Can You Measure Design's Value?

(page 2 of 2)

He pointed to research conducted by the Design Council indicating that design can increase a company's revenues, profits, market share, and overall competitiveness. (See BusinessWeek.com, 10/12/06, Using Design to Pick Stocks?).

Moreover, he noted there is strong evidence that a sustainable design strategy allows a company to take a leadership position within their marketplace. He compared consumer electronics giants Panasonic and Sony (SNE). The latter is recognized for its innovation while Panasonic prefers to follow industry trends. Both enjoy sales of around $62 billion a year, Rich notes, but Interbrand put Sony's brand value ranking at $12 billion—three times the size of Panasonic's. Rich attributed this difference to the power and value of design.

Performance Measurement

Johnson Controls, a Cologne-based supplier to the car industry, was one of the few companies to offer a solid methodology for measuring design performance. The company's design-quality metrics look at everything from craftsmanship—to assess the product's perceived quality—to design, to cost ratio, to return on investment of the design process. But if attendees were hoping to glean a useful formula to use in their own practice, they were sorely disappointed. Johnson Controls' Operations Manager Roderique Duell noted that their metric for return on investment basically boiled down to asking internal customers if the design team was good in comparison with external providers.

Not surprisingly, Rich and many other speakers questioned the feasibility of providing detailed metrics on design's contribution to business performance. Rich pointed out that many investments are hard to measure—not just design. For instance, everyone agrees that staff training is valuable. But how do you put a number on it? Rich claimed designers are entitled to ask doubting management where else in their business they are gaining that level of sureness. "What about the millions spent on strategic management consultancy? Rich asked. "Where is the quantifiable return on that?"

But there were a number of designers in Copenhagen with interesting insights on how they are managing to prove their value to public and private sector customers. Lavrans Lovlie is a founding partner of service design consultancy Live/Work in London. Service design is an increasingly important area of design—rather than focusing on tangible end products, companies look at the design of entire business models and work to ensure that every interaction with a customer or client is both consistent and compelling. Lovlie described the "usability index" his company has developed to help clients understand how their business is experienced by customers.

The index starts with broad questions such as: do customers understand the service’s benefits; is the experience enjoyable, easy to use, and accessible? Then it drills down to assess how the customer experience ranks at every touch point, such as the Web, marketing materials, and call centers, to the service itself, scoring each step. The client is able to track the entire customer experience and figure out where improvements are needed. The client is supplied with a detailed analysis as well as two lists. The first offers the 10 main things the company needs to address to improve its service and the second suggests the 10 changes that are easiest to implement. "It allows clients to hone in on areas where they need to take action and prioritize projects," Lovlie says.

Individuality

Live/Work used the service usability index with Streetcar, a car-sharing rental service in London. With other shared ownership car schemes emerging, Live/Work knew they had to create "service envy" to attract users. To do this, they ranked the company's service to find areas to improve (ease of Web site booking) and new business ideas (ditch the joining fee and let users pay as they go). Eighteen months after implementing Live/Work's action plan, the company began turning a profit.

Such models offer businesses tangible evidence of design's value but it's still clearly a frustrating area. Creating indices or tracking financial metrics may be too time- and capital-intensive for smaller design shops. But, on the other hand, there is more than one way to measure design return on investment. It's up to the individual design company to figure out what works best for them. As the Design Council's Rich noted: "There is no one magic formula."

Capell is a senior writer in BusinessWeek's London bureau .