Bullish by Design
As both an economist and designer I welcomed a report by Design
Council entitled “The
Impact of Design on Stock Market Performance”:
“Design is a critical component of business performance. We’ve
heard designers, commentators and companies say it. But, to date, the evidence
for the link between shareholder return and investment in design has been
scarce and anecdotal.”
While I strongly recommend this report to designers and managers alike I’m
afraid it is going to make more than one economist frown. Design is a critical
component of business performance, no doubt. That said, I have troubles linking
design directly to stock market prices, even after reading this report. Companies
are valued using financial metrics — factual and verifiable (behold the accountants
and controllers do their work correctly and honestly.)
More important than trying to link design to share
prices, is the relation between design and business in general (not specifically
stock market performance). In my opinion better design leads to better products,
and eventually improved business performance. My criticism is directed at their
methodology and the variables used to explain the relation. To use stock market
performance as the basis for business performance is dubious. Moreover, nowadays
share prices are predominantly determined by demand and supply. It is
naïve to assume that share prices actually reflect how a company
is really performing.
I would have preferred to see research based on the link between design and
internal business performance, such as sales, customer satisfaction and brand
experience (i.e. better design leads to % increase in sales.) In my opinion
share prices are too volatile and include too much noise to conclude to anything.
That said, the choice to use stock market performance as a metric is obvious and practical,
being freely and publicly accessible information.
Despite the somewhat flawed methodology, this report is an excellent read and,
in all honesty, I could not agree more with their findings. Design matters!
The general ideas elaborated throughout this report make sense and have been
researched extensively. Design is indeed a critical component of business performance
— I’m just not so sure about stock market performance as a good
and reliable metric.
This item was posted by on Friday, April 23rd, 2004.
Categories:
You can follow comments on this item via the RSS 2.0 feed.
Comments are closed.
