Saturday, July 13, 2013

The value of design

Posted by Pablo


This post will compile some statistics to justify placing a high emphasis on industrial design, and particularly user centred design.

This can help a product that I am developing succeed in a market where design and usability are practically not considered.


  • In Britain, Industrial design ROI is estimated at an output of 2.25 for every pound spent (1)
  • In China, it is estimated at 13 yuan for every yuan spent. (2)
  • In a survey by the British Industrial Design Council, around 40% of businesses reported design contributing in some extent to greater success in a broad range of company performance indicators, while around 5% stated in contributed to a great extent. (3)
  • Companies that are more design alert experience greater revenue growth (average of £602000 for British companies) (4)
  • In Denmark companies that invested in design experienced a 22% greater total increase in gross revenue than companies that did not invest in design over a five year period. (5)
  • Companies that use design for more that just styling achieve the best performance. (5)
  • For Finnish metal and manufacturing sector companies, there is a positive correlation between companies’ design investment and sales growth. (6)
  • The best results are obtained by companies that use design services both internally and externally. (7)
  • Another study shows that american companies who effectively invest in industrial design outperform their competitors by 75% on net sales and have increased profits. (8)
  • In the UK there is a stock index of design led businesses that have outperformed the stock market average by 200% in the last ten years. (11) The same effect has been proven in US and Finish manufacturing industries.
Some of the reasons for this are:
  • Up to 90-95% of product costs are determined during the design phase. (9)
  • Using more design reduces the products time to market. (10)
  • Many companies report requests from customers for more eco-friendly products, (12) and 80% of the environmental impact is determined in the design stage.
  • The risk of investing in design is extremely low. A study found that almost 90% of UK SME design project investments repaid themselves and made a profit. (13)
  • The gains from Design increase when Design pays a more important role in the company. (14) Design led companies consistently outperform those where design plays a lesser role.
In particular regarding ROI of usability, this paper has many examples of how it helps products and companies perform. There are many companies that rely on usability for success, such as almost all successful web-apps and a great many from the consumer electronics sector.
To be honest, at this stage I´ve sifted through enough literature to satisfy my Lean Startup
inclination for validating the hypothesis and not wasting more effort.

References:
  1. UK Design Council (2004), “The impact of design on stock market performance – An analysis of UK quoted companies 1994-2003.
  2.   http://www.designsojourn.com/designs-return-on-investment/, http://english.cctv.com/program/bizchina/20100310/102208.shtml
  3.   http://www.gov.bc.ca/premier/attachments/BC_PTC_%20ID_Report_2008.pdf UK Design Council (2007), “The Value of Design – Fact finder report” http://195.157.47.227:8080/design-council/pdf/TheValueOfDesignFactfinder.pdf, p. 11-17.
  4.   UK Design Council (2007), “Design in Britain 2005-06”, p. 11-17
  5.   National Agency for Enterprise and Housing, Denmark (September 2003), “The Economic Effects of Design”, www.ebst.dk/file/1924/the_economic_effects_of_designn.pdf, p. 3-4.
  6.   Nyberg, M. and Lindström, M. (2005), “Muotoilun Taloudelliset Vaikutukset”, ETLA, Discussion papers No. 982, p. 15-18.
  7.   Ramlau, U. and Melander, C. (2004), “In Denmark, design tops the agenda”, Design Management Review, fall 2004
  8.   Hertenstein, J., Platt, B. and Veryzer, R. (2005), “The Impact of Industrial Design Effectiveness on Corporate Financial Performance”, Product Innovation Management, 22:3–21, p. 5-7, 17
  9.   Salimaki, M. (2004), “International Design Business Management IDBM course”, 26D200, Helsinki School of Economics.
  10.   Hertenstein, J., Platt, B. and Veryzer, R. (2005), “The Impact of Industrial Design Effectiveness on Corporate Financial Performance”, Product Innovation Management, 22:3–21, p. 18-19
  11.   UK Design Council (2004), “The impact of design on stock market performance – An analysis of UK quoted companies 1994-2003
  12.   Bhan, N. (August 2007), “Ecodesign, Ecolabels and the Environment: How Europe is redesigning our footprint on earth, Core 77
  13.   Tether, B. (2005), “Think Piece on the Role of Design in Business Performance”, ESRC Centre for Research on Innovation and Competition (CRIC), University of Manchester, http://www.berr.gov.uk/files/file14796.pdf, p. 16-17.
  14.   Borja de Mozota, B. (2006), ”The Four Powers of Design: A Value Model in Design Management”, Design Management Review, Spring 2006, p. 44-53.

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