The Business Value of Design

This article is about the business value of design.

Design is a difficult concept. A difficult concept because it’s so broad and open to multiple interpretations. You may know the stereotypes of design, such as designer chairs, beautiful kitchen faucets, sports cars or men with turtlenecks.

However, design in an academic sense is a more abstract concept. It is a process or mindset to solve problems. Problems are often related to the interaction between a company and its customers. Problems of users. Or even better, because using user is sensitive too, problems of people.

However, the wide interpretation of design is also a problem. It is difficult to prove why and how design can have a positive influence on companies. How do you make the influence of design quantitative? How do I see the value of design reflected in my KPIs? And should I only focus on measurable results? Or in fancy terms, what is the Business Value of Design?

Based on research by McKinsey about the Business Value of Design and from the experiences of many companies worldwide, it appears that a focus on design can have great added value. If it’s implemented well.

In this article we look at the definition of design, the added value of design for companies, and how you can quantify this value – if necessary.

The definition of design

If we compare the different dictionaries and definitions, we arrive at the following definition:

“Design is the process of imagining, planning and creating (interactive) systems, objects, products, services and structures.”

Design is a broad activity with many variants, such as the design of products. To better understand design, you can subdivide it into three different aspects:

• The doing of design, such as the real craftsmanship of making products.
• The end result of designing, for example, a product or new service.
• The process of designing is also popularized under the name Design Thinking.

Now I am not implying that we have the correct definition of design and I wonder if it even exists at all. However, from the above description, it does seem clear what this term could mean.

Within companies, designing is an important activity for developing new products, services, and strategies and giving customers and employees a better experience. Much can be designed.

In this day and age, design is becoming increasingly important to companies, but no longer an isolated field. Much more often design is cross-functional, combining physical products, services, digital platforms and business aspects.

Consider, for example, the experience of buying and driving a Tesla, a textbook example of where design comes together. Design is integrated from ordering online to using a mobile phone and driving in the car itself.

This cross-fertilization of design makes it a big challenge to manage, but that’s a different story. But one thing remains: design serves to bring a good experience to customers and users.

The business value of design for companies

Design has great added value, especially for large companies. And that manifests itself in various aspects. The following image summarizes this well, and I will explain it below.

Revenue growth

Companies that focus on design have an average revenue growth that is up to 2 times higher than companies that do not.

This not only applies to companies in a particular industry but also applies to companies in different branches.

A dollar spent on design can – if properly executed – yield much more than this investment. With an emphasis on proper execution and implementation, which I will tell you more about later.

Now I find the focus on growth rather one-dimensional, or unfortunate. Besides a bigger wallet, the focus on design has several advantages. especially in the long term. Below is a summary:

Visionary Transformation

Because designers focus on users, or as I indicated earlier, on people, they are also experienced in designing change. A good product is designed to allow someone to do something with it, in other words, to encourage a certain change of behaviour.

This makes design pre-eminently a suitable process for implementing change and vision. Especially because it looks at challenges (and problems) from different perspectives.

Change or a new vision can be the answer to the challenges a company faces. Leaders help to implement the answer, but designers find the right question to answer.

Employee development and knowledge sharing

A company, especially if it has been around for some time, has a certain status quo. This has been shaped by a company’s successes and it determines how things are done.

But in the longer term, this is also a threat and frustration for some employees. It is difficult to change, processes do not run smoothly or culture is unhealthy.

An organization that is designed for design requires collaboration, in which traditional silos have to be broken. It also creates a culture where it is possible to develop new products, services and processes.

And this process has many advantages such as more knowledge that is shared among employees and better interaction, retention of talent and a healthy culture.

Faster time to market (and possibly on a broader market)

Design uses methods such as co-creation (designing together with users and customers), making prototypes (release test products or services early) and the popular Lean (not to be confused with Lean Six Sigma).

By applying these methods, services and products are often on the market faster, whereby they also better suit users.

And here we come to another point. Because the design process has a focus on the user (and thus user research) from the start, there is an early understanding of the user and his needs.

This often provides surprising insights for new market segments or solutions that can be applied to multiple segments.

Loyalty and customer engagement

An integral aspect of the design is – what we will explain later – user experience (UX) or customer experience (CX). This is the sum of all interactions a person has with your company or organization.

And when these interactions are well designed, meaningful and consistent, people will develop a better relationship with your organization. Moreover, they remain loyal.

Design goes further than just examining the customer experience, but also looks at designing new possibilities and interactions.

We were allowed to help Operation Mobilisation, a global non-profit organization with more than 5000 employees, with a process in which design played a major role. In three months, we brought the events of one of their departments online, launched a brand new website and ensured that the entire organization could contribute to the process. It is precisely in the latter that design played a major role. Using design in your organization? Please contact us.

Implementing design in your organisation

Applying good design is important to really get that Business Value of Design, but the correct implementation is crucial.

Now it’s nice to hear all these benefits of design and read about the importance of proper implementation. But how do I implement this within my company? Let’s see:

There are four factors that are important to consider, linked to the previously mentioned benefits of design.

Focus on analytical leadership

If I think one thing has become clear in this article, it is that design is more than just aesthetics or feel. It is an aspect of your company that should be taken just as seriously as Finance or Sales, for example.

The following is important here:

• Focus on users in the business strategy.
• Involve design at the highest management level
• Use so-called design metrics.

Metrics linked to analytical leadership

Analytical leadership is linked to visionary transformation. But how do you measure the results of this leadership?

• Due to an increased turnover from new products
• A larger number of new talent is being attracted
• A positive change in culture, with better values
• Better brand values and market reputation.

Make iteration and feedback part of business processes

Design should be more than a phase. Iterate from the first idea or strategy and do this up to and including launch. Also, involve users in testing from the very beginning and ask for their feedback. This process is called continuous iteration.

A few tips:

• Make use of both quantitative and qualitative research
• Integrate different forms of research, both with users, and business or technological research.
• Start prototyping early, if possible
• Test, improve and repeat.

The big advantage of continuous iteration is that it saves costs. By starting prototyping early, costly mistakes can be avoided later on.

The benefit associated with this implementation is the ability to get to market faster and address a wider market.

Metrics linked to continuous iteration

Results can be made concrete by looking at the following values:

• The development time and/or costs, which can be lower
• The profit, which can increase
• The amount of feedback from users and customers
• The market share, that can grow
• The proportion of customers who prefer your brand (the so-called Share of Wallet).
• The share of new products and services in the overall profit.

See design as a shared responsibility

For a while, separate innovation or design thinking departments were a trend in companies, but this ignored an important aspect of design: collaboration. In practice, these closed departments, therefore, proved to be of limited use.

Design is not the function of one department, but the responsibility of the entire company. You cannot put designing in one silo. But which practical aspects are involved?

• Appreciate and nurture employees with a talent for design
• Set up teams in a multi-disciplinary manner, in which designers are part of different teams.
• Ensure departments have access to design tools and design knowledge.
• Educates designers with a T-profile: broad knowledge with one specialization, so that designers can integrate well.

Design as everyone’s responsibility has a strong relationship with one of the added values of design, which is employee development.

Metrics linked to design as a shared responsibility

You can make the results of shared responsibility concrete by looking at the following values:

• Collaboration and knowledge sharing between employees
• Better interaction between employees
• A number of external experts hired
• A better retainment of talent
• A better relationship between management and employees

Put user experience first

Design is much more than just a product, it is the entire experience. As mentioned earlier, it is an experience where different fields come together. From digital services to physical products, everything must connect seamlessly.

They are all interactions with a customer, or for internal projects, an employee.

Below are four practical tips for implementing a better user experience:

• Start with the user, not the specifications or hard requirements. There are many tools available for this.
• Make sure that everything that can be designed connects seamlessly (a design system or brand guide is a good starting point)
• Use third-party products and services if this makes implementation easier and the experience better.
• Use width (the number of interactions), depth (the quality of interactions), and consistency to analyze, improve and innovate the current user experience.

Metrics linked to user experience

A good user experience is related to better customer loyalty and engagement. This can be measured with the following values:

• The growth of new customers
• Better customer retention
• Greater profit and market share
• And increased brand equity

Important: start small

There is one aspect that still needs to be highlighted in cow letters. Are you excited about what design can mean for your organization?

In that case, do not implement all four of the aforementioned aspects equally, but start with one of the aspects. Start with one product or service, and then expand it step by step.

Time for more design in your organisation?

As a designer, I naturally have a bias, and I will always regard the role of design as important. Nevertheless, the positive role of design is endorsed in several articles.

In the age in which we now live, data and feedback are more easily available than ever. Data that is useful for improving a better user experience, is something that design ultimately focuses on. It is almost a no-brainer to give designing more attention.

There is strong evidence that companies that focus on design are growing faster. But don’t forget that applying design isn’t about money, it’s about purpose and humanity. It is precisely in the indirect advantages of design such as better collaboration, more job satisfaction and the added value of services and products for customers that the real value lies.

So, after this article ready to shape design in your organization? Or do you have a question? We are happy to help you, also with the implementation of Design in your organization.

This article is based on sources from the articles on McKinsey Design, TheMoment, FrogDesign and Strate School of Design with illustrations from Freepik Stories.