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Determining the economic value of design

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There is no model to determine the value of design accurately. And no process can be employed to guarantee that design will create value.

Because of this dynamic, designers and design teams have difficulty quantifying the value they create.

The difficulty of determining the ROI of design can lead to an undervaluation of its function. When times get tough, design can look like a cost center compared to other more quantifiable roles.

The intangible nature of the designer’s contribution is difficult to put a precise number value upon, but it is evident that the designer’s contributions are valuable.

Some people understand the value of design, and some people don’t. Some companies understand the value of design, and some companies don’t.

Think of the success of Apple. They understood — either directly or indirectly — how design could raise margins, growth, and financial durability.

Apple’s brand and user experience contributed to the mass adoption of personal computers and mobile devices, influencing other companies to focus on design.

It wasn’t that long ago when the digital world looked ugly and functioned even worse. Now design is at the forefront.

Great design coupled with the network effects inherent in the digital world breaks traditional supply and demand curves.

Well-designed software can increase demand for a product or service by making it easy and delightful to interact with it. The same software with identical underlying functionality can have the opposite effect by repelling potential users with a challenging user experience and ugly brand.

The value of digital products is often purely intangible, making it hard to determine.

As great design increases demand, the infinite nature of digital products increases the potential supply. Given this dynamic, it’s much harder to determine points of price equilibrium.

This dynamic also applies to the valuation of design within organizations and how the market values the intangible assets of design-driven companies.

What’s more, measuring the value of design and targeting a quantifiable outcome for its success could undermine its value. There’s even an economic adage to explain this phenomenon. Goodhart’s law states that when a measure becomes a target, it ceases to be a good measure.

However, there are ways to understand the value good design creates. It’s not straightforward and requires a lot of experience in understanding what to look for and how to evaluate it.

In the coming article, I’ll cover ways to intuit the value of design and incorporate its practices within your product.




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Andrew Coyle

Andrew Coyle

Building @mockvisual (YC S19) • Formerly @Flexport @Google @Intuit • Interested in platforms

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