I believe one of the hardest issues as a “designer” is proving that what you do has tangible value to a business. That the time and extra expense of designing a product or user-experience returns financially.

Smart companies & consumers recognize this. Simple quality over cost result: as a business you want long-term results, as a consumer you want an experience or product that works beautifully. However in a cost-conscious, business driven mindset, it’s difficult to ascertain the short-term goals of design sometimes.  Especially in the era of software start-ups & tight timelines. This recent article in HBR has got me thinking time and time again about the value of design inside of business:

From Target to Uber, business managers everywhere are starting to understand that the strategic use of design is making a difference in achieving outsized business results.

Consumers recognize and respect companies that put design and design thinking into what they produce. Marketing is skin deep – the actual user experience needs to be supported from the beginning in fundamentally “designed” way.

And that starts with having the design competency represented at the highest level of your company – along side engineering and other operations.  The article points out that of the 100 companies indexed, only Apple has Design reporting directly to the CEO. I’m fortunate at SPARC that they see & promote the value of design within our company.

So why I’ve re-read this article 3+ times now:

  1. As a designer, I appreciate that it validates my profession, and the passion with which we approach problem-solving to insure a better user experience.
  2. As an investor, I already own stock in several of the design-centric companies they focus on. In the age of “socially responsible” mutual funds, why isn’t there a “designers” mutual fund focusing on companies that put design first?

Companies that get it, that make design part of their business philosophy not only gain consumer confidence, but also higher returns. 228% higher returns according to this HBR article:

How can this type of commitment to design contribute to results? In Interbrand’s 2013 list of the World’s most valuable brands, Nike ranks 24th, two slots up from the prior year and a 13% increase in value to $17.085 billion. Next to Apple, Nike had the highest shareholder returns in our index — from 2003- 2013 Nike’s market cap increased from under $6 billion to $70 billion, or 1,095% over the last ten years.  Further, Nike was ranked the #7 most innovative company by Fast Company in 2014, and the 13th most admired company by Forbes magazine.

The bottom line is that companies that use design strategically grow faster and have higher margins than their competitors. High growth rates and margins make these companies very attractive to shareholders, increasing competition for ownership. This ultimately pushes their stock prices higher than their industry peers. The returns in our Design Value Index were 2.28 times the size of the S&P’s returns over the last 10 years. Neither hedge fund managers, nor venture capitalists, nor mutual fund managers came anywhere close to these results.

Sorry for the repost, but this is a subject that is fascinating to me. And the HBR article is the first I’ve seen that provides tangible numbers around the financial results of good design. Someday soon I hope to be posting more about what “Design Index” fund looks like, and how I can bring it from idea into a reality I can invest in.