Breaking the Misconception behind ROI and Design
The return of investment on design is a notoriously hard measurement to quantify. While the value as a function itself is hard to isolate, many companies understand the numerous ways investing in design helps their organizations. Fortunately, thanks to the Design Management Institute (DMI), we can now put a number to the role design plays in companies’ success.
The DMI, a Boston-based nonprofit focused on design management, performed an aggregate study on design-centric organizations. Based on certain set of criteria, 75 were chosen and cross compared to the Standard & Poor 500- a stock market index of 500 large publicly traded companies over 5 years. The results made it clear that design-led innovation pays back: design-centric companies outperformed the S&P’s 500 by an extraordinary 211%.
Whether you are a UX designer, product designer, graphic designer, etc., your work is critical to the advancement and success of the companies you engage with. Design is a way of problem solving, telling stories, creating a positive experience, and leaving a lasting impression - something every single company that exists has to do to stay relevant. This is the number one mistake design skeptics make - they often do not fully grasp that an investment in design is an investment in virtually every aspect in a company’s success.
How can we actually quantify that design contributes to company ROI?
Imagine two of the most successful brands, Apple and Nike. Both of these companies recognize the crucial role design plays, and by embedding design-thinking throughout its culture and operations, these two companies have thrived. When people think of Nike and Apple, they don’t think of their shoes and electronics, they think of the lifestyle and characteristics these brands’ embody. As I previously wrote about, people don’t buy Nikes because they were cookie-d and sent to a website to convert, they buy them because of brand. These companies are able to communicate emotions, ideas and a brand voice effectively through design-thinking.
Second is a study done by DMI, and a more measurable way to quantify design-innovation. DMI and Motiv, an innovation strategy firm, created the Design Value Index. They selected 75 companies who met a series of criteria- for example, design had to be an integral part of their business strategy, and there had to be a growing investment to support designs influence within the company. They found that in the past 10 years, these design-led companies such as Apple, Coca-cola, Ford, Herman-Miller, IBM, Intuit, Nike, Procter & Gamble, SAP, and Starbucks, maintained significant stock advantage (over 200%) over the market.
For years, we have been competing for their company’s budget and cross-function buy in, while simultaneously overcoming the idea that “good design” is subjective. Providing hard data can help pave the way to investing in design and hiring high quality designers. This research could play an integral role in convincing design skeptics that hiring talented designers is truly a key to success. If companies invest a bit more into high-quality design, they can make leaps and bounds above competitors who do not.
The impact of design is difficult to measure, but understanding the influence on business success is a big push forward for us as designers. “This alone can be strong justification to invest in the discipline even in the absence of success metrics,” explains DesignerFund. For those who need data to support designs’ success claims, we now actually have substantial raw numbers.