Translating design value into numbers – an interview with Peter Zec
This way known assumptions have been proved and old prejudices that “design happens by itself” have been refuted. For the first time the intangible value of design can be calculated, and therefore identified, evaluated and compared to other values of development in companies. If long-term investments are made into well designed products, and design is used as an instrument of strategic leadership, superior profit is made, high sale figures are achieved and a clear advantage toward the competition becomes visible. This way an achieved quality becomes quantitatively measurable.
„I love this book because it is blowing away the age-old stereotype that design is just about culture and depends on the goodwill of a few mentors in industry. For the first time, “Design Value” demonstrates in a rational way that design is creating value and strategic potential for any company which embraces and applies its true strategic principles: creative business strategies, better and more sustainable objects, smarter functionalities, easier-to-use software applications and more inspiring, human-centric experiences. Design influences and defines about 80 percent of buying decisions and user satisfaction – now Peter Zec and Burkhard Jacob prove that design is also adding “beauty to the bottom line”. Hartmut Esslinger, founder and longtime co-CEO of frog design
We’ve talked to Dr. Peter Zec, co-author of the book Design Value, longtime president of the Design Zentrum Nordrhein Westfalen (Essen, Germany) and initiator of the Red Dot Award. Zec was president of the international umbrella organisation of design ICSID (International Council of Societies of Industrial Design), and for 20 years has been working as a design consultant for various international companies.
Together with Burkhard Jacob you have defined the Design Value – previously unexisting tool. How can it be put into use?
Every year Red Dot competition receives more entries while the quality standards are rising simultaneously, and while design has become one of the most important criteria for consumers’ buying decisions. But even though investments in design are all too often still misunderstood as expenses.
This is an unsatisfactory situation for designers as well as design managers because they know exactly the added value that stems from design. At times the differences are so big that one could almost talk about two separate worlds.
On the one side are the “hard” facts of the economy: prices, costs, investments – on the other side the “soft” facts of design: quality, use, benefits for users.
If both sides had the opportunity to come to an understanding about the value of design, then this would be an advantage for everyone. As the economic added value of good design has previously not been measurable and thus not been utilisable for strategic design management, we have been searching for a way to measure this value which is generated by the use of design.
Therefore we have looked for a way to “translate” the value added through design into numbers.
A formula to measure the value of design
We have developed a formula which for the first time makes it possible to calculate the previously rather intangible design value and thus to identify, assess, and compare design as a value driver in companies. The purpose of its determination lies above all in giving the industry a better understanding of the chances and risks design offers, because to date design has at best appeared as a cost factor in the balance sheet and not as part of the earnings.
The design value is the monetary (present) value determined at a specific point in time. It is calculated using the design-relevant earnings before interest and tax (EBIT), the design strength, the design continuity, and a valuation of the design property of a company.
What was the obstacle in the measurement of the Design Value until now?
Unfortunately, values such as innovation, quality and customer benefit cannot be measured in numbers. The reason for this lies in the dogma of business economics to limit the purpose of a company to profit maximisation. Obviously, the pursuit of profit is a principle which motivates the entrepreneur, because profit as part of the value creation accrues to the owners of the enterprise. Profit, however, is preceded by the questions of how the entrepreneur can create this value and how the company can survive in the long term.
Brand is not the goal but rather the result of innovative and well-designed products
Sometimes there’s some confusion regarding the relation of brand and design management. Where is the main difference?
A brand is not the goal; it is rather the result of innovative and well-designed products. Design management is aiming at the quality of products, brand management is based upon it. It is always dangerous if a company just concentrates on building up its brand without ensuring a consistent product and design management.
Companies should and must continue to face challenges. If they do not, their spirit of competition can suffer. The brand alone cannot carry even the biggest companies if new, well-designed products are missing. In fact, just the opposite is the case: the death of technological and design innovation, especially in times of crisis, weakens the design value and with it the value of the brand very quickly.
Design cannot be used as a universally applicable ‘magic bullet’ that will enable companies to achieve the success they desire. Even if in many cases it does not seem to be the case, success with design cannot simply be achieved casually, with relatively little effort but requires a well thought-out and rigorously implemented management strategy.
Design is more „Mens sana in corporis sana“
To be successful with design does not mean concentrating on one product or one segment of the product range. However good and successful they may be in their own right, individual products count for little when it comes to securing a company’s success. Design has to be viewed and implemented as an integral part of a company’s overall management strategy.
It is also true that a struggling business cannot recover solely through design. In fact the reverse is true with design, true to the Roman saying “mens sana in corporis sana”. Successfully managed companies can either become more successful through design or at least safeguard their success in the long term. The best way of ensuring this is a corporate management strategy that is both innovation and design-oriented.
When the sun comes up, you better start running
Today innovations are the most important factor for manufaturing companies, since they are often the sole distinguishing characteristic in a tough fight for market shares. Those who are not innovative can only trail behind; as a pursuer however, you always have to share the market with many other companies. It therefore pays to find new ways or muster the courage to tread new paths. Unfortunately it often happens that companies are highly innovative, but do not think about communicating their innovations – with the result that competitors copy their innovations and consumers perceive them as innovative instead.
In his book „The World is Flat“, Pulitzer laureate Thomas L. Friedman tells an anecdote which contains the following Chinese saying:
“Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up it knows it must outrun the slowest gazelle or it will starve to death. It doesn’t matter whether you are a lion or a gazelle. When the sun comes up, you better start running.”
In these words there is a lot of wisdom when you translate it for business purposes…
Title image: Canteen Double Wall Mug (Bodum) – Red Dot Winner. Photo source: Red Dot Award.