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The ROI of Great Design (Part 1)

In the first part of this blog series, we scratch the surface of the overall business value of design. Why should we measure the return on an investment in design?

Designing great products and services for end-users - how hard can it be? It’s commonly stated that everyone’s now doing user-centered design. That’s cool, we’re also doing it - and there’s a lot of work to be done in this area. As our UX Lead likes to point out, products and services have always been designed for the end-user. He’s completely right.

However, designing disruptive and delightful products and services that actually reform the market and bring in business value isn’t something that happens overnight.

Why is it important to invest in design - in great design, to be specific? How you calculate the ROI of something so non-tangible yet so business-critical? How do you identify the most sore pain points of current design and turn those to be some of the most important parts of your conversion stream?

What we mean when we talk about design

First, it’s important to make sure we’re discussing the same matter. Terms and definitions vary from person to person, so let’s clarify what we mean here and you can then decide if this is down your alley or not.

When we talk about design, we talk about the broad term that includes visual design, UX design, UI design and service design. If we want to point out a certain part, we’ll name it according to its rightful context. We want to make this as easy, understandable and approachable as possible.

In this blog series, we’re having a go at all of the design contexts mentioned above and how investing in these can bring a sack of money to your doorstep the way storks bring babies.

In this first post, we scratch the surface of the overall business value of design. In the next parts, we dig deeper into every single aspect of design that we at Sangre provide. This includes visual design, UI design, UX design and service design.

Design drives superior performance

McKinsey made a great study on the business value of design and how design is linked to companies’ financial performance. The results are interesting, to say the least, and they really highlight the value of design in all its forms. McKinsey tracked 300 publicly listed companies and their design practices over a five-year period and found an astonishing correlation between their design index scores and superior business performance.

Do you know how much your design brings in? It’s hard to measure, even though it can and should be measured with the same intensity as one would measure revenue and costs. McKinsey broke design down into four different themes in their McKinsey Design Index (MDI):

  • Analytical leadership

  • Cross-functional talent

  • Continuous iteration

  • User experience

All of the above touch all the parts of any company. Design should be measured and performance-driven like any other function. Design shouldn’t be a department and a siloed function either. User-centricity should be everyone’s responsibility. Communicating, testing and iterating with end-users decreases development risks. It often means internal change when you have to break down walls between different design sectors for the sake of achieving the best possible user experience.

Bigger players seem to have a lot to learn from smaller, leaner ones. A startup mindset with quick iterative development processes tends to drive better results, while bigger companies might be catching the design drift at a slower pace. Still, it doesn’t mean it’s easy anywhere. Too often design is still a department, not a mindset, culture and way of working.

Design-led companies are the winners

When you fully embrace design as a major part of your business, you’re already one step closer to beating the competition. Why is that? Studies have established that design-led companies introduce twice the amount of new services or products to the market compared to non-design-led companies. Design-led companies are nearly two times more likely to penetrate new international markets.

“But my domain is not one that you can’t fit design into,” you say. It may seem hard to bring in new practices and ways of working, but any company with clients can and should focus on design. It brings together different functions within the company, enabling innovation and faster product and service design, and keeping the end-customer in the centre all the time.

Are you measuring your design performance on a company level yet? If not, get in touch and let us help you get going.

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