As businesses increasingly recognize the power of design to provide significant benefits, executives increasingly are asking for metrics to evaluate the performance of design. What is needed is a framework for measurement, a specific set of criteria, and methods to be used as a structure to define and measure the values of design.
The following presents a framework of 10 categories that can be useful when measuring the value of design.
1. Purchase Influence
One type of design that is fairly easy to measure is packaging design. For example, a frozen-food manufacturer achieved a sales increase of 30% and more than $300 million in incremental sales gains—based solely on a new suite of packaging. Same product, new packaging. The measurement is not too difficult: Design new packaging, put it on the shelf side-by-side with the old, and see what sells. Then deduct the cost of design from the new sales and voila: ROI design based on actual numbers.
2. New Markets
The design of products, communications, interfaces, and experiences can be isolated. Here's a simple example: British Airways had built a business strategy around increasing its long-haul international flights. So the company looked to see how the interior design of its planes could be improved to offer more comfort to customers. What resulted was the first seat in the industry that could lie completely flat, allowing customers to sleep prone, rather than slouch as in conventional airline seats. The result was a significant increase in sales and profitability for long-haul international flights. Design alone made the difference because everything else remained the same.
3. Brand Image and Corporate Reputation
Design awards contribute to brand image. By providing an independent and expert critique of design, awards can provide valuable feedback, help build company pride, and confer prestige upon the business. Another example is corporate reputation. Compare the reputation of companies like Dyson vs. Hoover, Target vs. K-mart, or Audi vs. Chrysler. Consider their reputations for innovation and quality, based on their use of design as a core strategy. Design builds image.
4. Time to Market
When I was responsible for design at StorageTek/Sun Microsystems (JAVA), we established a design platform approach and simple guidelines. Brand guidelines included interface principles, typography, color, photography style, diagram style, and iconography. Product guidelines included a common platform for computer hardware and a standardized chassis and interface, as well as other shared components. In this way, our engineers didn't have to design components, only functions; development time was greatly reduced. The cost and time savings based on platform design, guidelines, or even standards can be easily evaluated; just watch your project costs rise without them.
5. Cost Savings
Julie Hertenstein and Marjorie Platt, from Northeastern University's School of Business, have conducted research in conjunction with DMI, the Design Management Institute, on the financial performance of design since the mid-1990s. They evaluated financial performance by using traditional financial ratios, such as return on assets and net cash flow to sales, for the sample period. They found that firms rated as having good design were stronger on virtually all financial measures from a practical and managerial perspective, as well as from a statistical perspective.
6. Enable Product and Service Innovation
What if a car dealer used design to create the perfect customer experience and increased sales by more than 25%? Open Road Toyota, working with Karo Design in Canada, did just that. They redesigned all their touch-points for a specific customer experience, and in 2006 they became the number-one Toyota (TM) dealer in Canada. The cars did not change but the design of everything else did, and sales skyrocketed. A deep understanding of customers was used to design the desired customer experience and then to design every touch-point so that it would support that experience.
7. Develop Communities of Customers
Many new companies have been tremendously successful in developing new communities of customers. Consider Facebook and Google (GOOG); design not only plays a role but is partially carried out by customers. This is engaging, sticky, and extremely effective. At times the professional designers need to allow the customers to play a part. Hard to measure? Not really, because it's based on individuals. Effective? Yes indeed; consider the usage and rapid growth of online communities of customers.
8. Create Intellectual Property
Another way to measure design's contribution is to consider how much you've lost if it is stolen. In today's economy, a company's intellectual property assets are often more valuable than its physical assets. Consider Coca-Cola's (KO) signature bottle or Nike's (NKE) swoosh. Joshua Cohen, of intellectual property firm RatnerPrestia, notes that IP laws do not give us the right to do things in the marketplace but they do give us the right to exclude others from using our designs. Strategies aimed to maximize the ROI of design efforts by securing comprehensive IP protection, steering clear of the IP rights of others, and integrating IP-building efforts into design processes can be isolated and are of significant value.
9. Improve usability
Very often, the usability of an interface design is measured by analyzing the efficiency of user navigation through observation, click-through, or interviews. Web sites are constantly monitored for user performance, and most web marketers watch our behavior closely and make design adjustments to improve performance. All manner of design-based usability issues can be isolated and evaluated.
10. Improve Sustainability
The creative economy is a greener economy, and we all need to help. Designers and design managers have considerable influence in this area. Valerie Casey suggests a Kyoto Treaty for Design featuring collective and individual criteria—the goal being to advance our intellectual understanding of environmental issues from a design perspective. Undoubtedly, design has considerable impact on our environment, and that impact is easily measurable.
Managing design is a science as well as an art and it requires the integration of the two. In effect it is the convergence of business, strategy, and customer experience.