Looking for 32 percent more revenue than your peer organizations? How about 56 percent greater total shareholder return? Over a 5-year period, companies that excelled in design reported these kinds of financial results.
“Many designers have believed in the business importance of design for years,” says partner Ben Sheppard, who led this first-time research initiative, “However, this is the first time we can quantify the impact of design on growth and shareholder return. This elevates the designer’s conversations with their business peers. Design is now firmly a C-suite topic.”
Ben grew up on a houseboat on London’s Thames River and, for as long as he can remember, wanted to be an inventor. He’s brought his passion for new ideas to his work at McKinsey, where he founded the firm’s Design-to-Value Lab in London. The Lab uses a process of taking apart products to find ways to improve them. He then became involved in growing the firm’s Design Practice, including integrating design firms LUNAR and Veryday.
Ben and engagement manager Garen Kouyoumjian are the lead authors of the new McKinsey report The business value of design with senior partner Hugo Sarrazin and expert associate partner Fabricio Dore as coauthors.
For this project, the team followed the fortunes of 300 companies, across industries, over a 5-year period; they tracked both design actions and financial performance. The results show the strong correlation between design best practice and improved financial return. They also show that out of the hundreds of design actions a business leader can take, there are four that matter most.
“I personally wondered if the results would be linear, if we would find that every dollar put into design adds more value,” says Ben. But instead of seeing incremental gains, the team found that companies that do certain design projects very well disproportionately outperformed their peers. When it comes to getting the most from design, “It’s all about moving into the first quartile. You can start by picking one project—a product, service, experience, or app—but do it properly, or don’t do it at all. Your customers need to recognize you as the best out there to get the rewards.”
The new report is an expansion of research published last year by Ben, Garen, and design partner John Edson. The positive response to this initial research encouraged them to expand the data set in the hope of finding statistically significant evidence for design’s bottom-line contribution. “Doing this at McKinsey made sense, because we’re able to combine our creative capabilities on the design side with the firm’s strategic thinking and analytic prowess,” says Ben.
Past quantitative research on the value of design has been limited, in part because designers themselves have been reluctant to quantify their impact.
“Everyone in design implicitly knows that there’s value in it, but we’re also very averse to putting it to numbers,” says Garen, a former designer himself. There’s a sense of design as a creative art, so some designers fear that quantifying it makes it seem like something anyone can do.
Ben concurs: “Designers have sometimes been their own worst enemy,” he says. By not prioritizing more rigorous quantification and being reluctant to own the business-case conversations, they’ve inadvertently created artificial silos, and as a result, their voices haven’t been heard by business leaders.
The silos are beginning to break down. “We set out to make design accessible to business leaders, to get design a seat at the table,” Garen says. They also wanted to ensure that designers have business needs in mind when developing products and services. “In the end,” Garen says, “achieving excellence in design is no more difficult than other big business opportunities. The difference is that the value of others has been quantified for a long time.”
To help as many companies as possible quantify the role of design, the team is publishing a public survey tool, built by Fabricio, in tandem with the research. The survey will allow companies to evaluate their own design success and benchmark it against the 300 companies.
Garen adds, “Our research findings apply wherever you are. The benefits you get from good design are not limited to the obvious disciplines, such as fashion or consumer products, but have power across industries as varied as healthcare, financial services, and industrial manufacturing.”
As for the significance of the research within the context of our client work, Ben says, “If, at the core of your business, you don't have an amazing product or service, everything else is filler. We aspire to help our clients solve the world's most complex and important design problems to delight users, stand out from the competition, and create growth.”