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Design conscious companies
outperform their peers

In 2014 Jeneanne Rae and Motiv Strategies partnered with the Design Management Institute to document the value of design in corporations that have made a long-term commitment to design. Their results were so striking, we interviewed Jeneanne to learn more and to provide an update. Their original work was posted on the DMI site

Question: Let’s start with big headline. What were your findings?
In our first year, 2014, our results showed that design conscious companies outperformed the S&P by 228%. In our second year, 2015, our results were 219%.

DMI

I think the most compelling result of our latest research shows that 11 of the 16 companies, or 69%, performed better than the S&P over the same 10 year period. From time to time some skeptical person will note that because the index contains Apple, and Apple stock has done so well, that the entire result is carried by Apple when it is not. When almost 70% of the companies that meet our criteria for being design-centric are doing better than the S&P, to me that is compelling evidence that our premise that a strategic commitment to design makes a big difference in company performance.

A strategic commitment to design makes a big difference in company performance

Question: What are the attributes of a design–driven company?
For the purposes of being included in the stock market index, we had to focus on publicly-traded companies. There were six attributes that the companies were asked to meet: Publicly-traded for 10 years, executive design leadership operating in the top echelon of the company for that same time period, design operating across all corporate BU’s, a clear place for design in the org chart, increasing levels of investment in design, and commitment to design on the part of the CEO and his/her direct reports. This is one reason we required a 10 year time horizon – a commitment to design like this isn’t built overnight.

Yet, there are many companies that are design driven that still might not qualify to be in the index and that’s perfectly okay and expected. When I think about the larger group of companies who I would consider design driven, the attributes would include that design makes a significant contribution to strategy development efforts, that it is a well resourced, respected function in the organization, that there is a recognition and enthusiasm for contributions from great design talent, that design engages the organization in impactful ways, and that the company is showing leadership in design, either through innovation, user experience, or aesthetics. 

Question: What healthcare organizations do you consider to be design-driven?
I believe there are many companies utilizing design effectively in the healthcare space, but I can’t think of one that complete fits the criteria for our index. GE Healthcare and Philips are on my radar, but it’s not clear to me how much those design organizations are helping to lead strategy development efforts. United Health Care is building up its innovation function with significant service design talent, but they are at the beginning of their journey. Kaiser Permanente has used design methods in its innovation function for many years, yet still not fully meeting our index criteria. If this audience has any suggestions for health care companies that potentially meet our criteria and therefore should be studied as potential candidates for next year’s index, please let us know.

Question: How might healthcare organizations make use the Design Value Index?
The attributes required to become part of our Design Value Index (DVI) show a pathway for becoming more design centric. The collective results of that group of companies shows that making a corporate commitment to design can yield great results. At the same time, each company’s approach and use of design is very idiosyncratic, and it takes a great deal of orchestration and know-how on the part of the design management team to achieve superior results. There are companies in the Design Value Index that are not performing better than the S&P and that is due in large measure to business cycles, mishaps in areas unrelated to design, and other factors.

A corporate commitment to design can yield great results.

Question: In healthcare, the ROI conversation has to be larger than financial impact—and must include impact on health outcomes. Can you comment on that?
Simply focusing on financial returns is a non-starter for measuring design no matter what industry you are in because design can make so many more meaningful contributions. In the healthcare field it would seem that anything that can drive higher levels of compliance for patients would be a huge win, as would anything that can reduce complexity, increase productivity, or drive efficiencies in time or money spent. Many of these characteristics are hard to measure, but can add a lot of value nonetheless.

Simply focusing on financial returns is a non-starter for measuring design

Question: Some design efforts may take years to show a health impact a large scale. What is your advice for organizations who are considering design initiatives that don’t show immediate results?
While it may take years to show tangible financial or clinical results associated with a health care design initiative, this doesn’t mean design’s contribution should be judged by these factors alone. My advice in this situation would be to expand what you mean by “results.” Can results mean greater collaboration throughout the organization to build better products and services? Could it be a return on learning as prototyping and testing is used during refinement efforts? Could a change in the engagement level of patients constitute a desired result? It seems like if the idea of results was broadened there could be many interim results that could be quite powerful.

For more information on the Design Value Index, please see:

A comprehensive video of Jeneanne presenting the DVI

Detailed writeup on the DVI

An excerpt on DVI from CNBC video

JeneanneRaeJeneanne Rae is founder and CEO of Motiv Strategies, a strategy firm specializing in customer experience, innovation, and design.
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