Strategic Numbers: Discussing the Value of Design with Sara Beckman of Haas School of Business, UC Berkeley

by Kate Rutter

February 4, 2009

We’re excited to bring Sara Beckman from the faculty at the Haas School of Business back into the Adaptive Path fold. We first worked with her in 2003 on our groundbreaking report, Leveraging Business Value: How ROI Changes User Experience.

With one foot in business and the other in academe, Sara brings both a practical and research orientation to her understanding of how design drives business value.

I had the pleasure of interviewing Sara about the value of design and how organizations are approaching this growing challenge.

[KR] Welcome, Sara. It’s great to talk to you today.

Sara, your work addresses that “holy grail” of business & design: how to measure the value of design. There’s now increasing empirical evidence that substantiates the impact, but challenges remain.

Let’s start with the basics: When you say “value of design” what do you mean, and what’s the meaningful difference that measuring value makes?

[SB] Well, Kate, in simple terms I think about the value of design as the contribution that design makes to the bottom line performance of a company. In short, how does design add to the profitability of the organization? These days, of course, we talk more and more about “integrated bottom line” performance — including environmental and social factors along with the traditional economic view of firm performance. This expansion allows design to make an even broader contribution to the firm.

Why should I want to be able to measure the value of design? Because doing so adds credibility to the argument that an investment in design ought to be made. For years we’ve provided anecdotes or stories of how design has made a difference in any number of settings; having measures and empirical data strengthens the arguments that we’ve been supporting with stories.

Remember, many of the organizations into which we are trying to sell the idea of “good design” or “design thinking” have been driven by classic marketing and market research approaches — having lots of data matters. Bringing data that “proves” the contribution of design to the “integrated bottom line” makes designers fit in better with that data-driven approach.

[KR] Unlike classic marketing approaches, however, this is a new message, one that has emerged only in the past few years. How does this message go over with strategic leaders? Are companies starting to “get it”?

[SB] Absolutely. The considerable visibility given to design, design thinking, and their partner, innovation, in recent years has raised awareness significantly. High profile companies like Apple and Google that engage in design and innovation as a way of life are leading other firms to believe in the possibility that design matters. And, in many large established companies, design leadership is being promoted to higher levels in the organization — there are more and more Vice Presidents of Design, for example.

[KR] One thing that is often mentioned is that the language of design and the language of business seldom align. What’s your take on this?

[SB] I’m not sure I think of it as alignment — designers and business people speak different languages altogether. So, it isn’t even as simple as alignment — translation is required. Designers and MBAs go through completely different educational processes, so it isn’t surprising that they would speak different languages, and even think differently.

The world of designers is far more visual, designers engage far more in experimentation and play, and designers learn to regularly engage in critiques of one another’s work, an important process for improving and iterating on their work.

MBA students, on the other hand, learn in a world of words and numbers, have fewer places or spaces in which to play with ideas and build upon them, and receive feedback on their work in very different ways than that provided in a crit. With these major differences in how they are taught, to say nothing about the content of what they are taught, it is not surprising that they speak different languages.

Some early research that we’ve been doing on the students in our new product development class — that involves MBA, engineering and design students — suggests that there may be significant differences in the types of students that are drawn to the different programs in the first place. So, it may be that designers and MBAs think and work differently even before they become designers and MBAs.

[KR] With all these natural differences in approach, it seems like we need tools to act like a Rosetta Stone to translate across different audiences. How can design managers address this challenge?

[SB] Well, bridging the design-business divide isn’t all that different in many ways than bridging the engineering-marketing divide or the finance-human resources management divide or any of the other disciplinary or functional separations we create in both the academic and business world.

To accomplish the cross-disciplinary or cross-functional goals of an organization requires working in teams that bring together people from the various functions. The members of those teams have to listen carefully to the language used by the other team members, thoughtfully present their own work in terms that the others can understand and over time build enough trust and understanding of one another that they can value, integrate and leverage one another’s expertise.

There are many academic programs now — our new product development class is one, the new Design MBA program at the California College of the Arts is another — that try to give students a head start in working with others outside their own disciplines.

In short, just as you might do in preparing yourself to visit another country or another culture, design and business leaders must take the time to understand a bit about the place they are visiting — a little of the language, the customs, the ways of thinking.

[KR] That’s a great metaphor. Considering the cultural shifts across functional areas is a helpful way of thinking about the communication issues. And different corporate cultures assess value and measure it in different ways.

You’ve done original research into the value of design to organizations. Overall, what types of outcomes are most important to measure?

[SB] Ideally, at the firm level, I’d measure impact on the social, environmental and economic outcomes the firm wishes to achieve. Realistically, profitability is probably the most important of those for most firms. Profitability in turn is driven by revenues and costs — so assessing the impact on growing revenues or reducing costs is at the core of assessing a design.

For a given design project or effort, there may be more specific goals — capture market share, increase margins, reduce distributions costs — that design has an opportunity to affect and thus should try to measure.

[KR] So if you could create the perfect world of measuring design, what 3 things would you want companies to do to achieve measurable outcomes?

[SB] That depends at what level in the organization you are trying to measure the impact of design. If you are looking to create a corporate organization that will bring better design to the company overall, then I would look for a set of specific objectives that are important to the company.

Sam Lucente at HP talks about design to simplify, design to differentiate and design to innovate. In a highly cost-conscious environment, design to simplify — e.g., to reduce the number of different HP logos used on products — provided a highly measureable objective, quick returns, and confidence that design could contribute. (Read the story at Fast Company.)

So, at a strategic level, it is important to connect measures of design impact to things that the organization cares about.

[KR] And at a more tactical level?

[SB] At a more tactical level, in some ways the answer is the same. For a new product development team, for example, there are generally specific objectives to be met with the new product. In what ways can design help achieve those objectives? Of course, there may be times when design needs to add an objective or two to the list — is the solution usable, how can the design maximize customer satisfaction?

Now, all that said, before you can achieve measurable outcomes, you have to be willing to try something in the first place. So, companies that haven’t tried design just have to rely on the data coming from elsewhere that shows the value of design and be willing to give it a try. In this way, design is no different than, say, the quality movement.

Companies that invested early (think many years ago now) in quality programs provided the results and data that “proved” to other companies that the investment was worthwhile. With results from the empirical studies that have been done in the past few years, and the considerable publicity design has gotten, hopefully we’re well on our way with this agenda.

[KR] Thanks, Sara. This is a terrific introduction to thinking about measuring design. We’re looking forward to hearing more at the conference.

You can hear more from Sara and others leading the charge in managing experiences at MX 2009. Join us on March 1-3, 2009 in San Francisco.

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Sara Beckman is on the faculty at the University of California, Berkeley’s Haas School of Business where she teaches manufacturing and operations management and new product design and development classes. In her twenty years of teaching at the Haas School she has won three awards from MBA students for teaching Excellence as well as the campus-wide Distinguished Teaching Award. She actively consults on various aspects of product design and development.

Dr. Beckman has B.S., M.S. and Ph.D. degrees from the Department of Industrial Engineering and Engineering Management at Stanford University and an M.S. in Statistics from the same institution. She serves on the boards of the Corporate Design Foundation and the Building Materials Holding Corporation.

Kate Rutter is a senior practitioner at Adaptive Path. During her ten plus years in the web industry, she’s honed her talent for bringing companies and customers closer together through smart strategies and inventive design. She actively embraces the term “specialized generalist.” Recently she’s been exploring how companies can more meaningfully measure the value of experience.