Design Thinking

The Value of Design Leadership in Business

As all designers know, great design doesn’t start with specs, but with the user. How will they interact with their creation? What type of look, feel, emotion, response should the design evoke? While the final products that designers create ultimately become the consumer face of a company, design has always lived its life in middle management, rarely straying into the C-Suite. As all designers have experienced before, when it does finally make it to the executives, decisions are informed by gut versus user data and design leadership (or worse yet every designer’s nightmare, when the CEO says, “My daughter likes red. Can we make it red?” …for a clean water campaign logo). 
For the long-suffering design community, validation on what we’ve known all along has come in the form of a McKinsey & Company study into The Business Value Of Design. You can read the whole report here
Others have studied the business case for design in the past, but as senior business leaders know, when McKinsey says something, the global titans listen. The authors of the study (Benedict SheppardHugo Sarrazin, Garen Kouyoumjian, and Fabricio Dore) analyzed more than 2 million pieces of financial data. 100,000 design actions – which they describe as focused tests to make design a central pillar of a business – for 300 publicly listed companies over a five-year period. The team uncovered that the companies who believed in design and had embedded design processes and principals generated 32% more revenue and 56% more total returns to shareholders. This was evidenced across three global industries: Consumer Packaged Goods, Banking and MedTech. 
The paper consolidates design into four key themes that showed the strongest correlation with financial performance. They are:
1. Analytical leadership
2. Cross-Functional Talent
3. Continuous Iterations
4. User Experience


Image courtesy of McKinsey & Company 
The companies that focused on each of these themes in unison scored high in the rankings. The businesses that found themselves in the top quarter realized increasing revenues and returns when compared to the bottom three quarters, more amazing yet is that the differences between the bottoms three quarters was negligible. Basically, for design to effect the bottom line, the business must commit and excel across all four themes.
Amazingly, over 40% of the companies involved in the study did not talk to their customers at all while developing products and prototypes. Which is really mind blowing considering the time designers spend researching their users, talking to them and understanding how their designs will be utilized. Additionally, a little over 50% of the companies involved admitted that they have no objective way to assess or set targets for the output of their design teams.
While I fully agree with the four themes identified, I want to provide some additional colour from the mind of a designer.
1. Analytical Leadership:
Lately I’ve noticed a marked increase in design that is based on “looking cool” versus built on a rationale, or quantitative proof and analytical approach of a business. In art college, our professors continuously hammered home that if we couldn’t rationalize our work, then it wasn’t ready to pitch. However they also admitted that designing something great and shoehorning a rationale after was perfectly acceptable when presenting to clients. I feel they have been doing the design community a major disservice with this advice.
As we’ve all heard, and what EVERY senior executive knows, “what gets measured gets done“. I truly hope that the voice of McKinsey starts to move the metrics that matter in the C-Suite from being shareholder-centric to more user-centric. For design to flourish, the C-Suite requires a more balanced combination of bold and humble, analytical and creative, empathic, explorative and methodological people. It requires a leadership team that is appreciative of all these differences and knows how to leverage them.
2. Cross-Functional Talent (and Collaboration):
Collaboration with the many stakeholders within and around client organizations is fundamental to a successful design approach. I couldn’t be happier to see that the team at McKinsey, their readers, clients and the hundreds of business leaders who filled out their questionnaire, recognize this as well.
Cross-functional collaboration is growth, cross-functional collaboration with a shared user-centric vision and integrated design methodology is hockeystick growth.
3. Continuous Iterations:
Incredibly, McKinsey discovered that over 40% of companies don’t involve customers in the early stages of development (I really can’t let this one go, it’s so baffling). Clearly, these companies are missing out in a major way. It actually slows down product development, increases revisions and misses early opportunities for identifying the right solution for unmet customer needs. We all know of startups that failed because the focused on what they want versus what the user wants.

The authors also turn their focus to the Lean Startup methodology which emphasizes that companies, “invest their time into iteratively building products or services to meet the needs of early customers, they can reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures.

In my experience, many startup businesses struggle with the tsunami of ideas generated in brainstorm sessions. The issue is: people are working hard to do a lot of right things fast, but fail to understand and align on what are the right things to work on.
4. User Experience:
As designers, we have a passion for tinkering with our tools, playing in our minds and our particular methods of production. Just like designers, companies are proud of what they produce and do, and these are all good things. What happens though is that we both lose sight of the user while we play with our tools and products. As such, the focus needs to shift toward the user experience across channels and vertical. However a focus on the user experience alone will not create impact.
The user is a person, one of many who will interact with your piece. They are a human, a customer who over the lifecycle of your product is as much a co-creator of value as you are when designing it. When all these perspectives come together, the complete saturated picture comes into focus. It is at this point where the full idea of the user is ready for its place in the light, informing strategy, vision, implementation and delivery of value.
Ultimately, user-centric design is this: If you’re focusing on designing for looks only – the superficial – then you are approaching it incorrectly, and your design will fail to realize its full potential.
Wrapping It All Up:
At the end of the day, McKinsey does the design community a huge favor with this research. Demand for design will increase with the promise of a positive impact on the way people live and work, and the accompanying competitive edge and growth that companies strive for.
I’m excited to see how companies digest this data and hope to start seeing more Jony Ive’s popping up at SMEs, Fortune 500 and startups alike. Apple (and Jony) really helped pave the way, but so many companies were afraid to take the leap as so much of Apple’s winning design was attributed to Saint Jobs. With real data on how design can drive business, there’s no excuse for companies to overlook its fundamental place in the C-Suite any longer.

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