Breaking the Misconception behind ROI and Design

The return on investment of 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 design’s success in companies.

The DMI, a Boston-based nonprofit focused on design management, performed an aggregate study on design-centric organizations. Based on a certain set of criteria, 75 organizations were chosen and 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 B2B, B2C, C2B, etc., proper design implementation is critical to when it comes to culture, operations, and business strategy. 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 do not fully grasp that an investment in design is an investment in virtually every aspect in your company’s success.

How can we quantify that design contributes to company ROI?

Take two of the most successful brands, Apple and Nike. Both of these companies recognize the crucial role design plays. By embedding design-thinking throughout its culture and operations, they have become two of the most relevant brands to exist. When people think of Nike and Apple, they don’t think of their products, 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, designers 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 you invest a bit more into high-quality design, you 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 design companies. “For many of us, 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.

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