October 12, 2020

Heart of Design Conversations

Opportunity during adversity: Design for business transformation

From impact and engagement to innovation and revenue, we look at what design can mean for organisations, and how companies can embrace Design Maturity as a foundation for future growth during uncertain times

A little over a year ago some of our team were invited to an industry event that recognised and applauded design-mature businesses.

Hosted at Deloitte Sydney by Greg Branson of the Design Business Council, the event discussed and dissected the Design Maturity Report – a pioneering body of research that reflected a global shift in understanding the value of design.

The report provided a framework to show businesses how an investment in design can pay off on different points of the 'design value chain'. These points include:

  • Inbound logistics
  • Infrastructure
  • Operations
  • Research and development
  • Outbound logistics
  • Human Resources
  • Marketing and sales
  • Technology
  • Service
  • Procurement

At the time, event organiser David Sharpe of Sharpe Advisory said: “The Design Maturity Index is a useful way for design firms to demonstrate to clients how an investment in design can pay off. It’s an easy to grasp framework for non-designers, and best of all, it’s focussed on ROI.”

Some 15 months on, the findings are more important than ever. Not only are businesses looking to offer more value, boost revenue, and build for the future, but they’re doing so against the backdrop of COVID-19. The need for design maturity has intensified, with the need for greater internal efficiencies in areas such as logistics, inventory and operations, as well as more engaging and impactful interactions with customers, suppliers and investors.

"De-risk your investment into design services with a strategic approach. Understand ​why​ and ​how ​design will deliver value to bottom line before thinking about ​what to design​"

The value of design

The report is one of several studies that have highlighted the business value of design in recent years. 

In 2018, consulting firm McKinsey published its report The Business Value of Design, which included its McKinsey Design Index. The MDI tracked 300 publicly listed companies over a five-year period, collecting more than two million pieces of financial data and recording more than 100,000 design actions. 

Based on four themes of good design – analytical leadership, cross-functional talent, continuous iteration, and user experience – the index rated how strong companies are at design, and how that links with their financial performance. 

Top-quartile MDI scorers enjoyed 32 percentage points higher revenue growth, and 56 percentage points higher total returns to shareholders growth. 

Similarly, the Design Value Index clearly illustrates the advantages for design-led brands. First launched in 2013 by consultancy firm Motiv and the Design Management Institute, the index measures the impact of investment in design in relation to the overall S&P Index. 

Recent versions of the index was based on a portfolio of 16 publicly traded stocks in the US that met DMI’s criteria for being design-led: Apple, Coca-Cola, Ford, Herman-Miller, IBM, Intuit, Nike, Procter & Gamble, SAP, Starbucks, Starwood, Stanley Black & Decker, Steelcase, Target, Walt Disney, and Whirlpool. 

DMI found that “over the last 10 years, design-led companies have maintained significant stock market advantage, outperforming the S&P by an extraordinary 228%”.

InVision’s far-reaching 2019 report The New Design Frontier also emphasised the relationship between design practices and business performance. 

Interviewing 2,200 companies across 77 countries and 24 industries, the report showed that more than 70% of companies believe design is reshaping their products, portfolios and industry standards.

Among its highlights, the report found that product quality had gone up as a result of design, with 81% of companies saying product usability was positively impacted, and 71% saying the same about customer satisfaction.

A third of companies said they had seen improvements in employee productivity, with 42% claiming a proven impact of revenue.

Only 5% of companies, however, were maximising the potential of design (level 5), while 41% were only using the most basic use of design (level 1). This is where the value of design can be seen the most, as only 22% of Level 1 companies saw an impact on revenue, compared to 92% of level 5 companies.

Similarly, only 16% of level 1 companies saw an impact on cost savings, compared to 85% of level 5 companies, while 14% of level 1 companies saw an impact in time to market, compared to 84% of level 5 companies. When it came to valuation, a mere 2% of level 1 companies saw an impact from design, compared to 52% of level 5 companies.

“over the last 10 years, design-led companies have maintained significant stock market advantage, outperforming the S&P by an extraordinary 228%”.

Becoming more ‘design mature’

The five levels of ‘design maturity’ are a common feature across different reports, often based on the four-stage Design Ladder, developed by the Danish Design Centre in 2001 as a model for the varying use of design in business. 

This original ladder saw step 1 as ‘Non-Design’, step 2 as ‘Design as Form-Giving’, step 3 as ‘Design as Process’, and step 4 as ‘Design as Strategy’. 

In the Design Business Council’s Design Maturity Report, the ladder has been adapted to include a fifth stage:

  • Level 1: Delivers commodity / meets expectations
  • Level 2: Delivers design solutions
  • Level 3: Delivers design and consultancy
  • Level 4: Uses design to solve business issues
  • Level 5: Integrates design in the whole company

In a similar fashion InVision’s Level 1 is ‘design is what happens on screens’, working all the way up to Level 5: ‘design is business strategy’. DMI’s five ‘maturity levels’ go from ‘Initial (ad hoc efforts)’ through to ‘Optimised' (proactively and continuously updated processes)’.

But what do companies need to do in order to move up the design maturity ladder? First and foremost is the understanding of design as more than just websites and logos. Design is also about how things work, how things are understood, how things are improved. It brings to the table new ways of thinking, problem solving and creating. As well as form and function, it is innovation and strategy.

It is also important to foster an environment where design can thrive; or at least be respected. In its Design Effectiveness 2019 report, Clearleft surveyed 400 designers around the world to learn about the state of design, and to determine under what conditions design could best make an impact on an organisation’s goals. In its summary, the design consultancy highlighted three aspects that are in place at 9 out of 10 organisations where design is making a positive impact.

This included:

  • Empowerment: Design teams empowered by executive management to identify and pursue unplanned or unrequested ideas.
  • Environment:The physical working environment supports collaborative design activities.
  • Research: Design research is being undertaken on a regular basis and communicated throughout the organisation.

In his article, The 7 levels of design maturity and the added value of design, UX consultant Dennis Hambeukers offers a series of ways design can be integrated into businesses. 

The first step is ‘styling’, where a designer enters the picture at the end of a process and helps to style a business’s output. Design has no influence on the content here. The next step is ‘design’, where a design team helps to shape how something works - not just looks. The structure of a website is a good example. 

The third step is ‘user centered design’, where designers help organisations to think from the perspective of the user, rather than their own. Step four is ‘service design’, where organisations start to design their entire service around the users’ needs and their own goals.

Fifth comes ‘design thinking’. Here, organisations have understood the benefits of a designer’s way of thinking, and brought them into a wider business context. Designers are solving business problems rather than just working on single projects. 

Step six is ‘business design’, wherein the designer is working on a strategic level, doing work traditionally done by management and IT consultants, until finally the organisation reaches step 7 - ‘managing by design’. In this step, the designer has moved into a leadership position. As Hambeukers says:

“The designer is using his skills, attitude, tools and experience to lead the organisation. He is not using planning and control mechanisms but prototype and iterate. He is cutting through the organisational silos and runs small teams like start-ups. He is engaging people by designing visions. He uses storytelling supported by strong visuals to inspire.”

Getting to step 7 – or level 5 on other scales – might not be within everybody’s reach straight away, nor might it be within their aspirations. But it’s clear to see the business benefits that climbing the ladder can bring - even when design is only slightly expanded beyond its most basic interpretation. 

Gould Studio’s founder and Chief Design Officer, Peter Gould, explains: 

“Design has always been about change – solving problems using imagination, ingenuity and technology. Designers iterate through prototypes to final products, with ideas and attempts - including the failures - sparking new ideas and inspiring others, which can sometimes lead to the birth of entirely new industries.

“In business terms, these changes can be small yet effective, or they can be large and powerful. The deeper, more embedded, more strategic design is in an organisation, the greater its impact. And the more Heart-Centered it is, the more profound it can be, too.

“This potential is keenly felt during uncertain times, such as the ones we’re in today. Design can help iterate and prototype what works for organisations during the ‘new normal’, whether in terms of their products, projects, structure, operations, engagement, logistics, or anything else that sits within a business context.

“It is up to each and every organisation how they react to this new normal, and how they plan for the weeks, months and years ahead. But those who understand and appreciate the value of design, and give it a more central role in their business, will be tapping into a proven catalyst of change - however big or small they allow that change to be.”

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