How do you measure the ROI of great design (for real)?

Design has never been more respected in business. Yet quantifying its value still presents a challenge. We need a practical framework for estimating its impact on the bottom line.

It’s a question that’s frequently asked, yet the answer is almost always unsatisfying. Companies want to know the expected return of designing best-in-class products, services, and customer experiences. But a meaningful projection of ROI is notoriously elusive.

This is a very strange state of affairs if you think about it. On the one hand, companies have never invested more in design, either by building their own practices or working with outside partners. And this has a clear impact on our daily lives, where it’s the design-forward brands that we truly love (and spend money on). On the other hand, the attempt to make a strong, numbers-based business case for placing the same bet everyone else seems to be making, from industry leaders to startups, typically results in head-scratching, fluffy generalizations, unfounded claims — or all of the above.

Consultancies like McKinsey have admirably tried to fill the gap, publishing a rigorous study showing a correlation between a company’s design prowess, on the one hand, and faster revenue growth and total return to shareholders, on the other. The study lends support to a hypothesis that’s cropped up again and again for more than a decade: that investment in great design creates increased value for a company’s stakeholders, including a higher share price.

Source: McKinsey & Company

Still, while the McKinsey report and similar studies have advanced our thinking about the business value of design, they don’t answer the critical ROI question for any one company. Macro studies across industries, including self-reported surveys, might offer a bit of encouragement to stakeholders deciding whether to green-light a design initiative. The same goes for concrete ROI success stories touted by other businesses. But what executives really want is the confidence that comes from defensible ROI…