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Summy | The business value of design
Our Summy for:
The business value of design

Summy Transcript

It is surprising, but even today there is a discussion about the business importance of design and the contribution it has to business is not obvious. At the end of 2018, consulting firm McKinsey published a report that sheds light on the clear business value and unambiguous competitive advantage that design can produce.

If you still have a hard time to convince them, this is the magic link you need to send to your managers and customers. We know they do not have the patience to read the whole thing, so we've summarized what's important.

The most significant study to date
McKinsey claims to have carried out the most in-depth research ever undertaken to uncover what actions product leaders can do to maximize business benefits through design.

For five years, McKinsey representatives have studied the design processes of 300 public companies from a variety of industries and countries. They analyzed over 2 million financial records and identified 12 design actions that have the most impact on the bottom line. The 12 actions were divided into four main content areas. This model is used as a new measure called the McKinsey Design Index (MDI), which is used to rank the quality of companies.

Starting from the end, the business performance of companies with a high MDI score is twice as good as that of companies with low MDI scores - both in profitability and return on investment for investors in all areas examined including medical products, consumer products, and banking.

Another interesting insight was that the business value generated in the upper quartile was significantly higher compared to the relatively small differences in the companies' business values by bottom 3 quarters. In other words, the market disproportionately assesses companies with the highest level of design.

Guidelines
So what are the 4 magic principles that make for great business?

1. More than "just feeling" - the understanding that analytical leadership is required for design
The first principle is the understanding that design is a subject that requires management leadership and direction, and that the performance of the design needs to be measured in the same way that the company's expenses and revenues are measured.

In most organizations, it appears that the design is a secondary element. It remains at the level of junior management and the organization’s decisions on design issues are made according to gut feelings rather than concrete and clear evidence.

2. More than "just a product" - the understanding that we create a user experience
The second principle is the holistic observation of the user experience by breaking of the walls between the customer’s physical conduct, digital behaviors and the service experience. We live in an age when a smartphone can warn you to leave earlier than planned in order to arrive at a meeting on time.

Leaving the boundaries of the product itself and focusing on the entire customer journey should form the basis of conversation at every meeting around the product. In practice, only around 50% of companies say that they carried out some sort of user research before designing the initial design version of their product.

3. More than one department in the organization
In companies found in the leading quarter, it is overwhelmingly felt that user-oriented design is the responsibility of everyone, not just one department. On the one hand, lateral attention and general awareness of the importance of design are required, and on the other hand, the design community must be nurtured. It turns out that designers belong to 2% of the most influential business. The study found that leading companies paid three times the average compensation for designers and also gave out prizes for the greatest business contribution to design.

4. More than one step in the process - design is an iterative process
Design culture develops in an environment that encourages learning, testing and Iterative work processes with users. These processes produce significantly better products, reduce risk and reduce development costs. In practice, the principles of iterative design and learning are contrary to the processes that exist in most organizations. The best product results come from processes where user research is performed repeatedly throughout the process.

Current situation
According to the study, 40% of companies still do not include users in development stages, and over 50% of companies do not have objective measures to measure the quality of product design.

Summary of principles
The four principles that make the most significant contribution to business success are management’s awareness of the importance of design, leading a culture of measurement and control of design, a lateral view of the customer experience and breaking the walls between the digital product and the rest of the content world.

Well, have you sent this to anyone already?

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