The Business Value of Design-Frog

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Insights

The
Business
Value
of Design

PUBL I S H E D BY F ROG
Intended audience
This Insight into the Business Value of Design is intended as a
reference point for business managers as they consider how best to
measure and communicate the value of their design investments.
Insights

P. 03 ME ASU R I NG D ES IG N IN IT IAT IV ES

P. 04 THE BUS I NESS VALU E OF D ES IG N

P. 06 1 . I NC R EAS E S P EED TO M ARK ET

P. 08 2. E XTE N D M ARK ET REAC H

P. 10 3. DR I V E EN GAG EM EN T AN D LOYALT Y

P. 12 4. E NHA N C E IN T ERN AL CAPAB ILIT IES

P. 14 5. V I S I O N ARY T RAN S FORM AT ION

P. 16 GROW I NG BY D ES IG N

P. 17 A BOU T F RO G

01
“Design is a toolset
and mindset which gives
firms the capacity to solve
customer problems.”
— T I MOT H Y MOREY

02 BUS I NESS VA LUE OF DESIG N | frogdesign.com


Measuring
design initiatives

Over the last decades, businesses have evolved a greater appreciation for Human-
Centered Design. Most executives can readily cite examples where design has
effectively solved customer problems and delivered a decided business advantage.
Yet despite the evidence showing design investments enhance customer experience
and address business problems, managers are frequently challenged to define the
financial benefits within the confines of traditional return on investment (ROI) analysis.
How do you quantify a disruptive idea that creates an entirely new market? Or a value
proposition that heads off potential new competitors?
The difficulty in creating a business case for design initiatives is that benefits can be
tough to measure, hard to attribute, differ by industry and even company, and pan out
over a long timeframe. However, it can be done.
At frog, we find the most successful business cases begin with a clear and tangible
proposition, are communicated through compelling stories that capture the imagina-
tion, and provide grounded measures that align with guiding business objectives.
What follows is a pragmatic summary of five key sources of value that frog clients
have used to effectively judge the impact of their projects. The resulting framework can
help guide those charged with assessing the potential or actual benefits of a design
project using key tools, metrics and considerations that help demonstrate the tangible
financial advantages of making design a business priority.

VP, ST RAT EGY

Timothy Morey Tim leads a global team of business and product strategists who work alongside frog
designers and technologists to bring game changing innovations to market. He has worked
in Silicon Valley for 18 years in a variety of product, strategy and marketing roles.  A
classically trained strategist, Tim had his eyes opened to the power of design to solve
business challenges through his work at frog.

03
The business
value of design

VISIONARY TRANSFORMATION

ENGAGEMENT & LOYALTY

MARKET REACH

SPEED TO MARKET

INTERNAL CAPABILITY DEVELOPMENT

04
Long-term benefit

05
1. Increase
speed to market

Increasing speed to market delivers a decided competitive advantage that enables


organizations to outpace rivals or react more quickly to change. Techniques applied
to increase speed to market include: rapid iteration to reduce development cycle
time and quickly validate new business opportunities; co-creation with key partners,
employees and end-users to accelerate innovation; and lean methods to build min-
imal viable products (MVPs) that are released quickly and tested with customers to
gather input for further product development iterations.

CAS E E X A MPLES Executing rapidly on a vision


In 2014, CheBanca initiated a project to anticipate the future of home banking. Six weeks
later, they were presented with a compelling vision for 2019 based on detailed customer
data and qualitative insights. Convinced of a significant opportunity with a limited “window,”
management committed to quick decisions and approvals—and endorsed the use of tech-
niques that would shorten the time to market for future digital service innovations.
To create extremely fast product iterations, senior designers and
developers worked side-by-side to implement a “super prototyping” technique that deliv-
ered product code in a condensed timeframe. In parallel, a UI (user interface) toolkit was
developed, providing a library of reusable and documented front-end code that empow-
ered CheBanca to develop new products quickly and consistently. The extended
project team and systems integration partner observed a 30% increase in speed to
market compared to similar projects on the same UX platform.
Saudi Telecom Co. (STC) provides a similar example. In 2015, STC wanted to create
a fresh, modern digital experience to appeal to millennials. Saudi Arabia has a young
population (roughly 65% are aged between 15 and 34) and one of the highest penetration
rates of smartphones, social media and online platforms in the world, yet the experience
for digital natives with legacy telecommunication carriers in the region was poor.
Prioritizing speed-to-market, STC created a new venture called Sapphire responsi-
ble for addressing the key market. Working with lean methods, Sapphire realized its first
MVP in just four months. The digital service offering, launched as “Jawwy,” provided
a responsive and seamless user journey across desktop, mobile and tablet devices that
went on to achieve the #1 customer experience rating (Net Promoter Score)
among all mobile operators worldwide. Read more at www.frogdesign.com

06 BUS I NESS VA LUE OF DESIG N | frogdesign.com


KEY M E T R I CS FO R S PE E D Those initiating lean digital programs at both STC and CheBanca convinced decision
TO M A R K E T makers of the value of the potential market and the need to seize it quickly. They won the
passionate advocacy of executive management because they demonstrated how a
rapid, design-centric approach using tools such as super prototyping and, in the case
of CheBanca, a UI toolkit, would develop revenue streams faster. Both companies then
aligned their organizations to that goal. Key metrics used to justify the design initiatives
and measure the final results include:

• R EDUCE DEVELOPM E NT COSTS AND TIM E LINE

• MEET OR EXCE E D TARG E T REVE NUE

• GENERAT E MV P-FOCUSE D CUSTOM E R FE E DBACK

• S H ORT EN B R EAKEVE N AND CYCLE TIM ES

“Being faster to market is not just about


being first with a new product. It is a matter of
real money because you create revenues much
earlier and reach breakeven faster.”

EX ECU T I VE T EC HNOLOGY DIRECTOR

Matteo Penzo Matteo believes that designers must be “pirates”—fearless, prepared to break the

on speed to market “rules” and able to adapt quickly to changing circumstances. He has more than 18 years
of experience in technology and software and his projects have been featured in the
Harvard Business Review, Forbes, Washington Post, Scientific American, and CNN Money.
His mantra is “deliver design through code.”

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2. Extend
market reach

Of the 30,000 or so new consumer products launched each year, some 40 percent
fail.1 While there is never a guarantee of market success, design thinking helps organi-
zations to minimize pitfalls, launch successful products, and extend market reach.
Tools used by designers include:

1. Deep user insights: Everyone uses market research. Design research goes a step
beyond to provide real insight about, and empathy for, actual users and their needs. Home
visits, shopper shadowing or other immersive interview techniques help researchers under-
stand and document the user journey, offering insights into how products might provide
greater value, ultimately driving new opportunities.

2. Breaking market segments: While companies often think in segments and cate-
gories, customers do not. Design takes a more open perspective, transcending status
quo product categories and market segments to explore radical opportunities that
live between categories.

3. Strategy as a creative act: One limitation of traditional product strategy is its reliance
on extrapolation—or linear conclusions based upon observable trends and tendencies.
Design helps identify an ideal state more closely aligned with customer goals and a strategy
to achieve it. This leads to the identification of future business, offering the opportunity to
redefine markets and generate tremendous value.

CAS E E X A MPLE 100 million customers, 2x increased share of wallet


In the age of MP3s, jukeboxes needed to do more than just play music. In 2010, TouchTunes,
an in-venue music and entertainment company, wanted to overhaul their flagship touch-
screen jukebox. First introduced in 1998, it had been the world’s first pay-for-play digital
jukebox, but it needed to change to meet evolving expectations.
Observational research with bar owners, managers, staff and customers revealed
opportunities to make browsing and selecting music less overwhelming. Designers
1. Castellion, G. & Markham, S. K.
(2013). “Perspective: New product failure observed that it was rarely a single person picking a song, identifying the jukebox as a
rates: Influence of argumentum ad populum
social experience. This sparked the re-imagination of the jukebox as an entertainment
and self-interest.” Journal of Product
Innovation Management, 30(5), 976–979 hub with a distinct physical appearance and an extensive catalogue of venue-specific

08 BUS I NESS VA LUE OF DESIG N | frogdesign.com


songs. The platform was devised to adapt to future digital services and the 26-inch
touch-screen was turned sideways for collaborative song selection.
The new product—Virtuo—sold out at launch in spring 2011 and TouchTunes
shipped 4000 units that year. By mid-2013, Virtuo was in 10,000 venues in Europe and
North America, reaching 100 million customers each month—30 million of them in the
21-24 age group. The new machines generate more than twice the industry average
revenue for jukeboxes.
The product revolutionized the international jukebox market, spurring increased
customer satisfaction and driving higher revenue and profits for venues, operators and
TouchTunes. Today, the platform continues to support the rollout of new services desired by
customers, such as photo booths and karaoke. Read more at www.frogdesign.com

KEY M E T R I CS FO R To get ahead of the trend and block rivals, TouchTunes undertook a design project. The
EXTENDE D MA R K E T R E ACH company has since measured the success of the product using:

• MA R K ET S H A RE

• I NCR EAS E I N SHARE OF WALLE T

• P ERCENTAGE OF REVE NUE FROM NEW PRODUCTS

“Design allows you to step outside the space


you occupy as a company and think more about
customer goals than market segments.”

VP, DES I GN

Thomas Sutton Design is a bifocal activity for Thomas as he insists you need to try to see both the wood and the

on extending trees. In this way, solutions can be created that improve people’s lives in small but significant ways.
Originally hailing from New Zealand, he manages and mentors 30 creative professionals whose work

market reach is particularly renowned in the healthcare field. He believes it is essential for people to embrace com-
plexity and ambiguity in design thinking, but that success is measured in humanizing technology.

09
3. Drive engagement
and loyalty

A customer experience, or CX, is the sum of all interactions a customer has with a company
over time, through digital touchpoints like websites, apps or social media and physical
touchpoints, like packaging or point-of-sale. The more cohesive and meaningful the CX, the
more customers are willing to engage, form a relationship and remain loyal to a firm.
Too often, customer experiences are inconsistent or frustrating. To win and retain
customers, companies need to not only understand their customer experience, but also
proactively imagine what is possible—and then design, implement and manage it.
A three-factor framework of breadth, depth and consistency can be used to assess
a customer experience. Breadth is the number of interactions with the customer. Depth
measures the quality and meaning behind each interaction. Consistency ensures a
cohesive feeling and promise to each interaction.
As competition increases, customer experience may be the only way left for
organizations to distinguish themselves in the market. Companies that focus on the
breadth, depth and consistency of that experience will be rewarded over time with
greater engagement, loyalty and customer lifetime value. Those who don’t risk seeing
their customers leave for the competition.

CAS E E X A MPLE 3x engagement, 75% new forms of engagement


Banco Indusval, a mid-sized Brazilian bank, saw an opportunity to provide wealth man-
agement services to the country’s growing upper-middle class. This market was poorly
served by existing financial advisors and research showed significant distrust amongst
potential customers stemming from historic instability within the local finance sector.
One 40-year-old interviewee had seen five mid-sized banks fold during her lifetime,
wiping out the savings of many people.
In 2015, Indusval launched Guide Investimentos, an investor-centered wealth manage-
ment platform that strived to establish a more empathetic relationship with customers.
Based on innovative personality testing, it developed a deep understanding of each
customer’s needs and risk appetite and then matched them to appropriate agents and
products. Information and education, presented in attractive and readable formats, were
key platform components meant to build knowledge and confidence amongst clients.
Within a year, Guide Investimentos acquired 10,000+ new clients and revenues
grew 46.2% year-over-year (2015 to 2016). Market share also grew by R$1 billion

10 BUS I NESS VA LUE OF DESIG N | frogdesign.com


($320 million) as measured by assets under management (AUM). By 2016, the bank
had 40,000 customers and AUM of more than R$5 billion. Customers were engaging
with Guide in new ways: GuideLife, an insurance and private pension plan from the
bank, attracted over 1000 clients within two months of being offered.

KEY M E T R I CS FO R Moderate improvements in customer experience can generate significant value.


ENGAG E ME N T AN D LOYA LT Y Customer relationships emerge over time through meaningful interactions, which
require companies to be just as committed to serving customer needs as they are their
own. As competition increases and customer empowerment grows, companies who
focus on improving their customer experience can see positive impact to metrics like:

• CUSTOMER ACQUISITION

• CUSTOMER R E TE NTION

• R EVENU E

• MA R K ET S H A RE

• B RA ND EQU I T Y

“In today’s disruptive markets, customer loyalty is more


important than almost any other strategic imperative.
Companies who take customer experience seriously will
thrive, those who don’t risk being left behind.”

CO- L EA D OF CUSTOM E R E XPE RIE NCE

Geoffrey Schwartz Customer expectations are higher than ever before, so business success is becoming more and

on driving engagement more dependent on the ability to meet or exceed those expectations with nearly every interaction.
Geoffrey had his business start building an umbrella of e-commerce sites that disrupted the furniture

and loyalty retail market. With over 10 years of experience in global innovation, he now helps innovate, design and
execute effective business solutions for clients ranging from the Fortune 100 to early-stage startups.

11
4. Enhance
internal capabilities

Businesses, like people, can be cognitively biased. Even if decision makers say they
value innovation, there is always a strong organizational desire for reliability. The status
quo in successful companies remains strong because it is built on effective, reliable
systems that have demonstrably worked well.
The problem is that the status quo can leave a firm stranded in the present by
limiting the ideas under consideration and ignoring contradictory data. The net effect is
a reduction in the flow of innovative ideas and products.
Collaborative processes create an environment where everyone has a role to play in
innovation, sustaining a culture that imagines alternatives and helps bring them into being.
By helping to build a compelling vision that appeals across divisions and drives stakeholder
alignment, a design approach enables a firm to pursue longer-term opportunities.

CAS E E X A MPLE Changing mindsets


Pfizer has long been a successful innovator in the consumer healthcare field. To tap into
disruptive ideas and technologies developing outside its walls, Pfizer initiated a Design
Collaborative in 2015. It partnered with 20 startups taking non-traditional approaches
to healthcare, assessing their potential and bringing the most promising ideas rapidly
to market. The project was complimentary to, but outside of, established innovation
processes at Pfizer.2
Pfizer’s approach is an example of a company seeking to further develop its venture
mindset by improving the novelty, value and breadth of ideas. This is one of the many tools
that design brings into an organization, allowing it to enhance its internal capabilities.

$300 million saved, 100% productivity gains


Known for its industrial expertise, by 2010 General Electric Co. had quietly become
the world’s 14th largest software developer by revenue. These capabilities had grown
opportunistically, primarily in response to requests from specific clients. As a result, little
software consistency existed across the company and significant development efforts
were invested in problems already solved in other divisions. Overall, users of GE software
reported that the quality didn’t reflect the excellence of GE’s hardware engineering.
GE leadership decided to make an investment to create a common software platform
2. Read more about Pfizer at www.frogdesign.com for the company. The Software Center of Excellence would develop a common backend

12 BUS I NESS VA LUE OF DESIG N | frogdesign.com


infrastructure for GE, and the associated UX Center of Excellence would guide a manage-
ment and company culture change to ensure that their software user experience matched
their well-earned reputation for stellar hardware engineering. Leaders, engineers and design-
ers collaborated to build processes and tools to support culture change, together with a core
foundation of design tools and success metrics that would support its UX practice.
Working across divisions, GE identified software patterns common across industrial
hardware, developing a common toolset for GE digital services called the Industrial
Internet Design System (IIDS). In the first year after its launch, the IIDS generated a 100%
productivity gain in development teams, and saved an estimated $30 million for the
company. These digital transformation initiatives provided the foundation for GE Digital—
and GE’s leadership in the industrial internet. Read more at www.frogdesign.com

KEY M E T R I CS FO R Many companies that turn to design projects are seeking cultural change. They want to
ENH A N CI N G I N T E R N AL motivate and inspire staff, foster and retain talent and improve team performance through
CA PA BI LI T I ES collaboration. Successful projects are anchored in metrics relating to corporate culture,
such as learning and development, staff engagement or a reduction in hierarchy.

• I NCR EAS ED COLLABORATION AND KNOWLE DG E SHARING

• I MP ROVED EM PLOYE E E NGAG E M E NT

• R EDUCED R EL IANCE ON OUTSIDE E XPE RTS

• TA L ENT R ET EN TION AND LE ARNING AG ILITY

• EX ECU T I VE A LIG NM E NT

“Many businesses focus on short-term results, but


businesses engaging with design are daring to invent
a different future—and they are able to tap into the
wisdom in their organization and release their staff
to be co-designers of that future.”

DI R ECTOR OF ORGANIZATIONAL DESIG N

Linda Quarles Linda describes her life work as part of the perpetual struggle to simplify the complex. She believes

on enhancing internal in two guiding principles when it comes to design: our idea will always be better than my idea and
bring your strong ideas held lightly. After carrying the torch of organizational transformation inside

capabilities Fortune 500 companies for over two decades, in her role at frog she brings empathy to the hard work
of designing organizations that both delight customers and increase business value.”

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5. Visionary
transformation

Visionary transformations occur when challenges are reframed, identifying oppor-


tunities to bypass competitors and reset customer expectations. At the heart of all
such transitions are teams and leaders with the courage to think broadly so as to
create a long-term perspective over the wider business context.

CAS E E X A MPLE Creating magical experiences


The MagicBand that transformed the visitor experience in Disney World Orlando
began with the question, “How can we help people get through the park gates faster
and easier?” Over time, the team realized that the transformative opportunity
wasn’t simply about waiting lines; it was about overlaying the park experience with a
digital layer to enhance the magic. The design team reframed the essential question
to become, “How can we bring magic back into the experience?” Answering this
question enabled a solution to be designed that not only integrated into Disney’s
strategy, but also aligned to its core values while fulfilling the emotional and practi-
cal needs of visitors.
At the heart of the system is Disney’s MagicBand, a personalized, data-enabled
wristband that grants a visitor entry into the park, allows them to join ride lines seam-
lessly and is an identifier, credit card and room key. Behind the scenes, the MagicBand
connects to sensors and digital services throughout the park, creating a frictionless,
magical Disney World experience for every family member.
To realize this, Disney invested $1 billion in backend infrastructure to integrate
more than 100 technological systems. This included 30 million square feet of Wi-Fi
coverage, more than 300 turnstiles and retrofitted services throughout the park.3
Press reports indicate that since launching, customer satisfaction rates have
soared such that 70% of guests claim they would recommend Disney World. With
most visitors wearing the band, the park uses real-time data to predict crowd flows
so that an estimated 5000 additional guests can enter the park each day without
3. Read more about how Disney fixed the degrading the experience.
magic experience at “https://www.forbes.com/
sites/bernardmarr/2017/08/24/disney-uses-
big-data-iot-and-machine-learning-to-boost-
customer-experience/#7e34fcfa3387” Forbes,
and “https://www.wired.com/2015/03/
disney-magicband/” WIRED

14 BUS I NESS VA LUE OF DESIG N | frogdesign.com


KEY M E T R I CS FO R V I S I ONA RY The Disney example illustrates how design can reimagine a value proposition in
TRA N SFO R MAT I O N the face of shifting consumer expectations, new competitors and business models.
Metrics used to help substantiate the validity and measure the success of such
projects include:

• NEW P RODUCT REVE NUE

• A B I L I T Y TO ATTRACT TALE NT

• I MP ROVED CULTURAL M E TRICS

• MA R K ET R EPUTATION

• B RA ND VA LUE

“One responsibility of designers is to reframe client


problems to ensure we are addressing the right ques-
tions. The true return on investment in design is the
ability to identify the strategic answer to the real,
underlying business challenge.”

EX ECUT I VE DI RECTOR, ORG ACTIVATION

Turi McKinley “When you think about form following emotion,” says Turi, “it’s not just about creating a product that

on visionary works or doesn’t work, it’s about getting to a product or service that evokes an emotional reaction and
inspires the ‘wow’ in people.” With 15+ years of experience in interaction design, design research and

transformation experience strategy, Turi’s clients have spanned domains and include GE, Honeywell, ETS, Humana,
Qualcomm, Mars, MTV, Telstra, Colgate and UNICEF.

15
Growing by design

Human-centered design has long been about more than just the creation of smart,
effective goods and services. It is about developing the collaborative skill sets that busi-
nesses need to build services and experiences for customers.
Companies seeking to drive growth and competitive advantage are increasingly
committing to design as a core aspect of their approach. Indeed, many companies treat
corporate strategy development as an exercise in design to help navigate the extraordi-
nary levels of complexity faced today.
Such an approach has the potential to generate tremendous value, but even as design
becomes integral to the business strategy, there remains a need to justify the spend.
Traditional metrics provide a way to gauge possible returns, but the rigid application of
ROI measures can kill radical ideas in favor of opportunities closer to the core business.
Yet, it is the radical ideas that can transform a company and set it on a new trajectory.
So how can companies get beyond a “way things are done here” mindset and make
space for radical ideas? First, there is a need to understand the power of design. It should
be applied in situations where innovation is required, to cut through complexity or to imag-
ine the future. Design offers a different set of tools than those for optimizing, rationalizing
and streamlining a business, so it cannot be measured in exactly the same manner.
Second, it needs to be understood that the system-level value that accumu-
lates throughout a firm over many years is not easy to fit within basic ROI metrics.
What value will an initiative ultimately bring if it provides a far better customer
experience? How can you measure the value of a business transformation? Holistic
initiatives that enhance multiple aspects of a business need broad measures that
truly capture their value to the firm.
While each company’s design initiatives will be unique, there are—as this Insights
Paper reflects—a wealth of business metrics that effectively measure the business
value of design.

16 BUS I NESS VA LUE OF DESIG N | frogdesign.com


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frog is a global design and strategy firm. We transform businesses at scale
by creating systems of brand, product and service that deliver a distinctly
better experience. We strive to touch hearts and move markets. Our passion
is to transform ideas into realities. We partner with clients to anticipate the
future, evolve organizations and advance the human experience.

To start a conversation about the business value of design in your


organization, contact business@frogdesign.com

www.frogdesign.com

© 2018 Aricent All rights reserved. All Aricent brand and product names are service marks,
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