My wife, Christie, is a child psychologist — she has a thorough understanding of child development. That means she can’t get out of bed without running into people interacting with children in ways that … could use some improvement. When you’ve studied parenting strategies for years, it can be hard to get on the subway without being horrified at how people interact with kids.

Expertise breeds dissatisfaction. The more experience you gain, the more of a contrarian you may become. 

I’ll bet you’ve gained some expertise in your field, and there are things that you notice people or companies doing all the time within your domain of expertise that drive you a little nuts.

The healthy way to deal with that dissatisfaction is to find an outlet that helps spread your ideas to more people. Videos, books, courses — or letters like this one — help you share your knowledge, expand your understanding, and clarify your thinking. Over time, you find a million different ways to express the core idea that much of the world seems to be missing.

But change comes slowly, and sometimes you feel you’re making no headway at all.

That’s why it’s so valuable when you occasionally stumble upon an outside source that takes “your” idea and repeats it back to you. As you read, you nod along more and more vigorously until you’re ready to jump up and down.

That’s how I felt reading this new study by McKinsey on the business value of design. The report (PDF) is the result of a five-year study analyzing 2 million pieces of financial data and 100,000 design actions from 300 companies.

The researchers found that design-led companies had 32% more revenue compared to other companies.

Today I want to talk a bit about the four themes they found that generated the most returns for companies. These themes make up what they call the McKinsey Design Index (MDI):

The value of design: 4 themes

Analytical leadership (Theme 1)

Yep. Earlier this year, I updated the SuperHelpful home page with a new headline:“Gut instinct will only take your organization so far.” That mirrors what the report's authors are saying here. They stress the value of data-driven decision making:

"Design issues remain stuck in middle management, rarely rising to the C-suite. When they do, senior executives make decisions on gut feel rather than concrete evidence."

The MDI recommends leaders track design’s impact as a metric just as rigorously as cost and revenue. I’d say that once you start tracking design’s impact, you’ll find that you’re often also tracking revenue. In other words, they’re not really different — design can be a significant driver of revenue. Once you start documenting design results, you’ll wonder why you hadn’t been doing it all along.

Prioritize user experience & break down silos (Themes 2 and 3)

Prioritizing user experience is about talking to your users, and then incorporating their voice and needs into your products and services.

The study found that more than 40% of companies don’t talk to users at all during development. I’d love to hear how many of those that do talk with users consistently go on to use the results in product development. Too often the customer’s voice drowns — it can’t survive the turf wars and egos within the company.

Which brings us to another of the 4 elements: Cross-functional talent.

It’s interesting that they distinguish prioritizing user experience and cross-functional teams (breaking down silos) as two separate themes. I think they’re so closely related; they should be considered one. I’d say you can’t prioritize user experience in a siloed environment. There’s no way to develop genuinely user-focused products and services when you have people guarding territory and hoarding information. Companies can’t look at the whole user experience if people in finance or legal can’t or won’t collaborate with product and service designers.

You’re going to be very limited in your ability to deliver a user-focused website, for example, if people in operations refuse to share insights from customer service call logs with designers seeking to create user-focused content that answers the questions customers value most. 

Iteration (Theme 4)

You’ve probably noticed me use the term “kaizen” here and there in these letters. That’s what McKinsey is talking about when they say “continuous iteration”. Companies that continually listen to and test with users are more successful.

And iteration is not internal — it’s public.

So many companies are uncomfortable with that. The study found that “60% of the surveyed companies only use prototypes late in the development process, for internal use only”.

Too many companies feel that a project should be 100% done before it is released. As they point out in the report, the problem with this is that it increases the risk associated with development. By waiting to release a new product or service until it’s “perfect” or “done”, the company places enormous bets. All it takes in one or two of those projects to fail or underperform for the organization to become allergic to experimentation. As the culture becomes more brittle and insular, it gets left behind as others in the industry embrace change.

But you can’t bet two nickels

Finally, the report suggests that for design to have an impact on revenue, it isn’t enough to invest a little more money in design and reap the benefits. Fast Company summarizes:

"… for design to work its magic, a business has to really commit and excel across all four areas that McKinsey identified. For Sheppard, that was a surprise. The team anticipated that every dollar spent on design would improve the bottom line, but instead, it has a disproportionate financial impact for companies that are really good at design."

This lines up with how I described the relationship between cross-disciplinary collaboration and prioritizing user experience above. The elements of the MDI are interconnected. You won’t get far with one element without having the others in place; the whole is more than the sum of its parts.

Martini bets a nickel

This is something I struggled with for years. I believed that I could help companies integrate design into their DNA by actually designing things for them.

I now know that’s rarely the case, and this report echoes that. 

But if practicing design isn’t the answer, what is? What can organizations and designers do to develop an organizational culture that celebrates design and reaps the benefits of user-focused design initiatives?

More on that to come.

Thanks for reading,


PS. I’ll be returning to the series on digital forms next week. Happy Halloween!