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dmi:Design Value Award Winner - McKinsey Design
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dmi:Design Value Award Winner

 

 

 

McKinsey Design, Consultants, Analysts, Data Scientists & Programmers, Digital, Consumer Packaged Goods, MedTech, Financial Services

Measuring the Value of Design

 

In 2018, McKinsey set out to answer a complicated question: what is the business value of design? McKinsey conducted rigorous research to answer this question. They tracked the design practices of 300 publicly listed companies over a five-year period in multiple countries and across 3 industries: Consumer Packaged Goods, Med Tech and Retail Banking. Senior business and design leaders were interviewed or surveyed, and the team collected more than two million pieces of financial data and recorded more than 100,000 design actions. Advanced regression analysis was used to uncover 12 design actions, which show the greatest correlation to improved financial performance. 

The team clustered the actions into 4 broad themes: 

  1. “More than a Feeling” embeds design methodology in the boardroom and C-Suite
  2. “More than a Product” puts the customer experience front and center
  3. “More than a Department” ensures design is every employee’s responsibility, not isolated to the design department
  4. “More than a Phase” emphasizes design-driven iteration, testing, and learning

The themes allow companies to look holistically at design as an operational practice and tool for business. Those organizations in the top-quartile consistently measure and drive design performance with the same rigor as revenues and costs; break down internal walls between physical, digital, and service design; make user-centric design everyone's responsibility; and de-risk development by continually listening, testing, and iterating with end-users. 

The four themes of good design form the basis of the McKinsey Design Index (MDI), which rates companies by how strong they are at design and—for the first time—how that links with the financial performance of each company. Working across 3 disparate industries allowed McKinsey to see that the findings apply regardless of whether a company makes physical goods, apps, services or a combination of the three.

The research suggested a correlation between design and financial performance. Those companies performing best against the four broad design themes and ranking in the top 25 percent of scorers (top-quartile) on the Index, achieved average revenue growth of 32 percent higher than their industry peers. over a five-year period. The Total Return to Shareholders (TRS) also grew by 56 percent more than the rest. 

The Business Value of Design report provides the platform to implement design methods and ignite a discussion for making a difference in the business and social worlds of today. It can be a tool for substantive organizational transformation. The Index provides quantification and allows for a more objective, fact-based decision on whether or not to change design actions and investments within an organization. It also provides a framework of twelve concrete actions in four themes, that business leaders can use to structure their next steps to improve performance.  

The Business Value of Design report and the McKinsey Design Index are freely available for design leaders and provide detailed benchmarking information to any company involved in creating an exceptional customer experience. The results from the survey are delivered to the participant through a convenient online dashboard. McKinsey also provides results at a deeper level, including one-on-one result reveals and feedback sessions, company-wide or design team workshops and large design at scale assessments. Their design consulting support is available globally, across all industries, to help companies achieve lasting impact through design.

The McKinsey Design Index has had a demonstrable effect in elevating the Design Value conversation in the last year, picking up the baton from DMI's Design Value Index. The clear rigor of the firm's approach has served to elevate the design conversation.

 

   
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