How do you measure the value of design?

It's a fair question that deserves to be addressed. How should a company measure the value of design? What is the contribution that design makes to the bottom line?

This is a difficult problem. Sure there are numerous anecdotes that provide evidence that a focus on design leads to success (Apple, Google, Facebook etc). But, anytime you're attempting to isolate and measure a single variable in a complex environment it will be difficult.

A few years ago the British Council of Design commissioned a study that does provide some quantitative evidence. They created a stock index tracking the 61 firms that had won major awards in british design contests. This index fund outperformed its peers by over 200% during the study. This may not prove a causal link, but perhaps it proves at least a correlation between design and performance.

The bigger question becomes, can you really isolate any single variable in a business environment? Does management expertise (perhaps measured by the percentage of MBA's in management staff) correlate to higher profits? I don't know, but it would be interesting to find out.

At the end of the day, I think the reason this question comes up so often is that the people asking it don't come from a design background. It's easy for an MBA to justify their own management, or financial expertise. But, someone without a design background has a hard time grasping it's value. Just as designers have a hard time grasping the value of an MBA.

Personally, I prefer a more common sense approach when approaching the value of design. Design is really nothing more than a focus on developing products in an extremely user centered way. If you develop products that meet your customers needs and you create products that they enjoy using—then you're providing value. And creating value is the reason that you're in business.

What do you think? Feel free to comment and share your opinions.

Written by Adam Harrell on April 29, 2009

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And Matt, I agree 100%. If you look at the approach google takes — then it's not about aesthetics, it's about results. The right solution is as easy as testing to see which user's prefer. But, this approach also has it's limits. Improvements become incremental and big change becomes next to impossible.

BTW -- I apologize for the delay in these comments getting posted. They were all caught in our comment spam filter for some reason (akismet). I really appreciate hearing from you all and will make sure your comments get through quicker next time around :-)

Great comments.

David, I agree that there have been efforts to measure design and I agree that case histories are numerous. But, isolating any single variable in business and quantifying the impacty is difficult to do well.

The point of the post was more that people demand a measurement of things they're not personally invested in.

Great comments.

David, I agree that there have been efforts to measure design and I agree that case histories are numerous. But, isolating any single variable in business and quantifying the impacty is difficult to do well.

The point of the post was more that people demand a measurement of things they're not personally invested in.

I think people are much more likely to value design ever since the Arnell Group made such a mess of Tropicana and Pepsi. Tropicana's sales went down 20 percent, just because of the poor redesign. That's huge.

This is very weak. If design adds value, what value?Measuring the value of design has been going on for some time. IIID ran a whole conference on the subject a couple of years ago and many of us have been researching and publishing in this area for years. Have a look at the Information Design Journal. Look at the many case histories published on our web site and at the little rants on my blog at: communication.org.au./dsblog. Look at some of the work from Aaron Marcus, Rob Waller, etc.

As an MBA, I like your question - how to quantify the value - and agree with your conclusion - that misunderstood often translates to simply "missed."

Why is this? There are many intangibles that MBAs will acknowledge drive value - e.g., "human capital" - that do not show up on the balance sheet. So, I don't think it is a simple matter of narrow thinking. True, some of these areas have related classes (e.g., human capital equates nicely to managerial classes). But there are classes in most programs around product ideation and the more functional aspects of design.

I suspect part of it is a confusion that equates "design" to "fashion." Why should any solid product require fashionista input, a dressing in the kind of "emperor's new clothing" that abounds at 5th Avenue model-fests? And if the community doesn't like to measure it, isn't that somehow proof of its insubstantial nature?

But that's not design, to my mind. One way I like to explain it - imagine products that are not well designed. The iPod without design: can you name the MP3 players that came before it? Or the bad user experience you suffer through at the Registry of Motor Vehicles. Do you wish someone had thought through some improvements? Can you imagine some alterations to products you decided not to purchase that would have made them purchase-worthy? Put in that context, design is exactly what you propose - matching product to person, the key to any supply & demand system and very much in scope for MBAs. "not design" is off the demand curve - who wants to be there?

So, beyond a basic validation that "design matters," I think there are some things designers can do to get more traction. I often hear arguments over aesthetic, but less often hear proposals on how to test. I believe the aesthetic arguments have merit, but ultimately the demand curve should decide. User groups are great, as are A/B tests and other stats from weblogs. Expensive? It can be, but a good proposal should be able to encourage an ROI approach to the test, and measure the upside. After all, if we're talking about being on the demand curve, this is meaningful stuff...

Just my two cents.

As an MBA, I like your question - how to quantify the value - and agree with your conclusion - that misunderstood often translates to simply "missed."

Why is this? There are many intangibles that MBAs will acknowledge drive value - e.g., "human capital" - that do not show up on the balance sheet. So, I don't think it is a simple matter of narrow thinking. True, some of these areas have related classes (e.g., human capital equates nicely to managerial classes). But there are classes in most programs around product ideation and the more functional aspects of design.

I suspect part of it is a confusion that equates "design" to "fashion." Why should any solid product require fashionista input, a dressing in the kind of "emperor's new clothing" that abounds at 5th Avenue model-fests? And if the community doesn't like to measure it, isn't that somehow proof of its insubstantial nature?

But that's not design, to my mind. One way I like to explain it - imagine products that are not well designed. The iPod without design: can you name the MP3 players that came before it? Or the bad user experience you suffer through at the Registry of Motor Vehicles. Do you wish someone had thought through some improvements? Can you imagine some alterations to products you decided not to purchase that would have made them purchase-worthy? Put in that context, design is exactly what you propose - matching product to person, the key to any supply & demand system and very much in scope for MBAs. "not design" is off the demand curve - who wants to be there?

So, beyond a basic validation that "design matters," I think there are some things designers can do to get more traction. I often hear arguments over aesthetic, but less often hear proposals on how to test. I believe the aesthetic arguments have merit, but ultimately the demand curve should decide. User groups are great, as are A/B tests and other stats from weblogs. Expensive? It can be, but a good proposal should be able to encourage an ROI approach to the test, and measure the upside. After all, if we're talking about being on the demand curve, this is meaningful stuff...

Just my two cents.

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Adam Harrell
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