Design spend is the largest single sum that the board knows least about, says Raymond Turner
Henry Ford is reputed to have said, ‘It is the product, not the business, which pays the wages’.
At the heart of this statement was the realisation that the product, and in today’s world we would add the word ‘service’, generated the means to survive and succeed. Ford did not need to be persuaded about the role of design in his business. He could see that design needed to be the business engine, not money. He unashamedly put his product on a podium and knew that it could not exist without design.
The fact is that all products and services are dependent on design for their very being – without design they cannot exist, and getting the most from the investment in design is a challenge for client and consultant alike.
The challenge facing the design client, irrespective of company size or sector, is ‘how do I increase my return on design investment while reducing the cost of that investment?’ The challenge facing the design consultant is ‘how do I ensure that my client sees their commitment to design as an investment not a cost?’
Every successful client/consultant relationship has, at its core, the aim of using design as a means of adding value, and so giving a return on the investment in design. If ‘added value’ is not at the core of the client-consultant relationship, the inevitable consequence is that the design work will be seen as a commodity, where the cheapest wins the day – and, by definition, only one supplier can be the cheapest.
So, how do design clients ensure the money they spend on design adds value to their business, and how do design consultants ensure they are treated as business partners, not suppliers of commodity services?
To create the greatest value from the financial commitment being made in design, two factors should always be taken into account.
The first concerns the fact that the amount spent on design is, usually, the largest single sum that the board knows the least about.
Money is spent in more departments, by more of the management hierarchy, on more design activities than anyone can imagine. So much so that the expenditure estimates are often out by a factor of four, and sometimes by a factor of ten. When challenged with these facts, asked if anyone around the boardroom table is responsible for the total amount being spent on design, the response from directors and managers varies between awkward shuffling, disbelief and alarm.
Every pound spent on design is saying something about the company spending it. If a lot is spent, then a lot is said. The questions are if we know what we are saying through design, if we are saying what we want to say, and if anyone is responsible for saying it.
Harnessing and then focusing company-wide design expenditure on realising corporate objectives is one of the broadest and most ambitious targets that design investment can have.
The second factor concerns the fact that design impacts on the key business ratios that businesses use to measure their own success, including – but by no means exclusively – the measures of gross margin, return on investment and net margin (see box).
Creating value through design is a multi-skilled task, where designer and client work as a fully integrated team. It is only by developing a mutual understanding of what to expect from the investment in design that the confidence will grow to continue the collaboration. Do this and the effectiveness will be self-evident.
Raymond Turner is the founder of Raymond Turner Associates. This article was based, in part, on a design effectiveness workshop he ran for the Design Business Association at the Cannes Lyons advertising festival
Design impact on business ratios
Gross margin: The difference between ‘value of sales’ and ‘cost of sales’. Design can impact positively on both sides of the ratio. The market appeal of products can be enhanced by design, while the cost of providing those enhancements can be reduced. This is the sphere of product and packaging designers, development engineers and prototyping specialists
Return on investment: Getting the most out of capital spends on plant, premises and people. Design can deliver a step change in efficiency in these areas. It can improve factory and office planning, make shopping more enticing and make public transport systems more pleasurable to use. This is the sphere of interior designers, space-planners, retail designers and architects
Net margin: What you are left with when the costs of administration, sales, advertising and promotion are taken out. Design can usually deliver a 10 per cent minimum reduction in these costs. This is the sphere of graphic and communications designers, together with the specialist support activities of photography, copywriting, art working and much more