I'm working towards my Master thesis with Design ROI as the focus. So , How can the value of design be proved by demonstrating the ROI?
I know design is used to differentiate and entice users and it would be invariably hard to pin down it's value but at the same would one be able to justify as to whether increased investment in design would generate increased profits ?
Thank you so much for giving a valuable insight into essentially the business/financial drivers as well as the including the key element of design too. Actually, I am looking at the ROI of design from a business and design perspective considering since the master I'm pursuing as of now is business design.
The approach is good since it seems to be favoring both the design and business perspective, please correct me if am wrong.Thinking about ROI in the context of a company like 3M proves to be the more challenging part too, since they have a well established engineering base as well as bring innovative (variable product designs and numerous well planned collaborations which give raise to high profit line) not to forget their Design labs all over.
As Erik says trust is going to be important since it relates to customer loyalty and leans more towards the design perspective (being the usability/emotional connect and such)
I will look into the material you have provided me with and once am through will be more than interested in having a thorough chat regarding the approach. Also, really truly appreciate your help and I would be grateful for all the insights I would gain :D . You Sir :), can count on me mailing you for info !!!
Maddy, Glad to have been of help, not matter how small :-)
Thanks for provoking a great discussion and a topic which I’ve been wrestling with for years. As those who have shared their thought provoking responses have indicated, it is not a clear path. Graham Hill makes a key point that designers need to provide a “better valuation of intangibles”.
I attended a conference a few years ago on Management, Innovation and Design, in which Roger Martin highlighted the communication gap between designers and business people and the need for both parties to come together. Those on this forum are already familiar with this need, and I am in agreement with designers having to do more to speak in the language of the spreadsheet and stats team.
Turning the intangible into the tangible is necessary for designers who want to demonstrate their value, especially in this much tighter economic climate. The business world may recognize that they must change to survive but there is still fear in what to many businesses is a leap of faith into innovation and design practice. We have the ability to change this doubt into a positive if we are able to demonstrate our work’s value (which may seem intangible) in a more concrete way, and in turn improve how we work (Arne’s point on longer term views also must be acknowledged here, but if we can show some returns in the shorter term too that can also be to our benefit in persuasion those who are not yet sure)
Looking beyond the product realm, have a look at Gensler’s workplace surveys http://www.gensler.com/#viewpoint/research which address measuring the intangible asset of space on performance and profit. Also have a look at evidence based design in this white paper http://www.healthdesign.org/sites/default/files/HCLeader_1_BusCaseW...
which demonstrates improved patient outcomes, decreased patient, family and staff stress and decreased staff injuries. These metrics can be clearly linked to the numbers and budgets loved the MBA’s.
ROI an important topic which we can all be working on- Keep us posted on your thesis!
Thanks for the two references. They are both vey interesting.
They both point firmly in the direction of looking at the JOBS (functional, emotional, relational and social) customers are trying to do and the OUTCOMES they expect from doing them. Both theoretically and practically, customers jobs/outcomes are the best proxy we currently have for what they 'value'. And jobs/outcomes are relatively easy to identify using methods very similar to ones we already use. If only we focussed on designing better innovations around customers' underserved jobs/outcomes, we could EASILY demonstrate the value of design.
Designer, redesign thyself!
Thank you for pointing out the 2 very interesting references. And since 3M is an innovation based company I hope it would be easier to read about this line :)...
I agree with your as well as the view others have proposed especially in the sense of the designer to turn over the intangible value into understandable tangible assists as you said in this money strapped economy.
For sure, will keep posted on my Thesis. Once my focus starts :D
I have my own take on business value of design (and spend several years blogging about business + design at bplusd.org, though not for the past couple). Mostly that designers typically conflate ROI with business value :)
See my response to an earlier post here where I share more detail...the question becomes less about ROI and more about thinking like a CEO.
My most recent client work involving value and KPIs is drawing on applied information economics; the basics of AIE are laid out in the book "How to Measure Anything". Highly recommended.
Also useful (and much more approachable, and free) is Scott Hirsch's work on design adding business value when he was at Adaptive Path. It's a must-read, and builds on his MBA work at Berkeley.
Look forward to hearing about your work in this area!
@Jess : Thank you so very much for providing the really interesting read on design adding business value by Scott for in my opinion it opens up different paths on the subject matter of evaluating design ROI.
I know this would probably sound simplistic, but am actually having trouble seeking the right person to provide guidance and act as a mentor for my master thesis of 'evaluating design's ROI'. Any idea or individuals who know as to who can give guidance with regards to this while acting as my mentor ? Would appreciate insight !
I was wondering, did you finish your Master thesis with Design ROI already? and if it's available, where can I read it?
HI i jointed up today, if i would have know this topic existed i would have joined up before...
i have written my thesis on the same topic and for 3M as well. ROI of design is interesting but a very complex topic since there is no golden formula for evaluating design ROI.
I think the fundamental question every organization and business has to ask itself is:
WHY are we using design and WHAT for? Because in the end you measure what you want to get! Right? Only if the intentions of why and what design is used for, only then specific measures can be applied. Once these intentions have been made explicit we can effectively measure design.
Well, at the moment i am trying to make a visual info booklet of my first research phase of thesis - it will explain the different design and performance relationships, designer roles, designer roles at the various business processes - the factors that cause designer roles to change - design strategy at corporate, business and project level - moderating factors that affect design effectiveness ;)
However i can say that design can add tangible and intangible value to the internal and external dimensions of a business. Therefore design can generate multiple benefits or returns for a business (internal and external). But its complex since design is moderated by several factors such as industry evolution, business strategy, the skillset and experience of design management and designers and the experience of a company in using design. All these factors can heavily influence design effectiveness.
It's a little odd to see another "Kristina" so for a moment I thought I had already commented. Hi Kristina Tool!
Graham, when I was with the Industrial Designers Society of America (1981 - 2006), we held a number of programs focusing on the design ROI. We took the award route primarily and then published our results.
Specifically, in 1989, we published our first Designs of the Decade. Here were asked designers who had previously been honored in our Industrial Design Excellence Awards to answer -- not about the design quality since the fact of the honor already proved that -- but about 3 business issues: market impact, financial impact, strategic impact. Entrants had to delivery numbers or powerful stories supporting their performance in each area. The result was powerfully persuasive and ranged from packaging to medical instruments and cars.
In 1999, we did a second Designs of the Decade. This time we opened the competition up to any design, and required a defense of the design quality.
In each instance, the jury was heavily weighted toward business people, allowing only one design voice, and that one a designer who had a strong business background.
The outcome of the 1999 event was huge coverage in BusinessWeek magazine following a truly gala ceremony where companies bought whole tables for their executives (something that had never happened in the US before).
In following years, this competition morphed into the Catalyst, a program that requires a great deal of in depth reporting by companies.
Check out: Catalyst Design Case Studies Gallery. and www.idsacatalyst.org. The Designs of the Decade winners were published by IDSA in its journal, Innovation, Winter 1989, and Winter 1999, I believe.
Hope you find this helps. We certainly amassed a great deal of knowledge with the awards and Catalyst and the program continues to thrive!