The Design of Value
From the value of design to design-led value creation
In 2013 the US-based Design Management Institute started to track the value of publicly held companies that met specific design management criteria and proved that, over the span of ten years, design-led companies maintain significant stock market advantage, outperforming the S&P Index by a remarkable 200+ percent each year.
More recently, global venture capital firm NEA partnered with design leaders from IDEO, Invision, and the likes to measure the impact of design across 400+ companies from around the globe and at all stages of growth. The results of this survey were astonishing; with 61-to-75% higher sales, 44-to-88% higher customer retention, 67-to-88% higher customer engagement, and 45-to-75% faster product cycles for companies daring to make design a priority.
Value-creation, however, is still solely measured in terms of business growth and return-on-investments rather than impact. Thus, a question remains. Now that the value of design has been established, can we finally focus on the design of value?
Earlier this month I heard from Dr Anthony Wood, Executive Director of the Council on Tall Buildings and Urban Habitats (CTBUH), and Associate Professor at the College of Architecture at the Illinois Institute of Technology in Chicago. During his presentation, Anthony outlined a series of 10 ‘Sustainable Vertical Urbanism’ principles, which, if adopted, could result in the building of next-generation skyscrapers more aligned with their physical, environmental, cultural, social, and economic environments.
Design principles such as the one presented by Dr Wood have been discussed extensively in Architecture circles and are now championed by studios such as Gehl and NBBJ. But the conversation around enhanced value creation is also getting picked up by design communities across the world.
In a recent paper published on their website, design & innovation consultancy frog is advocating for designing beyond the human experience.
‘When I consider ecosystem design, I am not only thinking about a family of products or a business unit within a company; I am thinking about how the products and services we create impact our communities and our environment’ says Agnes Pyrchla, Design Strategist at frog.
The paper then moves on to reference Ethan Roland & Gregory Landua’s work. Initially published in 2009, this paper lays the foundation of a value-creation framework discussing no less than eight forms of capital, including the most obvious of all, i.e. the one relating to our precious dollar.
The Oxford American Dictionary states that capital is, “wealth in the form of money or other assets” and a “valuable resource of a particular kind.” What are these ‘other assets’? We’ve never seen a whole map of all the different types of ‘valuable resources’, Roland and Landua said.
We wanted something that would be more helpful for understanding the complex transactions and exchanges swirling around us as human beings and us as a global community. As we considered the ‘mapping financial ecosystems’ exercise, a bigger picture began to emerge as we thought about the capital pools and flows of the Mayor of a hypothetical small town. Eight Forms of Capital/Currency emerged:
Similarly, Matt Kurowski from Huddle, a Melbourne-based strategic design studio, published an essay discussing a future narrative for designing services and strategies based on a complete value-set composed of another eight forms of capital.
The two frameworks above are somewhat similar (e.g. Social and Community Capital; Material and Infrastructural Capital; Living and Natural Capital; Cultural and Creative Capital, etc.) yet differences exist. For example, Huddle’s Temporal Capital is not found in the Regenerative Enterprise Institute’s framework but could overlap with their Experiential Capital in terms of the wisdom that is accumulated through time.
Discussing the similarities and differences between these frameworks, however, is beside the point. The fact of the matter is that both parties are proposing an alternative to the status quo; a more holistic way of designing products, services, and strategies that is focused on value exchange and value creation across the various actors engaged and/or implicated in a design rather than financial value extraction alone.
In their most recent annual trend forecasting exercise, design & innovation consultancy Fjord warns organisations against potential consumer backlash when organisations do not think hard enough about the implications of the business decisions they make (e.g. Airbnb’s alleged impact on local rental markets; Uber’s recently uncovered toxic employee culture).
In 2017, consumers and media will challenge the actions of the organizations that impact on their lives even more, not less, forcing digital ethics up corporate and legislative agendas. Institutions will focus more closely not just on their customer experience and employee experience but also their social experience to guard against the unintended consequences of their activities. Fjord trends 2017.
Advocating for a push towards addressing the bigger picture and designing products, services, and strategies benefiting society more holistically, Fjord is taking a progressive stance in the design industry — but will organisations listen?
Dr Olivier Cotsaftis is a post-disciplinary designer navigating the spaces between presents, futures, fictions, and realities. At RMIT University School of Design, his research addresses socio-ecological innovation in more-than-human heterotopias. Ollie is also the founder and creative director of future ensemble studio and the co-founder of Speculative Futures Melbourne — the Melbourne Chapter of The Design Futures Initiative. Most recently, Ollie joined the editorial board of Research Methods: Biotechnology Design (Cambridge Press, UK).