Design has emerged as a pivotal factor in driving business success in today’s competitive market landscape. However, many organisations still underutilise design, often relegating it to a secondary role rather than recognising it as a strategic asset. This article synthesises insights from three key resources — McKinsey’s “The Business Value of Design” report, McKinsey Insights, and Quartz’s commentary on the persistent undervaluation of design — to explore the critical role design plays in enhancing business performance. We will examine the correlation between strong design capabilities and improved financial outcomes, the barriers to integrating design into business strategy, and the ongoing need for a cultural shift towards valuing design as a core function. The article is written by Victoria Lisitsyna, a UX/UI designer, art director, and mentor from Russia, exclusively for TechBullion
1. Correlation Between Design Performance and Financial Success
The McKinsey report, “The Business Value of Design,” provides compelling evidence of the correlation between robust design capabilities and superior financial performance. Companies that excel in design, as measured by the McKinsey Design Index (MDI), significantly outperform their peers in terms of revenue growth and shareholder returns. Over a five-year period, firms with strong design capabilities reported 32% higher revenue growth and a 56% higher total return to shareholders compared to their industry counterparts. This data underscores the tangible financial benefits of investing in design and highlights its critical role in driving business value.
The report identifies four key actions that correlate with improved financial performance:
- Analytical Leadership: Companies that measure design with the same rigor as revenue and cost see better outcomes. This involves setting clear goals for design and measuring its impact on business results.
- User Experience Integration: Successful companies seamlessly integrate physical and digital design to enhance the overall user experience, recognising that customers value cohesive and intuitive interactions with brands.
- Cross-Functional Talent: Making design a collective responsibility across various departments ensures a more holistic approach, fostering innovation and aligning design initiatives with broader business objectives.
- Continuous Iteration: Engaging users throughout the design process and constantly iterating based on feedback helps companies remain agile and responsive to market changes.
Despite these benefits, the report notes a significant gap in how many companies engage users during the design process. Over 40% of companies fail to consult end-users, missing crucial opportunities to create truly user-centric products and services. This gap highlights a fundamental disconnect between design practices and user needs, which can impede the development of innovative solutions and hinder market success.
2. Design as a Strategic Asset
Expanding on the findings of the McKinsey report, McKinsey Insights argues that design should be treated not as a peripheral function but as a strategic asset integral to business success. Organisations that prioritise design can differentiate themselves in the market and achieve greater success. The insights emphasise three critical aspects for embedding design into business strategy:
- Strategic Integration: Successful companies embed design thinking into every aspect of their operations, ensuring that it informs corporate culture and decision-making processes. This holistic integration of design fosters a culture of innovation and positions companies to respond more effectively to market demands.
- Continuous Improvement: In rapidly evolving markets, maintaining a competitive edge requires constant iteration and responsiveness to user feedback. Companies that adopt a mindset of continuous improvement, grounded in user insights, are better equipped to adapt to changing conditions and maintain their market position.
However, achieving this level of integration is challenging. McKinsey Insights highlights that many organisations still treat design as an afterthought, failing to recognise its strategic importance. This lack of recognition can result in missed opportunities for differentiation and growth.
3. Why Is Design Still Underestimated?
Despite all the compelling evidence supporting the business value of design, I still find myself needing to argue its case. This resistance often comes from a combination of cultural pushback and a lack of understanding about how design directly impacts business outcomes.
I often reflect on the idea that “Good design is good business,” emphasizing how long we’ve known about design’s value. Yet, many organizations still fail to move beyond this surface-level recognition. Too often, I see design leaders viewed as secondary to core business functions like finance or operations, which limits their potential to drive real change and innovation.
What we really need are more concrete examples and case studies that clearly show the direct impact of design on business outcomes. By presenting clear, data-driven proof of how design contributes to profitability and growth, I can more effectively persuade skeptics of its value. This highlights the importance not just of investing in design, but also of ensuring its benefits are communicated clearly within the organization.
4. Companies that have placed design and CX at the forefront
Starbucks: Creating a Unique Customer Experience
- What They Did: Starbucks has transformed its stores into inviting spaces that enhance the customer experience through thoughtful design elements, such as comfortable seating, ambient lighting, and a welcoming atmosphere. They also focus on the design of their product offerings and branding.
- Results: This design-centric approach has contributed to Starbucks’ status as a global coffee leader, increasing customer loyalty and driving sales growth. The inviting store design encourages customers to spend more time and money, significantly boosting revenue.
Nike: Leveraging Design for Brand Loyalty
- What They Did: Nike invests in innovative product design and marketing, focusing on creating high-performance athletic gear that resonates with consumers. Their design strategy includes collaborations with designers and athletes to enhance product appeal.
- Results: Nike’s commitment to design has resulted in strong brand loyalty and market leadership in the athletic apparel sector. Their design-driven initiatives have led to increased sales and a significant rise in market share.
Airbnb: Enhanced User Experience Leading to Growth
- What They Did: Airbnb invested heavily in improving its platform’s design and user experience. They focused on creating a seamless booking process, visually appealing listings, and user-friendly interfaces.
- Results: As a result of these design enhancements, Airbnb saw a significant increase in user engagement and bookings, contributing to its growth as a leading player in the travel industry. The emphasis on design helped differentiate Airbnb from traditional hotel services, leading to a unique market position.
These examples illustrate how companies across various industries have successfully utilized design to enhance their business performance, leading to increased revenue, customer loyalty, and market competitiveness.
5. Key design actions that correlate with improved financial performance
Measuring and driving design performance with the same rigor as revenues and costs
- Adopt an analytical approach to design at the CEO and leadership level
- Measure and lead the company’s design performance with the same rigor as financial metrics
Breaking down internal walls between physical, digital, and service design
- Put the user experience front and center in the company’s culture
- Break down internal boundaries between physical products, services, and digital interactions
Making user-centric design everyone’s responsibility
- Nurture top design talent and empower them in cross-functional teams
- Ensure teams take collective accountability for improving the user experience
De-risking development by continually listening, testing, and iterating with end users
- Rapidly iterate, test, and learn by incorporating user insights from the first idea through launch and beyond
- Incorporate user feedback into the product development process to reduce costly mistakes
Researches show that companies that truly stand out from the crowd by excelling across all four design dimensions are disproportionately rewarded by the market. Embedding these design actions into the core of the business strategy and operations is key to unlocking design’s full potential to drive growth and financial performance.
