In a recent report released by McKinsey from a five-year study of 300 companies, the global management consulting firm found that organizations that adopted design-based principles and methods had 32% more revenue and 56% higher total returns to shareholders compared with other companies.
Over those five years, McKinsey based their findings by looking at over 2 million pieces of financial data and 100,000 design actions. This is one of the most significant studies in this area and certainly validates and quantifies what many organizations and the design community have known for years.
It’s also important to note that these findings were consistent in what are often considered more complex or multi-faceted service organization and industries, including medical technology, consumer goods, and retail banking.
The study highlighted four different areas that increased revenue and total returns most, then ranked all 300 companies on these four areas using a metric they’re calling the McKinsey Design Index (MDI):
- Tracking design’s impact as a metric just as rigorously as you would track cost and revenue.
- Putting users first by actually talking to them. This helps to think outside of a standard user experience.
- Embedding designers in cross-functional teams and incentivizing top design talent.
- Encouraging research, early-stage prototyping, and iterating. Just because a product or service is launched doesn’t mean the design work ends.
This is a great start to validate the impact of design practices and thinking has on the bottom line. It’s also important that those leading or participating in design make the effort to provide similar information to the C-suite to demonstrate the value of the work we do.