Understanding the Return on Investment in Companies, National Industry, Programmes & Policies, Economy & Society

A lack of knowledge and tools to evaluate the rate of return on design investment is often cited as a severe barrier to advancing the understanding of design’s value in Government. With design firmly on the European political agenda as part of the strategy ‘Innovation Union’, policy-makers across Europe will be looking at how design can meet challenges in industry, services and society.

This third SEE Policy Booklet provides an overview of current practice in design evaluation and identifies actions to improve these methods at micro and macro levels in both the private and public sectors. The four sections are:

1. Return on investment in design for individual companies
2. Return on investment in design in national industry
3. Return on investment of public funds in design programmes or policies
4. Role of design and its impact on the national economy and society.

This publication is an output of the European network SEE, funded by ERDF/INTERREG IVC, which has been engaging with national and regional governments to integrate design into public policy.

Download your copy from: www.seeproject.org/publications.

Irish companies that use design are more successful than those that do not. This fact was borne out of research published by the Centre for Design Innovation in the beginning of 2007. The challenge was to create a practical approach and tools that organisations could use to innovate and grow.

The result was Innovation by Design, an 18-month programme of workshops, research and mentoring for six Northwest organisations that began in June 2007. Precision toolmaker. Agricultural co-operative. Software developer. Third level institute. Airport. Heavy machinery manufacturer. Six very different organisations across six very different sectors; yet all with the common goal to grow their businesses.

Within 15 months different participants have launched new brands; generated hundreds of ideas; explored new markets; created prototypes for new products; redesigned their product development processes; delivered new and enhanced services to their customers; briefed and contracted design agencies; and one even renamed their company. Everyone has applied a design approach to understanding customers’ needs first, which is key to identifying the right ideas to commercialise.

But don’t take our word for it, read about Avenue Mould Solutions, Connacht Gold, Infacta, Institute of Technology Sligo, Ireland West Airport, and Mantis Cranes to see what they have accomplished.

In the end, success of the programme will be judged by the companies that took part and these are their stories in their own words.

Innovation by Design (PDF, 2.41MB)

It was breath of fresh air to hear Irena Fonda discuss her choice to invest in design to drive their family-owned fish business forward in Slovenia at the DME Conference. Fonda feeds their fish by hand (only the best food) for four years before going to market. Since they control the feeding, their fish can have 13 times less mercury than wild fish.

Working with LUKSstudio, Fonda incorporated family values and created a brand around old family photos. The “mustache” in the final logo is applied to the family portrait in a humorous and memorable way. You can purchase fresh, tagged fish on the Internet and have it shipped directly to you in a packaged experience. A panel of Italian chefs preferred their sea bass to that caught in the wild in taste tests and within a year of the launch, their fish appears branded on menus in the best restaurants in Ljubljana. Quality product. Authenticity. Design. That should put an end to the term “fishy business.”

Irena referred to design as one of many business tools, and she made the decision to spend on design. That’s a story to get out to other small operations looking for the right investment when spending (literally) their own money.

(The Fonda site is currently not available in English.)

So, does innovation deliver? According to the performance of The Innovation Index, which follows 18 companies deemed the most innovative by Business Week and Boston Consulting Group, the return is clear.

The Innovation Index has returned 119% over the last five years. $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.

The Innovation Index

However the study does report that “effective innovators excel at four key elements. The high-leverage innovators distinguish themselves not by the money they spend, but by building strong capabilities in the four principal elements of innovation: ideation, project selection, product development, and commercialization. High-leverage innovators listen closely to their customers across the entire innovation cycle. Companies such as Stryker and Black & Decker design their innovation strategy around a keen understanding of their end customers’ needs.”

How loud can you say DESIGN THINKING? Design thinking provides context for ideation and deep understanding of end user benefits improves your success at picking the right opportunities. Effective use of design during product development reduces risk & costs. This is the making of design innovation.

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