The Business Value of Design Thinking

design Nov 14, 2018

Beyond slick packaging and flashy graphics, design is a mode of thinking. Effective design prioritizes the needs of the end user to create new solutions to business problems—fast—and fuel sustainable innovation. Long-term studies from McKinsey and the Design Management Institute back up the concrete business value of design-thinking, and found that businesses with a foundation in design doubled the performance of industry peers.[1]

 

Design-thinking can shake up companies in positive ways for across all levels with its creative approach to problem solving. Business design shifts the focus onto understanding the customers’ experience throughout the buyer’s journey in order to ensure their offerings do everything possible to fulfill their needs. By understanding what your end users are looking for and continually identifying and responding to gaps between available products and your needs, companies can both disrupt existing industries as well as foster sustainable, year-over-year growth. Design-thinking allows gives businesses more flexibility and efficiency in redesigning processes—its emphasis on iteration makes it easier to change direction and experiment with new ideas, instead of adhering to a rigid development process.

 

Despite the quantifiable advantages of design-driven business strategy, McKinsey found that 40% of companies don’t talk to end users during development, and half don’t have quantifiable goals or objectives for their design team. Executives were unwilling to expend resources on design without a clear understanding of its impact on the bottom line.

 

In partnership with Motiv Strategies, the DMI identified sixteen publicly traded companies that used design across divisions in their organization, and tracked their performance over ten years compared to the S&P 500. The companies they followed invested increasingly in design, built design into the organizational structure of their company, and had C-level executives who spearheaded and served as role models of design’s integration. The DMI found that these 16 design-led companies outperformed others in their industry by as much as 228%—in 2016, their revenue was 211% of other similar organizations.[2]

 

McKinsey expanded upon the DMI’s findings, and collected five years’ worth of data on 300 public companies across industries, evaluating them based on the McKinsey Design Index. They found that companies in the top quartile of the MDI outperformed industry benchmark growth as much as two to one, in terms of revenue and return to shareholders.[3] These results held up across both product and service industries: although product companies like Apple are renowned for their design, the study shows that great design is also imperative for service industries.

 

In the modern marketplace, customers interact with your brand across fluid physical and digital spaces, with more user interfaces and points of engagement. For tech companies, seamless user interfaces are imperative to communicating your expertise to potential customers. Clean design is essential for taking complex concepts and making them simple and accessible to the end user with interactive visuals and easily navigable platforms. Big data empowers companies to better understand and tailor their offerings to their customers, but without design-thinking, companies can’t fully take advantage of data and iterate in response to changing consumer needs.

 

Design skills aren’t just about crafting things: your existing workforce can incorporate design-thinking into their everyday roles. Qualitative research, taking into account personal user experiences and context in addition to hard data, can help develop more customer-intuitive solutions.[4] Centering customer understanding and elegant storytelling can revolutionize processes across departments.

 

To successfully leverage design to its fullest, design thinking needs to be integrated into every level of a business. When executives are committed to listening to, understanding, and acting to address the needs of end users, they’re empowered to make objective design decisions. Director-level decisions set the tone for the importance of design across departments and projects, instead of silo-ing it off from other teams.

 

To kick-start business design in your organization, consider making a cross-disciplinary team of creative catalysts—task a group of employees with identifying new business opportunities and initiatives that could benefit from design-thinking, as a way to seed it in the company’s overall business strategy.[5]

 

Instead of limiting user-centric design work to one arm of the company, make it a cross-functional target for all teams: it should be a key strategy in concept development, marketing, and promotion.  Analyze design performance and hold it to benchmark metrics, like satisfaction ratings and usability, just as your company does with other business initiatives. With measurable goals, teams can deliver more effective results with a greater return on investment.

 

Design-thinking is all about iteration: listening to customers, creating prototypes, and testing, testing, testing. Instead of treating the development process as linear, with one “best” solution, business design uses data to continually create and build new solutions, finding opportunity in room for improvement.[6] According to Accenture, it eliminates the conventional “finish-line” mentality, where once established, a service offering is static and maintained, and creates a mindset of continued evolution.[7] It also allows you to move quick, to develop, test, and launch new services in response to new market demands.

 

Connect your company to end users throughout the development process, instead of only once you have a prototype ready or right before launch: make them active co-creators in your decision-making process. This ensures that your offering truly aligns with the end users’ needs, instead of what they think they want. Integrating different forms of quantitative and qualitative insight—on your users, competitors, technology, and industry as a whole— can help identify paths of innovation and deliver a more satisfying user experience. Iterative design processes also decrease the inherent risks of development and allows you to focus on the most effective projects.

 

Design extends beyond your website or marketing collateral to influence and shape a seamless user experience. Especially for B2B companies, whether customers typically spend a longer time educating themselves on your offerings and considering options, effective design-thinking creates a cohesive, integrated experience across all the possible points of entry, online and in the real world, where potential users might encounter your brand. Applying design-thinking to business strategy regarding third-party apps and services makes your offerings as accessible as possible to customers, where and when they’re most needed.

 

Of course, incorporating design into the heart of your business strategy requires bravery. Effective design is more complex than graphic flair: it creates platforms with enjoyable user experiences, products that are easy to us and navigate, it sparks meaningful emotional responses and connections in its users, and solves business problems. By being willing to accept that not every initiative will succeed and taking a risk on short-term turnover, companies can commit to breaking the mold and disrupting the field, cultivating agility and innovation.

 

[1] https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/the-business-value-of-design

[2] http://fortune.com/2017/08/31/the-design-value-index-shows-what-design-thinking-is-worth/

[3] https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/the-business-value-of-design

[4] https://www.accenture.com/t20170117T045518Z__w__/us-en/_acnmedia/PDF-39/Accenture-806035-Strategy-Business-Design-POV-v03.pdf#zoom=50

[5] https://www.accenture.com/t20170117T045518Z__w__/us-en/_acnmedia/PDF-39/Accenture-806035-Strategy-Business-Design-POV-v03.pdf#zoom=50

[6] https://www.accenture.com/t20170117T045518Z__w__/us-en/_acnmedia/PDF-39/Accenture-806035-Strategy-Business-Design-POV-v03.pdf#zoom=50

[7] https://www.accenture.com/t20170117T045518Z__w__/us-en/_acnmedia/PDF-39/Accenture-806035-Strategy-Business-Design-POV-v03.pdf#zoom=50

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