The major
increase, however, is limited to the existing products, while cultivating new business
partners is still a difficulty for them.
One of the major policy issues of local governments is the activation of small andmedium enterprises and local industry within their jurisdiction. They are implementing
their support to the local small and medium enterprises by offering subsidies to R&D,
encouraging industry-academia collaborations and other promotional schemes. In recent
years, their policy in connection with designing activity has been gathering attention as a
new initiative of industrial innovation. The effect of such an initiative is a matter ofinterest. Designing activity has been drawing attention as a means for enterprises torealize business innovation as a variety of studies have pointed out that designing activity
is vital for corporate management and innovation. (Lorenz, 1986, Utterback, 2006,
Verganti, 2009, etc.)
Large Japanese corporations, however, carry out product development while giving
priority to technical functions and performance instead of designs. (Hasegawa, 2012)
When it comes to the small and medium enterprises which have less business resources
than those large corporations, it is difficult to imagine that they are proactively
incorporating designing activity in their business.
In case designing activity surely brings about positive effects on corporate
management, it is likely for the local governments that give various forms of support tothe local industry and small and medium enterprises to incorporate designing activity into
their policy. In fact, there are some local governments in Japan that have assisted the
local small and medium enterprises in connection with design utilization since around1950’s. Little investigation of actual situations, however, has been carried out so far by
way of case studies. For example, there was one survey regarding design policy of one
prefectural government in Kyushu that made clear the actual condition of that policy.
(former Kyushu Bureau of International Trade and Industry of Ministry of International
Trade and Industry, 1991) The current Ministry of Economy, Trade and Industry also
conducted investigation on a few local governments regarding their design policy in 2008
and 2014. These surveys, however, were carried out by the government and they areviewed as rather exceptional. It is still difficult to state even now how the design policyof local governments is implemented and the extent of the effect on local enterprises.

2

The research questions we designated in this study are as follows: To what extent has
design policy been implemented in the local governments in Japan? What initiatives arebeing implemented in the policy? What effects does design policy bring out upon theinnovation of small and medium enterprises? And, what are the characteristics of theeffective initiatives? This study purposes to clarify these matters.

2 Data Acquisition
To find the answers to the designated research questions, we carried out a case survey
on the design policy by acquiring data through a questionnaire survey regarding design
policy and then analyzing the obtained results.
The data regarding the design policy was acquired from all local municipal
governments in Japan by the questionnaire survey. The questionnaire survey was
conducted by Center for Science, Technology and Innovation Policy Studies, Kyushu
University (hereinafter, abbreviated as “CSTIPS”) as part of the investigation related to
the “Development of the Case-Based Reasoning System for Regional Science andTechnology Policy” project that is being prompted with the grant of “Strategic Basic
Research Programs (Research for Science and Technology for Society)” from Japan
Science and Technology Agency (JST). The survey target was a total of 1,789 local
governments consisting of the 47 prefectures in Japan as well as cities, towns, villages,
Tokyo 23 wards belonging to those prefectures. The survey was conducted during theperiod between April and December, 2013. In our study reported in this paper, analyses
were carried out on the data comprising 1,777 replies (collection rate of 99.3%) that had
been collected as of the end of September, 2013. In Japan, some cities are designated asordinance-designated cities (hereinafter, “designated cities”) as well as core cities, which
are categorized in our analyses separately from the other cities.
Through the questionnaire survey, we asked them whether they implement design
policy, the purpose of their design policy, contents of the implemented design policy,
budget set aside for design policy and the responsible department.
In our case survey, we searched the cases that have produced positive results throughdiscussions with experts of design policy. As a result, we decided to take up “Tokyo
Business Design Award” granted by Tokyo Metropolis as our case study. The interview
was conducted on the staff responsible for policy making and implementation as well as
the participating enterprises. The survey period was from January to March, 2015. In theinterview with the policy making and implementation staff, we asked them thecharacteristics of the initiative and the ingenuity they devised for the implementation. In
the interview with the participating enterprises, inquiry was made on the reasons forparticipation, how they developed the product for the project and the results that came outof their participation.
.

3 Outline of Design Policy of Local governments
Under this section, an outline of the actual situation of design initiative is provided as it
was made clear from the results of the questionnaire survey.

Definition of Design Policy
Design policy especially focuses on initiatives taken in connection with manufacturing.
Design policy is hereby defined as “initiatives taken for dissemination, enlightenment,
and use promotion of designing activity that are targeted to enterprises, universities andcitizens in the locality.” Specific examples are given in the 4 areas of 1. designing

This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

activity for external shapes of products, 2. activity for improving the user-friendliness /interfaces, etc. of the products, 3. activity for designing the product packages, and 4.
activity for developing products or services that involve professional designers.

3-1 Implementation Status of Design PolicyFirst, the overall status of implementation of design policy is as follows. 1,773 local
governments replied to the question whether they implemented design policy in fiscal
year 2012. The results show that 128 of them (7.2%) implemented design policy.
Looking at the results sorted out for categorized municipal units as show in Table 1, it isclear that design policy is being implemented in large-scale municipalities. In otherwords, almost 70% of the prefectural governments are implementing design policy. The
designated cities also implement design policy at almost the same level as the prefectures.
The implementation rate of design policy in the other municipalities is about 10% only,
indicating that there are large differences among the municipalities in the implementationof design initiative.

Table 1 Implementation status of design policy by size of municipalities
Implementing
municipalities

N

Implementation rate

Prefectures

38

26

68.4%

Designated cities

20

13

65.0%

Core cities

40

5

12.5%

Cities

724

49

6.8%

Tokyo Wards

23

3

13.0%

Towns

745

31

4.2%

Villages

184

1

0.5%

Total

1774

128

7.2%

Purpose of Design Policy
Design policy is being implemented for various purposes. As indicated in the survey
results (Table 2), the most important purpose is the promotion of regional industry.
73.8% of the replying local governments mention regional industry promotion as the
purpose of their design policy. It is then followed by the promotion of small and medium
enterprises and the branding of products developed in their municipal area, which areviewed as policy purpose by over 50% of those municipalities. As mentioned earlier, theimplementation status of design policy largely vary among the prefectures, designatedcities and core cities or smaller municipalities. Therefore, we made a categorization ofprefectures / designated cities (Group A) and core cities / other cities, wards, towns,
villages (Group B) in order to see the purposes prioritized in those groups. The results
show that the purpose commonly viewed as important is regional industry promotion. On
the other hand, there are certain purposes that are highly regarded by either of thosegroups. Among other things, “small and medium enterprise promotion,” “utilization of
corporate technology capability,” and “community revitalization” were not viewed

4

similarly by those groups. Group A puts emphasis on “small and medium enterprisepromotion” and “utilization of corporate technology capability,” while Group B
especially views as important policy purpose the “branding of products developed in theirmunicipal area.” Group B shows a tendency to put more emphasis on the “branding ofproducts developed in own municipal area” than Group A, although the difference is notstatistically significant.
Table 2 Purposes of Design Policy by Size of Municipalities
Total

Group A
Prefectures,designated cities(n=39)

Group B
Core cities, other
cities, wards, towns,
villages (n=87)

Local industry promotion

73.8%

74.4%

73.6%

Local employment creation

22.2%

25.6%

20.7%

Educational, cultural promotion

11.9%

10.3%

12.6%

SM E promotion

54.0%

84.6%

40.2%

Utilization of corporate technology

31.0%

56.4%

19.5%

Branding of local products

53.2%

43.6%

57.5%

Community revitalization

42.1%

12.8%

55.2%

Note : Figures are ratios of municipalities that set above items as their design policy goals

Implemented Design Initiatives
Next, we consider what initiatives are being implemented for design policy. We first
conducted interview and document research in order to figure out certain initiatives thatsome of the local governments are implementing, and then arranged an inquiry regarding
12 initiatives related to design policy to find out the implementation status of thoseinitiatives. (Table 3) The results show that the implementation rate of these initiatives is
24.3% on average. Among other things, the promotion of collaborations among industry,
academy and government is the initiative that is most highly implemented by themunicipalities. Its rate is 35.9%. It is followed by such initiatives as the human resources
support for design development and installation of exhibition space for local brand items(33.6%), and hosting of exhibitions (32.0%), that are implemented by many of themunicipalities. Similarly to the analysis of the design policy purposes, we categorized
those municipalities into Groups A and B, and found out varying trends in the initiatives
they are putting into practice. First, the initiatives that are highly implemented by GroupA are, in order from the highest, human resources support for design development(71.8%), hosting of exhibitions (61.5%), and offering of opportunities to get acquainted
with designers (48.7%). The trend of their activity is focused on providing support for thedesigners and enterprises to get to know each other and to practical assistance forcarrying out product development. The average implementation rate of design policy ofGroup B is not averagely high. Even the most highly implemented initiative is put into
practice by a little more than 30% of the municipalities. Those initiatives implemented bythem are the installation of exhibition space for local brand items, promotion ofcollaborations among industry, academy and government, and financial support for
design development. This presents a different trend from that of Group A.

This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Table 3 Implementation status of design policy by size of municipalities
Prefectures, designatedcities (n=39)

Core cities, other
cities, wards, towns,
villages (n=89)

Setting up promotion committee

23.1%

18.0%

19.5%

Setting up promotion organization

20.5%

6.7%

10.9%

M anaging shops of developed products

5.1%

13.5%

10.9%

Setting up exhibition spaces for local brand products

33.3%

33.7%

33.6%

Promoting industry-academy-government collaboration

43.6%

32.6%

35.9%

Hosting exhibitions

61.5%

19.1%

32.0%

Arranging competitions

20.5%

20.2%

20.3%

Award system

33.3%

16.9%

21.9%

Financial support for design development

15.4%

29.2%

25.0%

Human resources support for design development

71.8%

16.9%

33.6%

Offering information on external designing activity

35.9%

16.9%

22.7%

Offering opportunities to get acquainted with designers

48.7%

14.6%

25.0%

Total (n=128)

SummaryThis chapter has discussed the outline of design policy that is implemented on amunicipal level. The implementation level greatly differs between Group A (prefectures /designated cities) and Group B (core cities / other cities, wards, towns, villages). Whilethe implementation rate of design policy is about 10% for Group B, it is around 70%
among the municipalities belonging to Group A, which indicates that the main players ofdesign policy are prefectural governments and designated cities. Groups A and B also
show different tendencies with regard to the purposes and initiatives of design policy.
Group A implements design policy for the purposes of activating small and medium
enterprises and utilizing the technical capability of such companies with such initiatives
as hosting exhibitions, providing human resources support for design development, andoffering opportunities to become acquainted with designers. On the other hand, Group B
focuses on community revitalization and branding of products developed in their own
municipal areas as their purposes of design policy by managing shops, installingexhibition spaces for their local brand items and providing financial support for design
development.
The question is why the implementation rate of design policy is relatively high in theprefectures and designated cities. The answer is that, first of all, the designated cities arevery similar to the prefectural governments in their scale and authority. In Japan, cities
with population of 500,000 or more are eligible to be qualified as designated cities. Oncea city becomes a designated city according to the Local Autonomy Law, it is entitled to
special privileges. One of them is the transference of some of the authority and financesfrom the prefectural government. This gives the city a status with authority that is similar
to a prefecture. In reality, a city that has been appointed as a designated city had apopulation of 700,000 at least or usually more. Therefore, it is comparable to a prefecturein their financial and human resources, availability of designers and the number of small
and medium enterprises. They thus opt for implanting design policy as they have a goodbasis of financial and human resources and local industry to carry out the policy. Also, amunicipality has a tendency to observe the trend of other municipalities rather than thatof the national government. (Hasegawa, 2013) This may be the reason why a certain
design policy adopted by one municipality is influencing other municipalities in theneighboring region or of a similar size.

6

4 Case Study
The analyses of the results of our questionnaire survey made clear that the main
players of design policy are prefectural governments and designated cities which
implement their policy for the purposes of supporting small and medium enterprise andutilizing the technology they possess through such initiatives as hosting exhibitions andproviding human resources. The next point is the characteristics of those initiatives that
produce positive results. We interviewed the experts of design policy. As a result, we
singled out Tokyo Business Design Ward (TBDA), an initiative of Tokyo Metropolis thathas been producing effective results in recent years among other design initiatives thatare targeted for small and medium enterprises. We also discuss two cases of design
policy that have been commercialized in the market.

4-1 Tokyo Business Design AwardTokyo Metropolis has been promoting a support scheme for utilizing the designing
capability of the small and medium enterprises in the metropolis since fiscal year 2004
based on the program, “Tokyo Strategy for Utilization of Intellectual Property of Smalland Medium Enterprises (August, 2003).” The scheme consists of the four activities ofhosting seminars, creating guidebooks, managing designer databases, and enterpriseparticipating design competitions. (Table 4)
Table 4 Main Activities of Design Policy of Tokyo Metropolis
Hosting of seminars
Preparation ofguidebooks
Management of databases
Design competitions

Introduction to the functions and implementations ofdesigns targeting small and medium enterprises
Guide on basic concepts of design utilization and how to
use designs effectively
Creation and operation of database of designers who canwork jointly with small and medium enterprises
Design competitions for providing opportunities to small
and medium enterprises to collaborate with designers(e.g. Tokyo Business Design Award)

TBDA is a design policy scheme that was launched in fiscal year 2012, whereby
designers and small and medium enterprises can be matched. The first step of this scheme
is to call for advanced proprietary processing technologies or special materials from small
and medium enterprises with high technical ability in Tokyo as a competition theme.
Next, designers in Japan are invited to provide new business models for utilizing thetechnology on a proposed theme. The presented proposals are examined by experts toselect a competition winner who will be awarded and given support to eventuallycommercialize their product.
The predecessor of TBDA was a design scheme called Tokyo Design Market (TDM)
that lasted for 8 years prior to TBDA. This business scheme was an exhibition that washeld in autumn every year where designers presented their proposal for a new productdevelopment from their professional viewpoint. The visiting company staff from small
and medium enterprises was then matched with a proposal presented at the exhibition.
That was the purpose of the scheme. Roughly 300 proposals were exhibited during theThis paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

eight years, and about 10 of them were materialized to be commercialized eventually.
TBDA is an initiative that has been further developed from TDM, and its scheme is asfollows:
In April every year, a call is extended to enterprises to participate in the scheme. Eachof the participating enterprises then selects one or more of their proprietary processing
technologies or highly advanced materials to submit an application. Next, the review
committee makes a selection of participants. In August, the selected enterprises and theirtechnologies are announced to designers. The designers check the list of enterprises andtechnologies to choose one of their preference, and then spend two months from then on
to create a business plan that utilizes the technology that they have chosen. In the process,the municipality holds a joint presentation meeting of all participating enterprises andvisiting tours on the manufacturing plant of each of the enterprises so that the designers
can better understand the company and its technology. At the joint presentation meeting
where all selected enterprises attend, each of them gives a presentation of theirtechnology for about 5 minutes. The plant visiting tour is arranged for a limited numberof visitors so as not to impose burden on the enterprises. The designers understand andcomprehend the scale and facility of those enterprises by actually visiting their plants andoffices. As a result, their proposals can be more realistic and feasible in harmony with theoperating condition of each enterprise. When the designers visit the plant, they are
obligated to sign a non-disclosure agreement with the enterprise so that they can safely
disclose their corporate information.
October, two months thereafter, is the deadline for the designers to submit their
proposals. One designer can make a proposal alone or two or more can present their own
proposal jointly. A proposal is submitted as a presentation document consisting of within
five sheets that explains a proposed product and a business plan associated with it. It
cannot be simply a sketch of a product, but they need to present a business plan for the
product. After the proposals have been submitted, the first examination will be carriedout wherein the examiners narrow down the proposals to nominate only several of them.
In the second examination, the enterprises that will receive proposals also join theexaminers to participate in the examination. They have an opportunity to select a businessplan that they wish to collaborate with. At this point, the participating enterprises can opt
for withdrawing themselves from the subsequent process in case they have not been able
to find a proposal of their interest.
If an enterprise decides to work with the proposing designer in the second examination,a matching has been made successfully. In December, there is a public notice that amatching has been made. From this point onwards, the enterprise and designer become abusiness team that works on refining the business plan through discussions. Their next
goals are the final examination that is held at the end of January and commercializationof the project product beyond the examination. The team works together for the next twomonths to refine their business plan and create a presentation material that is to be shown
during the final examination. Although prototyping of their product is not obligatory,
some candidates who are determined to commercialize do make a prototype in order totransform their business plan into a feasible project.
In addition, between the second and final examinations, the host holds seminars on
intellectual properties strategy and design agreements. These seminars provide theenterprises and designers with an opportunity to study the rights they can obtain throughthe business project, the preparation they should make to secure industrial property rights
before the public examination, and the agreements that are necessary when continuing the
project even after the examination. The participants can also consult the experts
individually about these matters.

8

Feburary, final examination of opened proposals is held. After that, enterprises set as
their goal commercialization of the project product and TBDM support their activity as
realization phase.
These processes are included in business schemes of TBDA. TBDA began in fiscal
year 2012, and has been held three times so far. During the past two years, this initiative
has realized 23 successful matches between the participating enterprises and designers.
Also, four projects have been already commercialized or advanced up to immediately
before that stage. TDM exhibited about 300 projects in the eight years, of which only
about 10 eventually reached commercialization. This means the commercialization rate is
3.3 %. In contrast, that of TBDA is 17%. Of the four successful business projects, we
now report one from 2012 and another from 2013, both of them reaching the stage ofcommercialization.
Table 5 Scheme of Tokyo Business Design Award
April

EventsCall for project themes (for enterprises)

July

Theme examinations (for enterprises)

August

Themes announced /Call for designers' proposals

Meetings
Explanation meeting

Explanation meeting for designers
Plant visiting tour
October

1st examination of proposals

November

2nd examination of proposals

December

Theme Award proposals announced
Consultation for intellectual property strategy
and design agreements

January
Final examination of opened proposals
February onward
Realization phase
Source: Documents of Tokyo Business Design Award

Table 6 Number of applicants and commercialized projects in Tokyo Business Design Award

2012
Applying themes from enterprises
Selected enterprises
Applying proposals from designers
Successfully matched enterprises
Commercialized cases
Note: Data is counted in January 2015.

2013
36
15
205
11
1

2014
26
19
147
12
3

23
12
104
11
-

4-2 Case 1: Taiyo Toryo Co., Ltd. and Masking Color
Masking Color is a product owned by Taiyo Toryo Co., Ltd. (hereinafter abbreviatedas “Taiyo Toryo), a water-based paint maker. This product is an application of paintcalled water-based strippable into painting colors that can be used on glasses, mirrors andwalls. Taiyo Toryo is an enterprise that has been conducting B2B business. They havepromoted business collaborations with their customers in the sense that they customize
their paint products according to the specifications presented by the buyers. They,

This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

however, had never had any joint projects with designers. Their participation in TBDA
goes back to when the ward office where they are based contacted them for a call toparticipate in the competition. Initially they thought participation in TBDA could be agood memory for them. The company had a pool of various paint technologies that they
have created, so they used elimination method to single out a technology to be submittedwith the application, which proved to be a paint called water-based strippable that can be
stripped off afterwards. Originally, this technology of water-based strippable was usedmainly for the purpose of protecting automobiles in stock for delivery. A strippable paint
was not very rare in the coating material industry, but they decided to see how the market
responds to it as consumable goods.
For the technological offer made by Taiyo Toryo, there were several proposals fromdesigners. In the first examination where the designers’ proposals were screened. In thesecond examination, Taiyo Toryo would get to see screened proposals. Of them, the one
made by professional designer Ryuichi Kozeki had a high level of completion. The
company decided to proceed with commercialization in a relatively early stage. The
proposal was to increase the number of colors, adjust the viscosity and commercialize thepaint as pen-shaped paint. For Taiyo Toryo which had mainly engaged in B2B business,
B2C-based product development was the first experience. Collaboration with a designer
also was their first undertaking. In December when Designer Kozeki and the Taiyo Toryostaff held a meeting, Ms. Kamiyama, Technical Director of Taiyo Toryo proposed amilestone leading up to product sales, after which they worked as a team in drawing up aschedule for product development and sales. Kozeki suggested a plan to display the
product at an exhibition called Interior Lifestyle that was scheduled in June 2013, andthen quickly proceed with launching in the market. The product development involved
two undertakings; expansion of color variations up to 12 and designing an original
package. The color variation was realized with the know-how that the company had
accumulated. The metal mold for the original package was completed after two
prototypes. On the other hand, the business plan proposed by Designer Kozeki was close
to completion as it was incorporated with specific ideas regarding the package andproduct name. These were adopted almost as they were proposed, and the package
development was completed. At the exhibition held in June, a variety of major
distributors inquired about the product. In August, the product was put on sales inadvance at retail shop “Loft,” and then other retailers including Amazon followed incarrying the product for sale.
After the sales began, 10,000 units were sold in 18 months. The sales have been ingood shape since then. The product has also won a number of design awards; Good
Design Award Best 100 and Special Prize (awarded by Director-General of Small andMedium Sized Enterprise Agency) and iF Design Award in 2014.
In addition, due to the increased mass-media coverage, the company became known more
widely, which also pushed its sales upward, facilitated new recruitments, and enhanced
the staff’s motivation.

10

Figure 1 Masking Color Products and Their Usage
Source: http://www.maskingcolor.com/

4-3 Case 2: Bushu Kogyo Co., Ltd. and Pipegram
Pipegram is an intellectual training toy wherein the pipe processing technology of
Bushu Kogyo Co., Ltd. (hereinafter abbreviated as “Bushu Kogyo) has been applied.
(Figure 2) This product was developed through a collaboration between Bushu Kogyo
and Designer Kozeki in the TBDA competition in 2013. Bushu Kogyo is a B2B
manufacturer which specializes in supplying automotive parts. Their first encounter withdesigning was when they were contacted by a designer with a request for industrial
processing as he was developing lighting equipment that required highly advanced
processing technology. Before that, they once thought about consigning their originalB2C product with a designer, but the project did not actually get started. Therefore, theparticipation in TBDA was their first experience of engaging in product development thatinvolves designing in their own business. They got to consider participating in TBDA
after the design policy staff of Tokyo Metropolitan Government Bureau of Industrial andLabor Affairs advised to take part in TBDA. Initially, they were hesitant to participate as
they worried that designers might not be interested in pipes, but they decided to accept
the invitation finally. The technology that they offered for the competition was capable ofbending a pipe freely and continuously. As the engineering development of thistechnology had been completed, they were about to begin their search for a possible
market.
In the TBDA, several designers made their business proposal for the technology of
Bushu Kogyo. After the first examination, Bushu Kogyo had a chance to giveThis paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

consideration to these selected proposals. The proposal made by Designer Kozeki tocreate an intellectual training toy was matching the desire that the company always had tocontribute to Japanese manufacturing in some way. The proposal was also based on thetechnological application that could be easily realized with the existing machineryinstalled in the company through consignment to affiliated companies.
After the matching with the designer, an additional development was promoted withthe goal of displaying the product at Interior Lifestyle Exhibition in June 2014. The
development of the product moved forward smoothly after the second examination as
Bushu Kogyo made a trial production on their own. An extra project was thedevelopment of product package and production of sales promotion goods. The mattersrelated to intellectual property rights and contracting procedure were supported by theadvisors specialized in these fields who were introduced by TBDA.
The product was launched in the market in November 2014, and it has been already on
the sales routes of major distributors including Amazon. Since the product has been put
on sale only recently, we may have to wait and see the real market response. On the other
hand, there are already some positive results besides product sales. The product has beenfeatured more on TV and it is contributing to the branding of the company. The TV
coverage is also gathering the attention of students who are looking for a job. The
company also has received more business inquiry regarding the pipe bending processing
which is their core business.

Figure 2 Pipegram
Source: http://www.pipegram.com/about/what.html

5 Discussion
Both of the two manufacturers reported in this study are small and medium enterprisesthat mainly focus on B2B business, and they had an opportunity to develop a new B2C
product in the design policy. They participated in TBDA, selected one of their proprietary
technologies, and gave a presentation to designers. Then they chose one proposal fromthose offered by the designers, and began to develop a new product in collaboration withthe designer. Within one year after they first met with the designer, their new productgets to be put on sales at shops. The participation in TBDA has brought to these twoenterprises a number of positive results. As sufficient time has not yet passed since theproduct launch, it may be a little too early to discuss the sales status at this point, but for

12both products, the sales has been steadily increasing so far, and it is expected to turn thebusiness profitable before long. In addition to the sales revenue, the product launch has
already contributed to the branding and advertising of the enterprises as they are more
exposed in the TV and other mass-media, the improvement in the working staff’s
motivation, the success in recruiting more young workers and increased sales in their corebusiness.
The superior technical potential of small and medium enterprises that do not handle
final consumption goods was drawn out through their participation in TBDA. Then, theysucceed in developing final consumption goods that has sophisticated design. The
product then brings about monetary and non-monetary advantages. It is the power ofdesign policy that helps small and medium enterprises which have little to do withdesigning activity to have a success in developing a new product.
Then, why is the design policy able to produce a positive result in a relatively shortperiod of time? One major factor may be the evolution that the policy initiatives havegone through during the 10 years since the launch of TDM, the predecessor of TBDA.
We now discuss the process of this evolution from the two viewpoints of ingenuity in thematching method and comprehensive support for open-ended new product development.

5-1 Ingenuity for matching methods
From designer’s pull to technological push
In the TDM scheme, the predecessor of TBDA, the designers first proposed what theywant to create, and those enterprises were invited to offer their expertise for what had
been proposed. The scheme was what may be called, “designer’s idea pull style.” On theother hand, TBDA gives priority to the technology possessed by the enterprises, and thedesigners then make proposals regarding products and business models that utilize thetechnology offered. We may be able to term this method as “SME technology pushstyle.”
There can be several reasons why the designer’s idea pull style matching is not very
suitable to small and medium enterprises. First, it is difficult for the enterprises to see if
and how the designer’s proposal is related to their technology. It may not be possible tomaterialize a proposal with the technology that an enterprise possesses alone. For an
enterprise which has never had a chance to collaborate with a designer prior to theexhibition, it is not clear how to work together in a project. It will be difficult for an
enterprise which does not have a good judgement on designing to make proper appraisalof the offered design. In case the offered design proposals are far from what theenterprises are specialized in their business, chances are small for a collaborative project
to be launched. Another problem is that an idea cannot be used exclusively if it has been
publicized in an exhibition already.
On the other hand, the SME technology push style is based on the technology that anenterprise already has, for which the designers make a proposal, so it is easier for theenterprise to come up with a project image and how a product can be developed. An
enterprise with highly advanced technology can easily grasp a business plan that is basedon their proprietary technology and then figure out the required process of the productdevelopment and the degree of difficulty associated with the project. Also, if the proposal
is based on its own technology, the existing facility can be used without making an
additional capital investment. Being able to select a proposal privately is advantageous
for making arrangements regarding intellectual property rights and drawing up a businessdevelopment schedule thereafter.

This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Shift to competitive environment
The TDM method is a method wherein a designer proposes his idea at an exhibition
and then waits for a small or medium enterprise which is interested in the proposal. In
other words, the designer makes a proposal without any specific target for it. The TBDA
has adopted a competition style. In this matching style, a number of designers make aproposal for a particular technology or enterprise. In order to surpass the other proposals
and to be selected, it is necessary for them to have a deeper understanding on theenterprise and its technology and to come up with a proposal more refined than thecompetitors. Especially, the TBDA requires them to make a business proposal. Itscompetitive environment focusing on manufacturing an end product eventually may havehelped to produce more feasible business proposals.

Comprehensive Support for Open-ended New Product Development Project
As discussed earlier, the matching method has shifted from the designer’s idea pullstyle to SME technology push style, or from a non-competitive to competitiveenvironment. It is, however, not enough. After the matching takes place, there is a stage
where the product development needs to be promoted as business, and this stage presents
other challenges. When an enterprise and designer are successfully matched with eachother to collaborate together, what they now undertake is a new product development
project. This project, however, is not limited to the realm of the enterprise’s activity.
They now embark on what may be called an open-ended new product development that
goes beyond the sphere of their routine business. A variety of issues that may not appear
in their own project can pose a challenge when collaborating with an external business
partner. In the above matching scheme, an enterprise and a designer meet each other for
the first time to work in a collaborative project. They need to move on while solving thevariety of issues that are associated with the project launch and execution.
Some of these issues are; who bears the cost for the development and in what way,
how the enterprise and designer make an agreement regarding the timing of payment ofexpenses, how they apply for and manage the intellectual property rights that will be
involved during and after the product development, and how they share the fees that the
product sales may produce.
The two enterprises that have been discussed in the case study above are both wellperforming companies with high technological capability, but it was their first time to
conduct a B2C business as well as a joint development with a designer. As mentioned
already, there were no major technical issues in the development phase. Although certain
additional technological development was necessary for the designer’s proposals, butthere was no major difficulty with it. Rather, what troubled them as revealed in theinterview with them was how to deal with the contract issues and intellectual property
rights and how to secure the sales distribution routes after the product development.
The TBDA staff became aware of such issues, so they improved the scheme by setting
up a system that provides comprehensive support to the open-ended new productdevelopment. In the second year after the scheme launch, they incorporated a support
system for handling agreement protection and intellectual properties. One of theexamination committee members is a patent attorney who can provide advice on various
aspects of agreement contract and intellectual property rights. Another committee
member is an expert in the sales distribution who also serves as an advisor in this field.
The TBDA obligates participating designers to submit a business plan along with theirdesign proposal. Those designers, however, cannot always provide a complete businessplan. Therefore, the examination committee member of TBDA who has knowledge on

14

the sales distribution routes and retail outlets gives advice on these matters to help
making a sales plan as well. By making a great advancement in these two areas ofmatching method and comprehensive support, the TBDA scheme has become a more
effective policy measure.

5-2 The policy related implications
An enterprise with highly advanced technology has a potential to develop a new
product through a collaborative matching with a designer. Japanese manufactures inparticular have a tendency to carry out product development that focuses on thetechnological aspect only. The local governments, however, can provide such small andmedium enterprises which do not have a design–focused viewpoint with an opportunity
to meet with a designer. Through participation in the design policy scheme, an enterprisemeets a designer, experiences a successful new product development and thus takes noteof the importance of design. A successful development can bring about a wide variety of
benefits to the enterprise such as improved brand image, more employment, risk
dispersion and more profit from launching in a new market. A local municipality has apotential to draw out the capability of small and medium enterprises in their municipality
by giving support in connection with the design policy. The key of the policy is how to
support the enterprises to meet a designer and to promote the project smoothly. The
possible implications are as follows though they may be limited to B2B enterprises.
There are a number of matching methods. When it comes to giving support to a B2B
enterprise which is launching a B2C project, it may be more effective to use a matching
method of SME technology push style. This method is advantageous for the enterprise toutilize their own technology and easily reduce the investment cost.
The proposals from designers are made in a visualized manner. It makes it easier forthe enterprise to figure out the end product and issues that may arise in the development
process. It can motivate the enterprise with technological capability to take actions for
product development. Looking at it from another viewpoint, an open-ended new productdevelopment is conducted jointly by a team of a designer with limited experience andresources and a small or medium enterprise. If no support is given to them to solve
problems associated with such a project, it may easily collapse halfway. The
technological development itself is not the issue that the municipality has to provide
support so as to promote the smooth functioning of the design policy. Rather it is thevariety of issues that arise in the process of promoting the project.
The above two cases are successful examples, but about 80% of the projects proposed
at TBDA did not reach commercialization. The policy promotion staff need to follow up
so that the participating enterprises and designers desire to give another try even when aproject did not achieve commercialization.
Enterprises having highly advanced technology have a potential to realize design
innovation. The current situation, however, is that most of them have almost noconnections with designing activity. The two enterprises reported in this study initially
had no intention of proactively having collaboration with a designer. It is vital formunicipalities having small and medium enterprises in their jurisdiction to carry out
education and enlightenment activity on developing a design viewpoint. It may not haveresults immediately, but steadily increasing successful cases and patiently conductedenlightenment activity will invite more enterprises having a potential for designing
activity to participate in the policy scheme.

This paper was presented at The XXVI ISPIM Conference – Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

5-3 Future Issues
In this paper, the case study was chosen from the initiatives of Tokyo Metropolis.
Tokyo Metropolis, however, is the largest local municipality in Japan. It has much larger
population and fiscal budget than any other municipality. Tokyo also has a sizable
concentration of designers and enterprises. We deem it necessary to research the cases inother municipalities to find out whether they can be similarly successful by implementing
a similar design policy.
The designers can perform their professional skills in other fields than productdesigning. The above cases are of B2B enterprises developing B2C products. We are now
planning to research cases other than product designing and those of B2C enterprises tofind out what policy can achieve a higher success rate to come up with generalization
possibilities of design policy.

Acknowledgment
We hereby express our gratitude for all those who were interviewed for making thisstudy report.

6 References and Notes
C, Lorenz. The Design Dimension, Basil Blackwell, 1986.
Kyushu Bureau of International Trade and Industry of Ministry of International Tradeand Industry, Local Revitalization and Design, Research Institute of Economy, Tradeand Industry, 1991.
J. M. Utterback, Desing-Inspired Innovation, World Scientific Publishing, 2006.
Japan Small Business Research Instiutute, 2007 White Paper on Small and MedisumEnterprises in Japan, June 1, 2007.
K Hasegawa “The Importance of Design in R&D Management,” NISTEP Discussion
Paper, No.83 (April 2012).
METI(Ministry of Economy, Trade and Industry). “Disclosure of aggregate result of
SMEs.” METI press release, December 26, 2013.
METI Web site. http://www.meti.go.jp/press/2013/12/20131226006/20131226006.pdf,
accessed March 2015.
R, Verganti. Design-Driven Innovation, Harbard Business Press, 2009.
Y, Shikano. Japanese SME: real image of management and finance by CRD data,
Toyokeizaishinposha, 2008.

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