The Business Value of Design

By Consultants Review Team Saturday, 18 April 2020


Consultants Review Team

Can the design not only distinguish the company from its competitors but also influence the real business indicators? In particular, the revenue and income of shareholders? It has turned out that leaders in the field of design really show the best financial results, though the correlation cannot be called directly. An increase in sales is not only qualitative design, but also essentially other approaches to teamwork, and attention to the opinion of consumers.

Failures in product and service design are remembered for a long time and can even play a fatal role. USB-port, which you get from the third time. Misconceived connecting flights. The ventilation opening of the "Star of Death" in "Star Wars" turned out to be its weak spot. Opposite examples are the famous Swiss army knife, the Google homepage or the Disneyland Parks. All of them clearly demonstrate that design is capable of both stimulating and hindering commercial success. This is true for services, real products, and digital products.

While the benefits are obvious, working consistently to create outstanding products is becoming more and more complex. Companies like Amazon set a very high standard, blurring the line between software, physical devices, and services. In doing so, they benefit from constant access to a huge amount of information and feedback from users.

The regression analysis has identified 12 actions that show the highest correlation with improved financial results and categorized them into four categories. These foundations of good design are at the heart of MDI - an index that reflects how strong a company is in design and how it relates to its business performance.

What conclusions did the authors of the research come to?

There is a noticeable correlation between high MDI and excellent business indicators. Above-average MDI companies increase revenues and total returns to shareholders (TRS) much faster than their industry peers. Over the last five years, their revenues have grown 32 p.p. faster and TRS has grown 56 p.p. faster.
The results are fair for all three industries studied at McKinsey: medical technology, consumer goods, and retail banking. This means that good design matters to any company, whether they are offline or online. TRS and second-, third- and fourth-tier companies differed little. In other words, almost all the benefits come to companies that really stand out from the crowd thanks to the design.

A slippery slope

More than 40% of the companies that took part in the study do not interact with end-users during product development. More than half recognized that they are not able to objectively assess the work of their design teams or formulate specific results requirements.

And this is in an era of big data and artificial intelligence, social networks, and smart devices. Thanks to them, it is possible to collect a huge amount of information about user preferences, analyze it, receive insight and feedback. Even small start-ups can show how to make the right decisions through prototypes and iterative learning. It is the user who must be at the center of all development - and modern technology offers a huge number of opportunities for this.

Understanding at the highest level

In companies with better financial performance, they understand that design issues must be addressed at the highest level. Designers should not feel like second-class people, and design decisions should not be made by mid-level managers. If top management is not included in the process, it does not seek to understand consumers, in making decisions it will be guided by "sixth sense" and speculative conclusions, but no specific facts.

As a result, less than 5% of companies said that their managers can make informed decisions related to design (for example, when developing a product or entering new markets or even connect extensions like Shopify upsell app).

Expand the scope of user experience

Top companies consider the user experience in its entirety. The integrated approach removes barriers between the design of services, real and online products. This approach dictates a new reality, where the smartphone warns of traffic and advises you to leave home early.

Who's responsible for the design

Another secret to success is cooperation. In successful companies, designers are locked into their departments and work with other specialists from different departments. Overcoming the insulation is extremely important, the experts emphasize. Companies that have managed to integrate a team of designers and distribute responsibilities evenly are more likely to show better financial results. Here, analysts noted the most notable correlation.

It is equally important to encourage talent and develop an incentive system. In this case, bonuses can be tied to specific results, such as increased user satisfaction or design awards. However, freedom of creativity and the opportunity to interact with the community are just as important as bonuses and career progression. 

To make the design work for you, we suggest the following steps:

  • Take an analytical approach to design, evaluating and guiding this direction with the same care as the company treats revenue and expenses;
  • make the user experience a primary criterion and primary value for all employees, getting rid of barriers (between offline and online, for example) that do not exist for the user;
  • encourage and inspire the best designers to work together when the responsibility for improving user experience rests with the entire team;
  • promptly test and learn to use consumer insight from an early stage.

Current Issue