Here at Co.Design, we’re constantly singing the praises of design-driven businesses. But “good design” can seem subjective and nebulous. Worse, it can be difficult to quantify how much design really impacts a company’s bottom line.
A new analysis by the Design Management Institute, a Boston-based nonprofit focused on design management, puts numbers to what design junkies suspected all along: in the past 10 years, design-driven companies outperformed the Standard & Poor’s 500–a stock market index of 500 large publicly traded companies–by 228%. These companies included Apple, Coca-Cola, Ford, Herman Miller, IBM, Intuit, Newell Rubbermaid, Nike, Procter & Gamble, Starbucks, Starwood, Steelcase, Target, Walt Disney, and Whirlpool. All that money these companies put into smoother user experiences, beautiful branding, and innovative advertising apparently paid off.
How DMI arrived at the number: The nonprofit partnered with Motiv, an innovation strategy firm, to create the DMI Design Value Index–a list of design-led, publicly traded U.S. companies that meet a set of six design management criteria. For example, the criteria stipulated that design had to be embedded within the company’s organizational structure; design leadership had to be present at senior and divisional levels; and there had to be a senior-level commitment to design’s use as an innovation resource and a force for positive change. The above-mentioned companies were the only 15 out of a pool of 75 that met DMI’s criteria. They measured the success of this design-led segment of companies against other companies in the stock market, and found that, indeed, those that put design first had a significant stock market advantage.
The research could help convince remaining design skeptics that hiring and effectively managing talented designers really is key to success. Now, when an exec demands “show me the numbers,” there are actually some numbers to show.