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)

If you were hoping to discover the secret formula in this post, I’m sorry to disappoint. Our research and the research of many other organisations have demonstrated the link between design and business success. Is it the only factor? Of course not. Great businesses use every tool at their disposal to create competitive advantage, and design is a very powerful tool.

What does appear to be developing is a mix of quantitative and qualitative metrics around user experience. And if you’re looking for the best way to identify and meet the needs of your customer and consumer, design is the perfect tool. The following articles broadly discuss these issues and highlight two models developed by Whirlpool (product design) and Live/Work (service design).
No Accounting For Design?
Can You Measure Design’s Value?

The European leg of the annual Design Management Institute (DMI) conference took place in Copenhagen last week. I’m a regular attendee and my perception is that they are becoming increasingly relevant to a European audience (where previously they have been quite US-centric) and less academic (which has been a criticism in the past). It was hosted in part at the Danish Design Centre, a temple of cool if ever there was one; their pack included a nice retrospective of the impact of Danish design.

So, what of the content? The tone was nicely set by Darrell Rhea, CEO of Cheskin who have pioneered design research methodologies as a means of creating competitive advantage for clients over the last 60 years. His keynote address reflected, and started to create a language for, emerging trends in design management. In particular he stressed the role of the designer in finding ways of creating meaning for consumers of which more later. Their primer on ethnography is a cracking introduction to the topic.

Of the other speakers, the resounding theme was to stress the importance of demonstrating the impact that design can have to a business but few were able to give real insights as to how best this can be achieved. Pia Mathiesen, Director of Design at the Danish State Railway used strong metrics based on qualitative assessment of user experience but had a lot of support when she cautioned against trying to “break the butterfly of design on the wheel of measurement”.

Han Hendriks and Roderique Duell of Johnson Controls gave for me the most striking presentation showing how this enormous manufacturer of car cockpits manages the design process and correlates their investment in design to final profitability. Impressive stuff, mainly because it demonstrated what can be achieved when an entire organisation is focussed around usability: all metrics, management structures and rewards contribute to this approach and it was a masterclass in why it is impossible to “bolt on” measurement after the event, it must be integrated throughout the company.

Finally, Harry Rich of the UK Design Council (who always gives good value) shared their research on the impact of design which they have distilled into a one-stop shop. A great resource.

Overall, my impression is that there is still a lot of fear around the question of measurement with few breakthrough insights. Best practice seems to be incorporating metrics into a user-driven business model, but we all know how hard it is to achieve that.

via Creativity and Innovation Driving Business …

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