A new analysis by the Design Management Institute, a Boston-based nonprofit focused on design management, puts numbers to what design junkies suspected all along: in the past 10 years, design-driven companies outperformed the Standard & Poor's 500--a stock market index of 500 large publicly traded companies--by 228%.

These companies included Apple, Coca-Cola, Ford, Herman Miller, IBM, Intuit, Newell Rubbermaid, Nike, Procter & Gamble, Starbucks, Starwood, Steelcase, Target, Walt Disney, and Whirlpool.

All that money these companies put into smoother user experiences, beautiful branding, and innovative advertising paid off.

The nonprofit created the DMI Design Value Index--a list of design-led, publicly traded U.S. companies that meet a set of six design management criteria. They measured the success of this design-led segment of companies against other companies in the stock market, and found that, indeed, those that put design first had a huge stock market advantage.

The research could help convince remaining design skeptics that hiring and effectively managing talented designers really is key to success.

Co.Design

Study: Good Design Is Good For Business

A new analysis by the Design Management Institute concludes that design-driven businesses have outperformed the S&P by a whopping 228% over the past 10 years.

Here at Co.Design, we’re constantly singing the praises of design-driven businesses. But “good design” can seem subjective and nebulous. Worse, it can be difficult to quantify how much design really impacts a company's bottom line.

A new analysis by the Design Management Institute, a Boston-based nonprofit focused on design management, puts numbers to what design junkies suspected all along: in the past 10 years, design-driven companies outperformed the Standard & Poor's 500--a stock market index of 500 large publicly traded companies--by 228%. These companies included Apple, Coca-Cola, Ford, Herman Miller, IBM, Intuit, Newell Rubbermaid, Nike, Procter & Gamble, Starbucks, Starwood, Steelcase, Target, Walt Disney, and Whirlpool. All that money these companies put into smoother user experiences, beautiful branding, and innovative advertising apparently paid off.

How DMI arrived at the number: The nonprofit partnered with Motiv, an innovation strategy firm, to create the DMI Design Value Index--a list of design-led, publicly traded U.S. companies that meet a set of six design management criteria. For example, the criteria stipulated that design had to be embedded within the company's organizational structure; design leadership had to be present at senior and divisional levels; and there had to be a senior-level commitment to design's use as an innovation resource and a force for positive change. The above-mentioned companies were the only 15 out of a pool of 75 that met DMI’s criteria. They measured the success of this design-led segment of companies against other companies in the stock market, and found that, indeed, those that put design first had a significant stock market advantage.

The research could help convince remaining design skeptics that hiring and effectively managing talented designers really is key to success. Now, when an exec demands “show me the numbers,” there are actually some numbers to show.

[Image: Coca Cola via Louise Cukrov / Shutterstock]

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14 Comments

  • Tadas Mikuckis

    Yes!!! "All that money these companies put into smoother user experiences, beautiful branding, and innovative advertising apparently paid off."

  • sem

    Of course, interface design is not a series of black and white choices. There is plenty of moral gray area — such as using the default state of an interface to your advantage. Instead of taking advantage of human psychology and expectations to trick people, we can use that same knowledge to create designs for advanced websites that are intuitive, friendly, and help people enjoy their experience. In this article you can find more information about good design and some case studies about dark patterns https://www.jtechcommunications.com/blog/blog-detail-13 . We believe that web design should follow the same ethics you live by in the rest of your life.

  • I think numbers like this are useful but in many instances just to help reinforce people's ideas about design in the first place. I wonder whether 'numbers' in and of themselves will persuade more people of the value of design. I fear not. We need bigger, brighter, bolder talk instead.... We urge you and your clients.... Taste Some Poison, even just a little (thats our approach to bringing design to 'experience building'... and it works!: http://www.freestate.co.uk/blog/a-manifesto-for-real-brand-experience/

  • Trusting design (and designers) is sometimes difficult for business thinkers. Problem is, in a spreadsheet world of quantifiable corporate cost structures design is often dismissed as frivolous embellishment. Truth is, design is a targeted enterprise, planned, purposeful and results driven. Here's an article that goes into some detail as to exactly how design solved some major business problems for a brand we all know.

    http://www.nocturnaldesign.com/blog/?p=148

  • Agreed. Everyone can benefit from better understanding design thinking. Also crediting designers more because its hard to quantify how their efforts effect sales and revenue because of improved UX and brand perception.

  • Johnny West

    What is extremely difficult for most people in the design profession is the task of convincing a current or prospective client that good design has value. On a real nuts-and-bolts level, you can talk until you are blue in the face, send article after article to them, show them figures, charts and graphs and still there are many who simply see design as a necessary evil, something they don't understand or don't care about.

    What is needed is an industry-wide HOW TO that shows those of us in the profession exactly how to combat those client types who simply refuse to see the value of good design.

    I have a client right now that is in the process of re-branding. They can't seem to get off of square one on this subject and have (horrors) even gotten their 11-year-old daughter involved in the process because they insist that "it doesn't matter what the logo is, as long as we are honest and sell a good product ethically". I am now questioning my sales ability after 35 years!

  • Johnny,

    That's one of the reasons that I wrote the blog post that I linked to in my original comment. It was a way of organizing the argument lucidly in my own mind and offering concrete examples to illustrate to people how design is a business tool and not merely superfluous decoration.

    Ultimately, we can't be the idiot whisperer. Sometimes people aren't going to understand, no matter how lucid or logical your explanation. You have to know when it stops being productive and becomes a waste of your time and brave enough to step away.