The Business Value of Design – McKinsey

There’s a lot of fluffy writing out there about the business value of design. It’s frustrating. So I was super happy to hear this report from McKinsey yesterday which maps out the value of design clearly and includes evidence, themes, problem areas, and advice.

THE EVIDENCE

To tee up this investigation, McKinsey looked at the performance of 300 publicly listed companies over a five year period and pulled out two things: 1. Their Financial Performance and 2. The Design Actions that these firms took. (Design Actions can range from putting a designer on the exec board to deciding to track design metrics).

What did they find?

The revenue growth of top design performers was almost double that of their industry peers.

These are good numbers.

They also found that the business value of design reaches across industry sectors. Their study includes analysis of three distinct industries: consumer packaged goods, medical devices, and retail banking.

THE THEMES

The report defines four themes that contribute to the positive correlation between financial performance and design actions:

1. More than a feeling. These companies bring as much research and rigor to design as they do to other business functions

2. More than a department. Design isn’t done in a siloed department. In fact, the researchers found that siloing designers can actually lead to decreased financial performance. Instead, design-driven firms embed designers in cross-functional teams throughout the organization

3. More than a phase. Design-driven firms adopt an attitude that design is never done. They iterate on their design from strategy to launch and beyond by building prototypes, gathering customer feedback, and turning that feedback into better designs and customer experiences

4. More than a product. Design-driven firms understand that customers don’t respond to individual widgets as much as they respond to the entire experience with their company. With so many physical products having software and service components these days, this should be a no-brainer

 

THE GAPS

Nothing sums up the gaps between theory and practice better than this quote from the report:

If you look at these actions, while they may be commonsense, they’re not common practice, because they need senior management to orchestrate.

Why is it so hard to integrate designers? Well, they are different. What makes having them on your teams great also makes having them on your teams challenging. The advice? Look for “T-Shaped” designers that have a depth of knowledge in design and breadth in related areas like business strategy and technology trends.

Another tip for moving to an integrated design practice is to not do it all at once. Instead, pick a project and apply the themes to that project. That’s your prototype. Mock it up, test it, iterate, then scale.

 

TAKE IT FURTHER

The full podcast and transcript is here

 

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