The Business Value of Design: Is there a clear correlation between good design and business success?

Let’s start with a spoiler question: is there a clear correlation between good design and business success? Absolutely.

McKinsey's research reveals that companies focusing on design and practicing excellent design strategies see faster revenue growth and higher returns for their shareholders than others in their field. The market rewards exceptional design highly, selecting companies that excel in their design efforts.

Not only McKinsey: ✅ DMI and Motiv Strategies, funded by Microsoft, found that over the 10 years, design-led companies have maintained significant stock market advantage, outperforming the S&P by an extraordinary 211%.

✅ Adobe's analysis revealed that prioritizing creativity increases the likelihood of achieving a competitive advantage by 1.5 times; ✅ a 2020 report from Forrester found that well-executed UX design can raise conversion rates up to 400%.

As an example, by focusing on its product design, Airbnb has not only smoothed interactions between guests and hosts but has also redefined industry standards with its aesthetically pleasing, friendly, and welcoming interface and user flow. This commitment to design simplicity turns what could be a complex process of booking accommodations into an easy and pleasant journey. Brian Chesky, the CEO and co-founder of Airbnb, champions the importance of leading with design. This approach has propelled Airbnb to a leading position in the hospitality industry, showcasing design's critical impact on business success.

This image is a courtesy of McKinsey and Company.

Diamond of Design Impact

The impact of good design on business can be distilled into four key pillars:

1. Design-driven vision: Effective companies prioritize design as a strategic issue at the management level, rigorously assessing design performance with the same seriousness as financial metrics. This approach fosters a design-centric culture within leadership, encouraging decisions grounded in evidence (metrics) over intuition. Historically, designers haven't fully leveraged design metrics or demonstrated their impact on business objectives. Today, companies with superior financial results effectively integrate design and business leadership into a cohesive, design-driven vision.

2. User experience: Effective companies extend their focus beyond mere products to offer a comprehensive and seamless user experience, blending physical, digital, and service elements. Embracing user experience means dismantling the barriers between these domains to foster a user-centric approach. In practice, this often means mapping a customer journey – pain points and potential sources of delight – rather than starting with technical specs or a list of features.

3. Cross-functional talent: Effective companies treat design as a collective responsibility, removing silos to blend design talent with other disciplines (departments). The concept of "T-shaped" hybrid designers, who possess broad skills across functions while maintaining deep design expertise, is essential for impactful contributions. Ideally, design talent should be integrated across all operations.

4. Continuous iteration: Effective companies adopt from design its culture of continuous learning, testing, and iterating with users, employing both qualitative and quantitative research to steer decisions. The most successful outcomes arise from blending user research with insights from market analysis, technology trends, and business strategy, ensuring that design efforts are both innovative and aligned with user needs and market opportunities.

So what steps should companies take to make good design a driver of better outcomes?

1️⃣ Adopt an analytical approach, measuring and leading the company's design performance with the same diligence applied to revenues and costs. 2️⃣ Prioritize the user experience to meet customer needs effectively. 3️⃣ Nurture and empower cross-functional design talent to foster innovation and revisit old perspectives. 4️⃣ Finally, iterate, test, and learn rapidly, incorporating user insights from the initial concept to post-launch, cultivating a culture of continuous design improvement and innovation.