Many people ask how I am able to quantify the benefits of working in the way I do. The simple answer is that the evidence comes both from my clients and from major institutions such as the UK Design Council, Boston's Design Management Institute and the international management consultancy McKinsey & Co.
These studies, covering the period 1995-2018, demonstrate conclusively that companies that have an experienced innovator serving on their boards grow faster in the good times and are more resilient during recessions. They return more money to shareholders and make more profit than competitors. Full evidence for this is given below.
Of course, share price and profit are not the only measures of performance. For public sector organisations and charities the measures may include customer satisfaction, number of people helped, increased influence or improved ability to raise funds. You'll find plenty of examples showing how such benefits can be derived on my personal company website (Stakeholder Design).
Study 1: UK Design Council
Back in 2004, shortly after I began working as a senior manager at the UK Design Council, it published a ten year retrospective study of the impact that design thinking at board level has on company performance. The report compared:
- 61 companies that were known for their innovative capability
- 97 emerging tech companies
- All 100 members of the FTSE 100
- The entire FTSE All Share Index.
The report showed that creative and emerging tech companies grew by 205% and 248% in the period 1993-2003 compared to 57% managed by the FTSE 100.
Just as striking was the discovery that design-friendly and emerging tech companies actually grew in value during the bear market of 2000-03 while FTSE 100 firms lost 41% of their value.
Study two: Boston Design Management Institute
In 2013, and again in 2016, Boston's Design Management Institute repeated the study using a portfolio of 16 American companies that were known for their integration of design thinking into corporate strategy - companies like Apple, Black and Decker, Proctor & Gamble, Walt Disney and Whirlpool.
All 16 companies were chosen on the basis that they had board level representation for design and innovation, led by someone with 15-20 years' experience in the field.
The study showed that, over a ten year period from 2005, the companies had outperformed the S&P 500 by 211%.
Study 3: McKinsey & Co
In 2018, the international business consultancy McKinsey & Co published the results of a five year study of 300 PLCs based in several different countries and operating in medical technology, consumer goods, and retail banking.
The study, which incorporated more than 100,000 points of reference, found that any company that incorporates design thinking into its corporate planning processes will achieve significant benefits both in terms of revenue growth and ability to pay dividends. Companies in the top quartile achieved 32% higher revenue growth than their competitors and 56% higher total return to shareholders.
As noted, the benefits were there for everyone. Even the bottom quartile companies secured 4% more revenue than their competitors and 15% higher share returns.