Understanding the Commercial Significance of Design

How can human centred design help organisations increase revenues and shareholder returns?

By paul.howell@sqwarepeg.com November 14, 2018
Paul Howell is a Human Centred Design, Principal Consultant at Sqware Peg

The Value of Design

How easy is it to transfer money via your phone, book tickets, reserve parking or even apply for a home loan online?  Well-designed user experiences that keep customers coming back are no accident – today they are at the core of organisational strategy and competitive advantage and are consciously considered, designed, tested and iterated before they are launched into the marketplace.

The design community is excited by a recent article from McKinsey that looks at how organisations that have implemented human-centred design practices consistently outperform their competitors, increasing revenues and shareholder returns at nearly twice the rate. This five-year study illustrates the commercial benefits of designing great products and services and quantifies what we have long known about the importance of the user experience to attract, engage and retain customers who have become increasingly demanding in their expectations.

What Did the Study Find?

To fully grasp the power of design as an asset, it looked at 300 public companies and included over 2 million pieces of financial data and 100,000 examples of how design is implemented within organisations and the effect this has in determining success. McKinsey found that those with the strongest commitment to design and the most adept execution of design principles reported superior business performance with 32% higher revenue growth and a 56% increase in total returns to shareholders.  These results held true no matter the industry or type of business, suggesting that good design matters regardless of focus.

The potential for design driven growth is enormous. This is supported in the article by a number of strong examples, including one online company that discovered how a small usability tweak to its home page increased sales by 25%. Another analysed payment data and used machine learning algorithms on security cameras to identify retail inefficiencies that enabled them to refine their design layout and improve user experience and increase spend.

So What is this Magical “Design” Thing?

The compelling virtue, common to all well-designed digital products and services, is efficient resolution of tasks by users and those servicing them. Fast access to real customers is readily available through multiple channels, including apps, social media and smart devices. A successful design strategy and implementation places the user at the heart of business decisions in a way that design leaders have long envisioned.

Customers can feed opinions back to companies (and each other) in real time, allowing design success to be measured by customers themselves. Target metrics that identify success are established, examples could be time taken to complete a payment, how many click-throughs for a promotion or time taken to resolve a customer service issue.

The design process itself is a key factor of success and strengthened by encouraging research, early-stage prototyping, and iteration during development. Practices centred around learning increase the odds of creating innovative products and services and reduce the risk of costly mistakes.

How Can You Use This Information?

Along with the authors of this study, Sqware Peg recommends starting with a single project as a pilot (seed and grow). Starting small rather than trying to implement design-focused initiatives across the entire company at once has better adoption and financial results.

Sqware Peg endorses and uses the techniques discussed including customer research, data driven insights, prototype testing and iterative development.  We do this onsite with clients, engaging subject matter experts from within the business to collaborate on problem definition, rapid prototyping and solution design.

At Sqware Peg we look forward to bringing a fresh design-led approach to all our clients work. To learn more get in touch with one of our experienced team of advisors. 

 

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