Apple. Google. IKEA. Audi.
These are some of the biggest companies—and most well-known brands—in the world.
They all have one thing in common:
All are design-centric companies.
If you want to increase the value of your business, one of the best investments you can make is in design.
That’s backed up by research, by the way. A study conducted by the Danish government showed that design-centred companies grow 249% faster than companies that do not invest at all in design (interestingly, there wasn’t a huge difference in growth between companies that don’t invest in design and companies that only invest in design as styling).
Research from the UK and my own home country, Sweden, have demonstrated the same pattern holds true elsewhere too.
The UK Design Council (a non-profit that champions better design practices) noted that companies who participated in one of their programmes saw a £20 increase in revenue for every £1 they invested in design.
Another study from Sweden found that the average growth in turnover for companies that used design purely for styling was 6.5%, whereas the average growth for companies that used design as a strategic tool was 9%.
Finally in America, design-driven companies outperformed the rest of the S&P 500 by 228% between 2003 to 2013.
Okay, so we’ve established that design has a significant impact on the bottom line. It still just seems like this magic word that gets thrown around though, doesn’t it?
What is design?
And how does it help businesses?
What is design?
“I strive for two things in design: simplicity and clarity. Great design is born of those two things.”
— Lindon Leader, creator of the FedEx logo
There’s this loose concept of design, but very seldom do you see people actually defining it. That’s probably because it’s such a complex term; it can mean any number of things, depending on the context.
Personally, I think of design—stripped to its bare essentials—as finding the most ideal solution to a practical problem.
That problem could be anything from “how do we arrange this content in a visually stimulating layout?” to “how can we renew our business concept to improve our competitiveness and long-term viability?”
That’s what’s so awesome about design: it encompasses both the really tactical and nitty-gritty, as well as high-level strategic thinking.
Sometimes, when analysing how companies use design, we envision it as a ladder. At the bottom is non-design—this is where companies that don’t use design at all are.
One step above is design as form-making or design as styling.
Then comes design as process. This is where companies that use design as a process integrated early into the process in order to build products and customer experiences that are functional, accessible, useful, helpful, and meaningful.
Finally, there is design as innovation or design as strategy. Here, the designer works closely alongside the company’s owners/C-suite to partially or completely reshape the holistic business concept. If your company uses design like this, the ROI of design is at its very highest.
Some tangible ways design makes a difference
1. Great design can justify higher prices
Immediately two examples come to mind: Apple, and fragrance companies.
Design lies at the core of everything Apple does. Everything from their website, to their advertising, to the way their hardware components are laid out inside the products, to their operating systems, to their packaging, to their physical stores—it all reflects Apple’s philosophy of design.
As a result, Apple is one of the best-known brands and they are able to charge premium prices for their products.
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.”
— Steve Jobs
So what about fragrance companies?
The actual product that they’re selling—perfume—is extremely cheap to make. And there’s so little of it! But go to the perfume section of any department store, and you will find some of the most premium packaging you have ever seen:
The bottles are often breathtakingly beautiful and of very high quality, and the boxes they go in are ornately decorated.
Perfume feels like a very luxurious and premium product, and as a result, companies can charge hundreds of dollars for a formula that costs pennies to produce.
2. Design is a differentiator
What do you do to gain an edge in a saturated industry?
One way is to design better products. Another is to design a superior customer experience. Yet another way is to stand out from your competitors visually.
One company that is successfully doing all of three in the email marketing industry is Drip. They have designed a product that is 1) faster, 2) more powerful, and 3) more user-friendly than competitors like ConvertKit and AWeber. And they have possibly one of the most visually striking brand identities in the industry. Here are a couple of frames from their marketing website:
Drip’s combination of offering a well-designed and powerful product (lol, is this starting to sound like a sales pitch? It’s not!) and communicating with bold and memorable visuals, has allowed them to carve out their own space in the busy email marketing space.
The reason Uber was able to disrupt the taxi industry is that they designed a customer experience that is far more convenient and enjoyable than the traditional way of ordering a taxi.
Actually, I’ll go one step further: Whenever a newcomer successfully breaks into an old and saturated industry, you can be pretty sure that excellent design is how they did it.
3. Great design increases brand loyalty
Without design, there can be no brand loyalty.
If your packaging does not have shelf presence, if the product is indistinguishable from your competitors’, if your website looks just as shitty as everyone else’s, if the way you communicate with customers is boring and unauthentic…
How are you going to leave an impression strong enough for people to even remember you? And how will you compel them to keep coming back for more?
At this point, the only way you stand a chance is by competing on price. And that is a bad spot to be in—it’s a never-ending race to the bottom, and a surefire way to go out of business.
(There are exceptions to this rule of course—for example if your customers have a personal relationship to you or your company. Think: Farm sales and small-town mom-and-pop stores.)
4. Design helps you create better products and serve your customers
This is a huuuuge one, and the crazy thing is that most small businesses are completely ignorant to it! Meanwhile the large corporations that are better informed use design to create products that completely blow their smaller competitors out of the water. (There’s a reason that big companies get big in the first place!)
I don’t do product design specifically, but I do run brand strategy with my clients. More than half of the time, we surface some way that a product—or the whole product offering—can be improved to better serve customer needs.
That is one of my favourite parts of this job: seeing the light-bulb go off in a client’s head when they realise the impact our work is going to have. Even originally skeptical clients’ eyes start glowing and they lean into the conversation, both metaphorically and physically.
5. It can help you create processes and systems to run your business more efficiently
Can design have an impact on your internal processes? Yes, yes it can.
If you think about your business right now, I bet you can come up with at least a couple of bottlenecks that waste money and time, or prevent you from focusing on higher-order things like business development, strategising, or spending more time with loved ones.
Look, there are always better ways of doing things. But when you’re “in it”, those ways are not always easy to identify. The return on investment of finding a great consultant who can help tease out a more streamlined or effective process, compounded over the amount of years your business will be around for, is immeasurably high.
6. Design can make your company appear bigger than it actually is
We’ve already established that through design, you can make a product look more expensive or valuable than it is.
In a similar fashion, a great brand identity can make you look ten times bigger than you actually are.
The truth is, people make snap judgments about businesses all the time. Creating an appearance of scale and communicating professionalism through your brand identity can help nudge those potential customers in the right direction.
A few months ago, I was privvy to a call during which a CEO was choosing between two different vendors for a SaaS (software-as-a-service) solution. He spent a couple of minutes on each vendor’s website, and then went, “This one looks more modern, we’ll go with that.”
Are there better ways to make decision? Probably.
But that doesn’t make much difference to the vendors—one of which is now going to make thousands of dollars in recurring revenue as a result. The other company… none the wiser.
Obviously, this was not an exhaustive list. Explaining the value of design is difficult. Not for a lack of material, but precisely because there is so much to say about it. There are entire organisations dedicated solely to exploring the impact of design on business; it’s impossible to do the subject justice in one single blog post.
I expect I’ll return to this subject in the future, but until then I hope this post was both interesting and valuable to you.
Until next time,