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by Andrew Lam-Po-Tang
AGDA welcomes the publication of a ground-breaking study commissioned by the UK Design Council that shows, in dollar terms, the power of design in generating business results.
The study, which examines UK-listed companies over a ten-year period between 1994 and 2003, found that a group of 63 companies identified to be effective users of design outperformed the FTSE 100 index over the full period by 200%, and also surpassed their peers in the recent bull and bear markets.
How the research was done
Companies were identified via their inclusion in one or more design award/nomination schemes. The range of nomination schemes was intentionally broad in order to provide a comprehensive, and reasonably objective, view of UK companies recognised in their use of design. The schemes used were:
- DBA Design Effectiveness Awards (DEA), 1993-2003
- D&AD Awards, 1993-2003
- Interbrand Brand Values report, 1993-2003
- Design Council: Millenium Products, 2000
- Design Council expert panel, 2000
A standardised scoring system was used to allocate points to companies based on type of recognition achieved in each scheme - for example, companies with gold awards scored more points than those that were simply nominated or commended.
The group of companies was then filtered to exclude any that were not listed in the FTSE (Financial Times Stock Exchange) All-Share index as at December 2003.
Finally, the resulting list of 166 companies was further separated into two groups, a "Design Portfolio" group of companies that had scored 7 points or more each over the ten year period, versus an "Emerging Portfolio" group that scored less than 7 points.
At no point in the selection process was any consideration of each company's financial performance allowed, in order to ensure an unbiased comparison of the design-using companies versus other companies.
As is standard practice for this type of analysis, the performance of the two groups was then compared over the ten year period to the stockmarket average overall. In financial analyst terminology, "performance" means "what happened to the share prices."
As previously mentioned, the numbers show quite clearly that the "Design Portfolio" companies did much better than the average of the market.
Why this type of research is so important for you and your clients
What is exceptional about this study is that it answers the "value of design" question with a methodology and dataset that business analysts are most comfortable with. This is exactly the type of analysis and language that the stockmarket, CEOs and boards are familiar with, and respond to.
While it doesn't answer every question that can be raised about the impact of design, it provides the crucial "CEO level" perspective on the value of design as a fundamental business tool to improve company performance, share price and ultimately, shareholder returns.
For designers who are looking for hard evidence of design's ability to create business value, this research is a must-have and a must-use. Do your clients and yourself a favour - send the report pdf to them, and then book a lunch to discuss it!
The link below is to the press release, from which you will be able to download the report pdf (on the right).
Design Council Newsroom - The Impact of Design on Stockmarket Performance
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