an online conversation
about design management


Design-driven companies outperform the S&P 500 by 219%

Over the past decade I have spent a considerable amount of time trying to devise a method small studios can use to convince clients of the value of design.

In developing the Design business model canvas I have put a strong focus on the design value proposition (dvp) as my way of showing clients why they should value design. I consider the dvp is the key element for a design studio wanting to show design has value. The dvp describes the value-add services you offer to a client and demonstrates them with an example. These services are often hidden in the way that designers talk and relate to their clients. The process of developing the dvp unlocks those value-adds and gives you the words to describe them to a client. The big question is still 'how do you put a $ value on the return from design investment?'

Measuring the value of design

The Design Management Institute (DMI) has long been a champion of selling design value but even they admit it’s difficult to define the value of design. They recognise that design is hard to isolate as a function within an organisation and even when you can, the design function operates differently in each industry. That makes benchmarking extremely difficult.

Instead, DMI chose to look at the value of design-focused organisations as an aggregate. DMI and Motiv Strategies, funded by Microsoft, tracked the performance of US companies that integrated design into their business strategy.

The dmi:Design Value Index tracks the value of 15 publicly held companies that met specific design management criteria. They monitored the impact of their investments in design on stock value over a ten-year period, relative to the overall S&P Index.

In reporting on the 2014 Design Value Index results Jeneanne Rea, Founder and CEO, Motiv Strategies said.

“The ability to create compelling products and services that resonate with customers, consistently produce financial rewards, and build brand loyalty has become the Holy Grail for many companies. In today's consumer-savvy world, design has unequivocally become a critical element towards meeting such goals. In fact, the Design Value Index (DVI), a market capitalization-weighted index comprised of design-driven companies, shows 10-year returns of a remarkable 219% over that of the Standard & Poor’s 500 index (“S&P 500”) from 2004-2014.”

The report showed that there are three corporate design trends:

UX design dominating growth of the design profession

Significant investments in design transform business

New types of design businesses starting up

You can read more about these trends and the overall report here

The take away point of all this. The dmi:Design Value index is a great source of information that can be used to show clients how design can add value.

 

Greg Branson

Greg’s passion is the research and development of methods that improve design management and the role of design in business.

Greg has developed a series of processes and tools to help designers manage their business better along with a series of workshops that show designers how to use these tools.