Good design is good business.
Coined in 1973 by the legendary businessman Thomas Watson, Jr., this phrase has since become something of a mantra among design professionals and business consultants alike.
The former IBM president understood like no one else before him the power of good design to fuel business growth.
Under Watson’s 19-year leadership, “IBM grew from a medium-sized business to one of the dozen largest industrial corporations in the world.” By the time he finally stepped down from his position in 1971, IBM had become a multibillion dollar company that employed more than 270 thousand people.
And though IBM no longer dominates the tech market as it had during Watson’s influential tenure, it has undoubtedly left a lasting impact on the business world––one that can still be observed to this day.
The Real Value of Design
The most successful companies of the modern era all understand that in this age of increased competition and unprecedented demands on customer attention, good design is more important than ever before.
According to John Maeda, former design partner at Kleiner Perkins Caulfield & Byers:
Top companies are leading with design. Others that aren’t willing to invest in design because they think it can’t be measured or tied to ROI will fall behind. Business as usual is no longer good enough.
Yet even still, many businesses fail to truly comprehend this.
They continue to look at design as either a luxury (at best) or a frivolous expense (at worst). They tend to equate design with mere aesthetics, an afterthought to be considered at the tail end of the product — or business — development cycle, if at all.
And while aesthetics — branding, logos, websites, marketing collateral, etc. — are all certainly important aspects of design, they don’t make up the whole picture.
As Steve Jobs famously put it: “Design is not just what it looks and feels like. Design is how it works.”
Good design is about ensuring a positive end-user experience at each point of the sales process, whatever that might look like for your business.
Consider Apple, a company that has gone to incredible lengths to make certain that each phase of buying a new computer — watching a stylized WWDC keynote address, scrolling through the sales page, walking into an Apple Store, interacting with the product display, unboxing the product, using the product — is as easy, pleasurable, and yes, beautiful, as possible.
By following the example set by Watson’s IBM and investing in good design rightly understood, today’s business owners can place themselves in a strong position to capitalize on the modern consumer market.
Good Design Sells (A Lot!)
One of the most frequent objections to investing in good design is that there is little to no direct correlation between design and profit.
Those who believe this often argue that focusing on the design of their business, its brand and its assets, is really just a large distraction from the core function of their business — i.e. generating profit and sales.
But good design and increased profits are in fact much more closely related than they might appear.
According to a 2015 study from the Design Management Institute, companies with “strong” design outperformed those with “weak” design by 228 percent on the S&P stock market index over a period of 10 years.
These “design-centric organizations” included several household brands like Apple, Coca-Cola, Ford, IBM, Nike, Starbucks, and Target.
Another recent McKinsey study examined the design capabilities of 300 publicly-listed companies over the past five years and found that:
The companies who perform best in terms of design outperform their industry peers by a wide margin. Their growth in terms of revenue is nearly double that of their peers, while their growth in terms of shareholder returns is 70% higher.
And yet, notwithstanding this clear and demonstrable correlation between design and profitability, the McKinsey report showed that many companies have been hesitant to hop on the bandwagon.
This hesitation signals a potential opportunity for savvy business owners to quickly gain a leg up on the competition by choosing to follow in the footsteps of Apple, Coca-Cola, Disney, et. al. and start taking design seriously.
Good Design Creates Credibility and Consumer Trust
It’s no secret that consumer distrust toward marketing is at an all-time high. In order to interact with their target audiences, brands now must overcome enormous levels of public skepticism.
This is particularly true with regard to companies’ online presence, as many consumers’ first interactions with businesses — especially in the era of home confinement due to COVID-19 — are often through their websites.
Unsurprisingly, research shows that poorly-designed websites aren’t viewed for a sustained period of time. Nor are they particularly well-trusted.
What’s more: Of all the reasons participants gave for dismissing a business’s website, a whopping 94 percent were design-related. Only 6 percent were related to actual content.
According to one study:
The look and feel of the website was clearly important to the participants. … Design issues affected first impressions and could lead to the mistrust of a website.
Customers doing business online want to know that they’re dealing with competent and reliable professionals — not scam artists. Investing in quality design demonstrates a certain level of credibility in the eyes of most consumers.
Just look at the two example websites below … which would you be more likely to trust with your credit card?
In addition, a well-designed online presence can establish trust with its audience.
Nearly four in five consumers studied in 2017 said that a business would first need to establish a trusting relationship with them before they would ever consider actually buying something from it.
And so, companies that choose to prioritize the design of their web presence can significantly increase the likelihood that prospective customers will follow through with making an online purchase while also inspiring the sort of customer loyalty brought about by strong credibility and trust.
Good Design Makes Brands Memorable
While strong products and top-notch customer service are still undeniably important, they are no longer enough for businesses to stand out.
The internet has dramatically reduced the barriers to entry in most markets, ushering in a new era of cutthroat competition. Hundreds of thousands of companies are all now competing with one another for the same users’ attention — which has already plummeted to record low levels.
The average American is now bombarded with around five thousand advertisements per day! And of this number, only about 12 on average are strong enough to leave a lasting impression on their viewers.
What makes these particular ads so memorable? Why, design, of course!
Let’s take Coca-Cola, for example.
The name itself probably evokes for you the company’s familiar logo, the iconic shade of red, the design of the can, the famous glass bottles — all because of the degree to which Coca-Cola has prioritized its design and remained consistent with that design.
According to Robert McDorman of North Star Marketing:
From the name to the logo, from the product to the messaging, everyone knows Coca-Cola. It has been said that ‘Coca-Cola’ is one of the most widely-recognized terms worldwide, eclipsed only by the word ‘okay.’
Interestingly, their logo has remained largely unchanged since the 1900s. The script font and classic red are recognizable all over the world, even when displayed in different languages. Even with a massive ad budget, the sheer scale of this branding phenomenon would be unsustainable without an unwavering commitment to consistency.
Because of all this, consumers are significantly more likely to recognize, recall, and look favorably upon a Coca-Cola advertisement than they would be for one of its competitors’ ads.
With this knowledge in mind, forward-thinking business owners should adopt a thoughtful approach to the design of their brand and products and apply that design consistently.
In this way, they can build the sort of familiarity required to stand out from the competition and firmly establish themselves in the minds of their consumers.
Good Design Still Makes Good Business Sense
As IBM’s corporate website makes clear, Watson’s unique (and for the time, radical) philosophy of design has influenced some of the most successful companies of the 21st century — and of all time!
Design is now seen as essential for organizations to express their brands and their values — from Apple’s iPhone, to Starbucks’ in-store experience, to Disney’s entertainment venues.
These innovative companies have all taken note. Yet it still seems that many business owners have yet to get the message.
To be successful in today’s competitive environment, these businesses must understand that design is a core business expense as vital to the overall success of their companies as R&D, marketing, and sales.
Because an investment in design is fundamentally an investment in business — its customers, its brand, and ultimately its bottom line.