According to a McKinsey study with 300 companies, design-led companies' revenue is higher, and shareholders have a 56% increase in their return

Sometimes considered secondary, design’s best practices and functionality are commonly undervalued by companies. The reason might be historical: there was no well-structured methods to analyze and show the commercial value added by design. Now, the new study of consulting firm McKinsey & Company can put a number on the impact it has on business.

The Business Value of Design report  assessed 2 million pieces of financial data and 100,000 design actions – deliberate attempts to make design a more prominent part of the business. They tracked the design practices of 300 public companies over a five-year period. McKinsey found that the ones strongly committed to design principles had 32% more revenue and 56% more total returns to shareholders.

The consulting firm highlights three separate industries which consistently showed financial benefits from good design: medical technology, consumer goods, and retail banking. Sheppard is a partner at McKinsey and he has declared to Fast Company – a progressive business media brand – that it´s getting harder to make products and services stand out in the crowd.  “Over the last five years, we’ve seen this boom of senior business leaders saying, ‘Help, we need to up our game in terms of product and service design’”, he says.

C-suite topic

C-suite is the group of top managers in a company.  Seen as a less relevant issue, design wasn’t present in the strategic discussions of senior business leaders before. Sheppard says the current report recognizes the age of the subject by mapping and recording successful experiments: “Design is now a C-suite topic”.

Sheppard and the other authors of the study analyzed different design-related actions, such as putting a design leader in the C-suite, or linking executives’ bonuses to usability scores.  Through their analysis, they uncovered four sets of design actions that increased revenue and total returns. The 300 companies which joined the study were ranked using this metric developed by McKinsey.

McKinsey’s four themes of good design

1. Track design’s impact as a metric for success

Tracking design’s impact as a metric just as rigorously as you would track cost and revenue. How much did it contribute to results? Is it possible for the company’s directors to measure the value of design?  McKinsey cited one gaming company that tracked how a small usability tweak to its homepage increased sales by 25%.

2. Focus on customer experience

Understand the users’ and customers’ unmet needs by talking to them. Do real investigations centered on user experience, instead of the ordinary marketing research.

3. Embedd designers in teams

Put designers in cross-functional teams and encourage top design talent. Think about the design in every product and service development stage. Design is every employee’s responsibility.

4. Use Design Thinking strategies

Build a culture of encouraging research, early-stage prototyping, and iterating with continuous improvement. Basically, the Design Thinking strategies. Just because a product or service is launched, that doesn’t mean the design work ends.

“With no clear way of linking design to business health, senior leaders are often reluctant to divert scarce resources to design functions. That is problematic, because many of the key drivers of the strong and consistent design environment identified in the research call for company-level decisions and investments. While many designers are acutely aware of some or all of the four MDI themes, these typically can’t be tackled by designers alone, and often take years of leadership commitment to be established”, the study says.

Content published in January 18, 2019

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