The Business Impact of Design

Jan 20, 2021

Design, Work

My goal for writing this article is to amplify the business value that design can have beyond product and UX. It’s an attempt to broaden perspectives on the role of design in business, and what people think about when they hear or say “Design”, especially in the context of startups/businesses. I hope that after you read this article, you’ll be more informed on how to leverage design beyond product and UX.

Overview

Design; a word that is now the new cool with companies of all shades and sizes investing it. Even companies with no previous design culture are beginning to appreciate having one or two UX, or Product Designers. The design industry itself has seen a boom! Design is hot. Designers are finally having a voice, one that can be used to amplify the value design brings to businesses, and the world at large louder than the chorus of tools, processes, design systems, react, jobs, case studies, user interfaces and digital products; somewhat muting the true value of design.

I’ve been graced to work as a freelance designer and also as an employee for some remarkable companies, and I could see that even the smartest people perceive design as a process that leads to some well put together product, app, feature, interface, or graphic. While that’s part of what design is, that’s not the entire picture. Perhaps, there seems to be a lesser conversation on the other spectrum, in fact, the main spectrum – the business value of design or, how design can influence businesses, generate revenue, ensure profit and stability, enable growth, and drive customer loyalty.

Design is a key driver of business success and is the only way that companies can stand out from the crowd. According to a report by management consultancy McKinsey & Company, design can help businesses that embrace it holistically rather than seeing it as a tool to make products look pretty. “While design was once largely thought of as a way of making products more attractive, it is now a way of thinking: a creative process driven by the desire to better understand and meet consumer needs”, said McKinsey.

The report is based on studies of 300 listed companies around the world, including 30 face-to-face interviews and analysis of over two million financial data points. McKinsey claims the report contains “the most extensive and rigorous research undertaken anywhere” to map the business impact of design. It concludes that firms that embrace design generated 32% more revenue and 56% more shareholder returns than rivals over a five-year period.

Therefore, it’s imperative that businesses employ design thinking and practices into hiring, team dynamics, office design, service design, sales, product, strategy, etc. And it is also important for designers to pay close attention to other aspects of the business for which they design because understanding every part only makes for better decisions inspired by holistic and valuable insights of the business, and problem space. This brings me to my next point:

Design is not just about an app, a product, feature or graphic

We’ve all heard the phrases “design-centric”, “design-led”, “design-driven”. In the past when I heard or read those phrases and especially if it applies to a company that builds products, my thinking was that a design-centric company is one that cares about the design of its products. But I have come to understand that a design-centric company is a company that takes its time to design every aspect of the business – recruiting, customer services, sales, marketing, operations, product, etc based on data and insight from customers, people within the company, experimenting with processes, and trying new things.

According to the report by McKinsey, the companies that performed better are those that look beyond product and employ design in every aspect of what they do.

You may ask, how can design be applied to a part of a company that isn’t the product. Design in its sense is simple; it’s about intentionally making decisions with information and data, validating those decisions through experimentation and continuous iteration, embracing failure while learning from it to make even better decisions.

In employing design to make the right hires for instance, certain questions have to be asked. Questions are the basis for finding answers. Questions enable us to not only think but also inquire, research, and gather the necessary information to make informed decisions.

Let’s say a new startup wants to start hiring for some important roles. Do you just hire a developer because he has a great portfolio and can write code? Well, good luck with using only those data points as your basis for employing him/her/they.

I believe there are more important insights to gather to make better hiring decisions.

Here’s how a design framework I’d use in gathering relevant insights to make informed decisions would look like:

Understanding the goal

• Why is this position important?

• What problem(s) are we trying to solve as a company?

• How does the position impact that?

• How will our hire benefit our customers?

This list is not limited to the above. If you are as curious as I’d be, more questions can be asked to get a clearer understanding of the goal.

Define both parties (the company and the hire(s))

• Who are we as a company?

• What do we stand for?

• What are our values?

• What categories of people do we need for the role(s)?

• What are the unique personality traits we might look out for?

• What demography (eg; location, experience, etc) are we looking for?

• Who contacts the potential hires?

• Who decides whom to hire?

• What are the dependencies of this role?

• etc.

Other relevant questions

• What are we building?

• What will be the exceptions of this role?

• What are the key indicators to make the hire?

• How does the role intersect with other positions?

Designing a hiring process is an entire article to write about. I’m only trying to illustrate how design applies to every aspect of a business, and how design thinking can be leveraged beyond apps, products, websites, graphics, etc.

Design is about selling

“Anything that won’t sell, I don’t want to Invent. Its sale is proof of utility, and utility is success.” - Thomas Edison

No matter how well a product or service is designed, if it does not satisfy a need, no one is going to pay for it. On the other hand, no one sets up a business to lose. Even though most businesses claim they want to change the world, the goal for most businesses is to make a profit. Google claims it wants to make the world a better place, yet 70.9% of its business model is advertising. And Facebook wants to connect the world, yet they are a publicly-traded company, and the business model is advertising, and almost every SaaS product out there either has pricing page or, and a business model.

Maximizing profit isn’t bad. It’s the sole aim of a business. Hiring top talent, research and development, operations, inventory, technology, etc are some of the things a business requires to run; and they all cost money.

That said, when a company hires design talent, they are making a business investment. Therefore, businesses and designers need to set expectations on the return on investment, or at least be aware of how design can impact the bottom line.

It has been widely discussed that one of the primary reasons for startups’ failures is product-market fit. In February last year, CBInsights published a research report on startups’ failure. It says that the primary reason for startups’ failure, 42% - is no market. Meaning, the product, service or idea is not a primary people/business problem that exists.

It’s important to know that a market might not exist when an idea was validated, but things change as time passes by. So it may be possible that the idea had some market, but the product did not have a market because it did not evolve.

Design is about evolving and iterating. As such, a design-centric business is one that keeps changing as the market changes by putting people in the centre, to uncover customer needs and business opportunities to make revenue and maximize profit.

From experience, it is common for a designer not to know about sales and marketing, and the sales teams not to know much about design. But design teams must know what exactly sells and how their understanding of designing an experience is likely going to inform what the sales team plans to sell. And likewise, sales teams should understand how the product is designed, why it interacts the way it does, how the customer journey unfolds across screens and interfaces, and across messages, else they might be selling the wrong thing. This brings me to my next point:

Design is inclusion. It’s everyone’s job!

Design is more than a department. According to the McKinsey report, In cases where the design department has a beautiful design centre which was isolated from the rest of the organization, it performed significantly less well than cases where the design department was de-emphasized, but the role of individual designers was elevated, and they were put in cross-functional teams working together.

As already mentioned, putting the customer at the centre of what is being done in every part of a business is the foundation of design thinking. Having this customer-focused mindset becomes a valuable basis of how companies do business, outline processes, market its product, hire talent, compete, and build their brand.

It’s imperative that businesses train its staff for a customer-centric approach to problem-solving that makes design thinking meaningful and relevant to everyone, regardless of roles, departments or divisions, and also build a team where design cuts across disciplines. This can be done by making a designer a core part of any product or service development where design takes an active role in bridging multiple functions including sales, legal, technology, marketing, operations, etc; so that these groups can not only be part of the process but also understand directly the value that design can bring to a business.

To further amplify the impact of design across disciplines or departments, it’s important that businesses set metrics that focus on the customer and business goals. This brings us to the next point:

Design is impact

It’s common to see design case studies with decent stories and compelling visual, but with results, or impact left out.

A good approach to designing anything is to anticipate an outcome or to set an expectation, even though often, the outcome we expect isn’t what it turns out to be. The goal should be to validate the impact of a design or business endeavour.

A design or business without metrics to measure, track, and validate decisions, ideas, or hypothesis is like driving a car with the windscreen and windows completely closed up with black, non-transparent blinds. You are just going to run off the road.

It’s common for us to come up with ideas we think are the best; assumptions are a default we all have, and it comes naturally when we are faced with problems, or when we need to come up with ideas. And even when we have insights to back our ideas, we never know how good they are until tested and proven. It is also common for business executives or team leads to dictate decisions based on the highest-paid person opinions.

Currently, I work for Booking.com; a company that is known for its culture of experimenting and testing ideas on real customers to find out what works and what doesn’t – a valuable learning approach. From experience, 9 out of 10 times, ideas turns out not impacting the bottom line. This indicates that assumptions without testing and validating will only lead to failure. It also indicates that the customer tells you what to do, design or build and not the other way round.

A key decision to make from the outset of any design or business endeavour is to set performance indicators. What is measured? How is success determined? How do we know what our customers are doing or asking for? Asking these key question is the basis for determining what data points are tracked, and as we know today, data is the new currency.

Note to Designers

I’ve been following the business world lately – China, Bloomberg, Stocks, Startups, etc. One thing is clear – everyone wants to make money, go public; which creates jobs that impact the economy. This is the business of business.

Designers need to start merging perspectives to do more in the world than just designing widgets. Designers ought to be obsessive about selling, profit, and making “conversion” a key metric to tracking impact.

For us designers to stay relevant and still have a seat at the table, we must be aware of how we impact businesses. I look forward to a time when design portfolios will highlight the impact of decisions instead of pretty mockups and visuals. Impact is what matters.