Why design-driven companies are actually a good idea

In the digital economy it becomes increasingly easier to copy business models, product features and marketing tactics. Hence, one of the last resorts of competitive advantage is UX and strategic design.

Design-led companies

In a recent article by WIRED, Airbnb’s new Head of Design makes the case that ‘design-led’ companies don’t work. This is really surprising to hear from a company that is usually the startup poster child for creative culture and design thinking. The main reasons cited against creating a design-led organisation were that designers don’t deserve a seat at the executive table and inherent organisational discrimination against non-design departments. The rest of the article explores how designers should be integrated into an organisation effectively, ranging from elite consultants to more democratically distributed team structures. Airbnb’s new approach is to employ project managers that are supposed to bring in the point of view of the end users.

In order to bring up some arguments against this anti-design approach, it might be useful to define what design-led actually means: design-led organisations utilise design tools, processes, and mental models not only for aesthetic and functional product or service design purposes, but even more to generate insights to make better strategic decisions. Unfortunately, the majority of designers and design agencies are predominantly focused on the former, i.e. the downstream design activities. It is very rare to find strategic design competencies in the traditional realm. Hence, it’s often the innovation consultants who utilise the power of design for higher strategic purposes. Even more so, building up a healthy design culture is actually a good idea. This article explains why.

Design capabilities result in better financial performance.

About half a year ago the ‘The Business Value of Design’ report by McKinsey made waves across the business world. After analysing over 300 companies and over 100.000 design actions, McKinsey found that design-led companies gained over a five-year period ‘32 percentage points higher revenue growth and 56 percentage points higher total shareholder return growth for the period as a whole’. These findings apply to all industries. In a nutshell, companies that track design activities, relentlessly focus on delivering great user experiences, retain top design talent and iterate like crazy have a good chance of doubling their revenues and shareholder returns.

Design is about solving customer problems.

‘The point, Schleifer says, isn’t to create a “design-led culture,” because that tends to tell anyone who isn’t a designer that their insights take a backseat.’ Every company has a culture, either by design or organic evolution. Explicitly stating that a company runs on a design culture is indeed a strong statement, and it’s the right one. It’s not about worshipping designers as a profession, rather a clear commitment to put customer needs and experience above all else. In a design-led culture, every single employee is encouraged to contribute his insights, if they help to deliver a better customer experience. Designers solve customer problems, and hence their mental models need to cross-pollinate the whole organisation to effect change. If an organisation doesn’t make this intention explicit, it can be sure that its culture will evolve one way or another, so it’s better off providing a clear directive.

Design is everyone’s job.

After all, everyone is a designer, hence it is an effective base to lead a company’s activities in one direction — delighting its customers and business partners! While designers are the ones most visibly designing, managers also design most of their time, invisibly though. By allocating budgets and creating organisational structures as a company scales, they have a huge impact on design processes and the ability to gather and act on customer insights. Thus, by calling for a design-led organisation, one could also name it customer-led. Without making a big fuss about it, Jeff Bezos recognised this early on, which is illustrated nicely in an early interview from 1999:

Without a doubt, Airbnb will still continue to deliver a great service, as they have plenty of talent, and one shouldn’t get too attached to discussing the formalities of being design-led over other approaches. If you want to learn more about building organisational structures that allow for more agility and customer-centricity, get in touch here.

Sources

Wired, January 2015, Cliff Kuang: Why AirBnb’s new head of design believes ‘design-led’ companies don’t work.
https://www.wired.com/2015/01/airbnbs-new-head-design-believes-design-led-companies-dont-work

McKinsey Quarterly, October 2018: The business value of design report.
https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/the-business-value-of-design

CNBC Business News, February 2019, Jordan Malter: Jeff Bezos has an ambitious vision for Amazon in 1999 interview.
https://www.cnbc.com/2019/02/08/jeff-bezos-1999-interview-on-amazon-before-the-dotcom-bubble-burst.html