“Good design” is typically a subjective phrase. What one thinks is “good design” certainly might not meet the criteria for another. But in a number of businesses, design is more objective and is used to achieve specific business goals. Just as many engage in the age-old form-versus-function debate, good design can serve a much higher purpose than just simply being something nice to look at. The best products work well, and the ones that are a cut above also look great in addition. This delicate balance helps the world’s best businesses get ahead and stay ahead of the competition in, especially saturated markets.
Good design is not an afterthought; instead, it is woven into the fabric of leading businesses. Consultancy McKinsey Design is tackling the business of design to figure out exactly how to quantify the value of good design. They take the study of design much further than simply the look and feel and seek to understand how it connects with underlying business objectives and helps key business stay on the cutting edge. This, in turn, will help executives worldwide consider the importance of design at all stages of a company, since it is better connected to the top and bottom line goals they are tasked with achieving.
To dive deep into the concept of good design and the hard metrics that go along with it, McKinsey Design put together an index tracking 300 publicly listed companies over a period of five years to better understand the tangible impact of good design. To help in the process, McKinsey brought together 350 leading designers from all parts of the world and from all disciplines to ensure their study was as comprehensive and relevant as possible, complimenting McKinsey’s analytical power with authentic creativity.
Believe it or not, design thinking as a concept has been around for just over 50 years. But in the modern era, design has often taken a backseat in some of the most influential companies. “How will it work?” “Why will consumers choose it over a competitor’s product?” “How will we keep our users coming back again and again?” These questions keep executives up at night and directly tie into their high-level goals. But with the McKinsey Design Index, the consultancy worked hard to show the hard analytical value that good design brings to these questions. Instead of being an afterthought in bringing a product to market, the index shows without a shadow of a doubt that the most design-forward companies in the world are also the most successful. Let’s explore the methodology and findings in depth to learn how you can put them to use in your own business as well.
How the Study Was Conducted
This index aimed to evaluate the business value of design. It’s not that businesses don’t want to provide excellent user experiences, but this takes time, effort, and expertise that a number of businesses might not have. Achieving good design is more than worth it based on the results that the top quartile of companies in McKinsey’s index have enjoyed.
In terms of the methodology of the study, McKinsey explained that over a period of five years, they studied 300 companies, both with qualitative and quantitative methods. They interviewed business and design leaders within the companies to get a holistic view of practices, goals, and outcomes. Then they pulled over two million pieces of financial data, along with 100,000 design actions. Of these myriad actions, they distilled them down into the 12 that correlated best with increased financial success.
McKinsey Design Index Findings
In the interviews McKinsey had with executives across design and business functions within the 300 companies, four themes emerged organically when they were asked about their organizations’ design weaknesses. Broadly speaking, they centered around analytical leadership, cross-functional talent, continuous iteration, and user experience. The last two are topics we have discussed in depth here on the Proto.io blog, as we deeply understand the importance of prototyping solutions and getting user feedback early and often. The other two factors round out the difficulties even leading companies experience around investing in their teams and staying metric driven on the design side.
As a fellow lover of design, you can imagine how a design-centric company might outperform its peers—but the extent is what caught us off guard. Over five years, McKinsey found that top scorers leaped over the competition with 32% higher revenue growth and an increase of total returns to shareholders of 56%. While we always had a hunch that a focus on design and business performance were linked, this is just the data we needed to officially confirm our thinking.
The great thing about this data is that this correlation between design and better business outcomes applied across all of the different industries that the study looked into, from medical tech to consumer goods. So even if your company produces b2b software or consumer-facing apps, this data is still relevant and should be taken into account at all levels of your company.
Some findings that really stuck out to use were around the slow progress towards user testing (which we will explore more in depth in the following section.) McKinsey found that over 40% of responding companies don’t talk to their end users while developing their products. As a company that considers testing core to everything we do, we couldn’t believe that leading companies could be developing in the dark. User feedback is required at all stages of product development, from ideation to launch. We found this to be a major sore spot that the study illuminated, proving that businesses have a long way to go to optimize their product development processes.
Lastly, internally, we practice agile sprints and aim to get the entire design ecosystem on board with us. Why? Well, it helps us set goals and get all contributors and stakeholders aligned. But in the McKinsey Design Index, they found that over 50% of companies in the study “admitted that they have no objective way to assess or set targets for the output of their design teams.” Just as design overall needs to be quantified to get buy in, there also need to be smaller goals on the way to true design innovation that hold teams accountable and ensure project timelines are staying on track.
Action Items for Design Teams
One of the main takeaways from this index is that teams must develop their own design metrics. Your executive team requires hard numbers to make decisions instead of hunches. Determine what your unique design metrics are and measure them over time to be able to take this data up the chain and get their buy in. This will help your company devote more resources to design and understand how the design team directly contributes to larger business goals.
Another finding that astounded us was that only about half of the companies in the study did user research before generating design ideas or plans. The only way to make a product your users will love and use is to understand them. This is important for entry-level designers all the way up to your CEO. There needs to be transparency at all levels of a company.
This can come in the form of user testing sessions with rotating participants. Every person involved in design and product decisions needs to remain grounded in what users like, dislike, and ultimately what their needs are. Save an empty seat in all of these sessions for a new member of the team each time so that they can sit in to observe, ask questions, and gain insights that will help them make better decisions. One way to accomplish this is to incorporate prototyping into your workflow during the planning stage. This way, your team can try out ideas first and go with the best option, instead of having to switch gears weeks or months into a project.
Closing Thoughts
As a design-centric company, we know the value of good design, but that isn’t true across all companies. While the McKinsey Design Index might have only covered 300 large companies, the implications are clear across all organizations: design matters and leads to better financial outcomes. However, in order to get executive buy in at all stages, hard metrics are required to prove both the importance of design and also show the impact they have on that specific company over time. In such a data-driven world, design can’t be left behind. And the massive success of the companies in the top quartile serves as a starting point for making the case that good design should always be a priority.
How does your company quantify good design? Let us know by tweeting us @Protoio.
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