Design Economics: Putting a $ on good design
The superficial that divides | The ambitions that unite

Design: it’s so hot right now.
And for good reason. Research has shown that design-mature companies outperform others over a number of financial metrics, over multiple horizons, across multiple industries. The Design Management Institute has tracked the impact that the maturity and intensity of design teams and approaches has had on companies in the S&P 500. Their research highlighted the fact that design-centric companies, those who committed to design as a central part of their business strategy, outperformed the rest of the S&P 500 by 211% between 2005 and 2015.
This isn’t the “warm-fuzzy” of customer feedback scores, but the cold hard cash of efficient customer acquisition, repeat purchases, cross/up-selling and ultimately market share.

Recently, businesses have started to engage more proactively with Design. Perhaps the most telling signal here is the multi-billion dollar acquisition spree that professional services companies such as Accenture, Deloitte, PwC and others have undertaken to bring design agency services to their clients.

However, in my years of experience at the intersection of business, technology and design, and having worked with some of the most discerningly sceptical clients out there (looking at you, Investment Banks) I’ve seen many of the frictions play out when these forces meet — when the logical left-brain of business and economics meets the radical right-brain of design.
The Similarities that Divide Us
And yet, Economics and Design isn’t really a clash of left/right brain at all. The last few market failures, and the growing canon of behavioural economics show that Economics is far from a perfectly logical Natural Science at all; we’re learned the hard way that Finance is not physics.
Instead, the clash is often more a case of the left and right brain needing to get comfortable with each other, and finding effective ways to communicate using a common language and objectives.
Too often i’ve seen business reach for a designer (or “design thinking” or “UX” or “Service Design” or…) without really considering why. “We’ve been told design is good, we’ve been told digital is good, so i’m going to get this chap with tattoos in to fix everything and make it pretty and innovative” (‘Innovative’, naturally undefined…). Equally, i’ve seen designers come in to pitch or present and completely lose the confidence of a business buyer by talking about mood boards, storytelling and play. Peak behind the curtain of most of those agency acquisitions and you’ll probably find a degree of culture clash.
And yet, when you pick beneath the surface, there’s a good amount of overlap between the domains that economics and design operate in, and the functions they intend to optimise.
At their heart, both aim to maximise utility, within a given set of constraints. Economic agents focus on maximising their own utility functions (presupposing their own rationality…), where designers work to maximise the utility of a product through a deep understanding of what the user truly wants and needs. Both are looking to ultimately improve the lives of people by maximising what they can achieve with the resources they have.
Increasingly, there are points where the two modes are explicitly overlapping. Economics is increasingly focused on exploring the maximisation of functions beyond gross domestic product, looking at the maximisation of happiness and wellbeing to inform policy decisions. Market Design, accounting for how users on both side of the marketplace act, react and adjust rationally and irrationally with markets, can help with efficient market clearing. (See Alvin Roth’s great book “Who Gets What — and why”).
Design is even being used to bend some long-held rules of economic rationality. For example, products designed to elicit an emotional response can often break a preference curve based solely on observable measures of utility. Ask any of my engineering friends which smartphone is better and they will list you the technical advantages of a Samsung handset with Android operating system. And yet, I buy an iPhone because…well, it’s an iPhone.
But if Design is going to aspire to and maintain a more important role in business and strategy, as it should, the intent and impact of design needs to be dovetailed with the economics that underpins the business. As Beth Comstock put it:
What Business needs now is Design. What Design needs now is making it about business.
- Beth Comstock, SVP, General Electric
Bringing Design into the Organisation
Doing so, I believe, requires designers to start weaving the language and weight of business into their design, and re-branding the role of designers within the organisation.
‘Use’ and ‘Experience’ have dollar values
Design’s role vis-a-vis tech and business teams is generally characterised as being focused on ‘desirability’: do users want the product, and will they use it?

On one level, use is everything. If there is no use, there is no use-r; If there is no user, there is no viable business. Simple.
In reality, ‘use’ is often a hard challenge to solve for. For example, companies repeatedly build and deploy new internal software with the goal to increase productivity, standardise processes, deploy analytics or some other business end. I’ve seen large investment banks spend months and millions on building and deploying new trading systems that are often simply circumvented by users because “it’s too fiddly” or it cannot accommodate the existing workflows and workarounds of the user.
Ultimately, It simply doesn’t get used. That means for all that investment, we’re received absolutely zero of the benefit. Worse still, we could be actually increasing the economic cost on the business — with non-productive employees stuck in help desk queues waiting to talk to overloaded support staff. ‘Use’, in these instances, is not just an IT or design problem, it’s a CFO problem.
Looking to the frontline, the removal of friction via good design can have clear benefits on the top line too. Anecdotally, one leading investment bank saw a double digit uptick in the amount of business they did through their portal simply through good investment in design. In a heavily commoditised market where competitors are selling almost identical products, like the Foreign Exchange (FX) market, it’s hard to compete on price. Investors chose the portal because it felt easier. They come back to it because its familiar. Soft, ‘touchy-feely’ sentiments, perhaps, but that ‘feeling easier’ and ‘familiarity’ delivers the business several million dollars a year in extra commission.

Looking more broadly, research has shown that good experience design has a demonstrable impact on several key performance indicators, in a variety of different business models. Medallia studied the impact of a customer experience in two business models: a transaction-based business, and a subscription-based business. Controlling for other factors, they found that a customer’s past experience had a strong predicting effect on their future lifetime value (measured by frequency and value of transactions in the transaction model, and ongoing subscription loyalty in the subscription model).
You can read the full study in Harvard Business Review by following the below link.
Building targeted business metrics into the language and artefacts of Design will help align the communication between design and the other departments. But to be of true strategic importance of the organisation, Design needs to re-brand itself as the department that will help senior management scale a creative business.
Scaling Creativity
It may well be that creativity is the last unfair advantage we’re legally allowed to take over our competitors
- Bill Bernbach, Creative Director, Doyle Dane Bernbach
The musing from the ‘father of modern advertising’ possibly rings truer than at any point in our economic history. Technology has levelled the information asymmetries that underpinned old markets for goods and services, squeezed the margins of commodity products, and made ‘bespoke’ a requirement, not a nice-to-have. Customers have gotten used to, and now expect, a quickening stream of new products, at new (generally lower) prices that deliver bigger and better outcomes and experiences. Innovation is the corporate focus for growth.
All this ‘new-ness’ demands a creative culture — one that can look at the world in new ways, who aren’t unsettled by a blank sheet of paper, and are comfortable with working in the new and unknown.
Cultivating this culture, for most companies, is extremely hard. The creative process, to most outsiders, looks like chaos…and sometimes genuinely is. It’s incredibly hard to measure as you can have long hours of nothing punctured by five minutes of inspiration. It’s difficult to consistently replicate across projects and often gets more complex and cumbersome as teams scale. You have to hire differently, measure differently, manage differently, and even then being successfully and consistently creative eludes most.

There are exceptions. Pixar’s story, and their efforts to keep their creative culture amongst hard times, acquisition and even in the face of success (do you really want to be the first director that makes a duff Pixar film?!), is well documented in Creativity Inc. And then there’s Design Agencies — companies who have built and scaled companies on the premise of consistent creativity.
I believe the latest slew of agency acquisitions, and internal agency builds (see Commerzbank’s internal Service Design Agency, Neugelb) is an attempt to satisfy this need to be consistently creative, at scale. The attitudes, processes and artefacts of design can indeed help companies achieve this aim — but design needs to be understood in this light, not as the ‘art department’. That doesn’t mean that the design community becomes the bastion of creativity — exclusively responsible for ‘bringing the creative bit’ to strategy and operations. Instead, it becomes the space for people to be supported in the cultivation of their creative confidence, and the engine room for turning that confidence into product.
Proof of Value
Deriving value from a design-mature corporation requires action from both sides.
Designers need to educate the Business that design isn’t ‘what it looks like’, it’s ‘how it works’ — and management need to be willing to challenge their assumptions about design. This means detaching from thinking of Design as colour, type and composition, instead using the ‘thinking’ of Design to understand your business better, and the ‘doing’ of design to work iteratively towards a clear objective, in collaboration with the end customer.
But whilst business needs to be more mature in it’s understanding of design, the onus is on design teams to find impactful ways to demonstrate their contribution to the company’s economic success. Working closely with Product and Marketing can help ground design briefs and decisions in measurable metrics. These should be absolutely personal to the business, and sensitive to it’s model, market and position in the business cycle, but the ‘Pirate Metrics’ (Awareness, Acquisition, Activation, Revenue, Retention, Referral) are a good starting point for cross-department collaboration.
Proof of Value
The ability to bridge the unnecessary divide will be a hallmark of high performing companies in the next decade. For all our technological progress, companies cannot lose their sensitivity to the humanity that drives the markets and communities they serve — lest we build a world of junk because we ‘can’, rather than we ‘should’ or ‘need’. Making and maintaining this connection will ultimately help you build better products and services, that grow and adjust to stay ever-relevant to the people they serve, and deliver the purpose that so many of your employees are looking for in their careers. Design is a powerful competency that can help deliver that — if we are only willing to look past the superficial that divides us, and communicate using the ambitions that unite us.
