The business value of Design

Business leaders who focus on their balance sheets are likely to overlook the potential value that a good design team can bring to the overall performance and value of a company. In other words: The business value of design is not just its ability to generate direct revenue, but its potential to improve almost every relevant business metric.

This is not obvious until it has been tried and design has had a chance to become an integral part of business processes and workflows. It is not just about fashionable ‘design thinking’ or ‘innovation management’ (both of which have always been the domain of design). It is about the simple fact that communication and visualisation at all levels are fundamental to all creative and intellectual work. Design is like the salt in a soup: without it, it is still a soup… but a bland one that nobody likes.

And this is not wishful thinking: many of the larger consultancies have seen the potential and started to investigate. And it has become clear that a high level of design awareness contributes significantly to the overall success of companies.

To say it in simple terms:
A high design maturity of a company is a key indicator for how good a company leverages its own potential for business success and revenue.

As a result of their work, designers influence factors such as internal learning, understanding complex issues, communicating effectively and thinking in systems. Design is above all intellectual work, helping to innovate internally and externally, and to drive change towards positive outcomes.

Why is Design particularly relevant for this?

Designers never take anything for granted. They think outside the box and always have their eyes on the future… and where “the puck is going to be” (to borrow Steve Jobs’ famous quote from Wayne Gretzky). They are also doers. They are movers. They are shakers. They do not stop at ideas. They are expected to implement them – at least to convince everyone of the true potential of an idea that may seem ordinary at first, by reconnecting creative thinking with the reality of customer experience.

And it is quite plausible that this attitude is important for many, very many things that companies and organisations might be struggling with.

The only reason that the “business value of design” is and has been an issue at all is that many managers actually disagree! For them, design is just an element of marketing or a necessity in the product development part of their business. They do not see the strategic value in the solution patterns that designers create through their work.

And yes, there is evidence!

InVision on the Business Value of Design

Let’s try to approach it with a Design Maturity model – as it is common to understand the evolution of a practice these days:

“Companies with high design maturity see cost savings, revenue gains, and brand and market position improvements as a result of their design efforts”

In 2018 InVision has conducted an online survey with over 2.200 companies that were asked what the positive effects of a design team within the company was. There were not only foreseeable effects on the product quality and customer satisfaction but also notable effects in operational efficiency, business profitability, brand value and market position.

frog on the Business Value of Design

In the same year 2018 the design agency frog has issued a report on how Design influences key metrics like

  • (a) time-to-market
  • (b) market reach
  • (c) increased engagement and loyality
  • (d) enhanced internal capabilities
  • (e) transformation towards a vision

For frog there is a clear potential to measure the impact of the work of design teams for business success.

“The difficulty in creating a business case for design initiatives is that benefits can be tough to measure, hard to attribute, differ by industry and even company, and pan out over a long timeframe. However, it can be done.”

Timothy Morey, VP Strategy at frog

In terms of time-to-market the report mentions CheBanca and Saudi Telecom Company (STC) that used design initiatives to significantly reduce development timelines and bring products to market more quickly.

How design can extend the market reach is highlighted with an example of TouchTunes’ Virtuo jukebox which sold out at launch, shipped thousands of units in its first year, and significantly increased revenue and profits for venues, operators, and TouchTunes itself.

Enhanced customer experience for the wealth management platform Guide Investimentos was able to drive engagement and loyalty that lead to the acquisition of over 10,000 new clients and a growths of revenues by 46.2% year-over-year.

Lastly General Electric Co. (GE) is mentioned for its investment in a common software platform and UX practice, thus enhancing the internal capabilities and leading to a 100% productivity gain in development teams and an estimated $30 million saved in the first year, showcasing how design can enhance internal capabilities and lead to cost savings and potential revenue growth.

McKinsey on the Business Value of Design

In the same year 2018 McKinsey finished a five years long study with 300 publicly listed companies. The report argues that investing in design is not just about improving the look and feel of products or services but about adopting a strategic and analytical approach to design that integrates it into the core business processes and decision-making. This approach leads to significant financial benefits, including increased revenue growth and shareholder returns.

McKinsey even invents an own metric – the McKinsey Design Index (MDI) that could be calculated by looking at these factors:

  • (a) analytical leadership
  • (b) cross-functional talent
  • (c) user experience
  • (d) continuous iteration

With these metrics the report concludes that companies in the top-quartile MDI scorers saw their revenues increase by 32 percent more than their industry counterparts over a five-year period.

The same companies with high MDI saw their total returns to shareholders (TRS) increased by 56 percent more than the increase of their industry counterparts over the same period.

“Design is more than a feeling: it is a CEO-level priority for growth and long-term performance.”

Authors of the report

This signifies a substantial impact of effective design practices. Company’s financial performance is strengthened and thus reinforcing the argument that investing in design is not just about enhancing the aesthetic appeal or usability of products and services but is also a strategic investment that can lead to significant business growth and shareholder value.

The takeaway

Design is a strategic asset!

Companies that excel in design don’t just happen upon success; they make deliberate, strategic choices to invest in design capabilities, integrate design thinking across their organization, and align design initiatives with business objectives.

It requires a comprehensive approach to Design!

Successful design transcends traditional boundaries, encompassing not just product design but also user experience, service design, and digital interfaces. Companies that adopt a holistic approach to design, considering every touchpoint in the customer journey, are more likely to create cohesive and compelling user experiences that drive engagement and loyalty.

Conversely, this means that companies that do not understand the strategic relevance of design and how it influences internal processes to improve their own business are simply missing out on a good chunk of revenue!

It always pays to invest in Design!

More about Design Maturity Models

There is a study from June 2022 that compared different design maturity models.