Attaching a value to design work

A recent Design Council survey reveals how much UK companies are spending on design. Mike Exon asks if it is paying off.

Design professionals might often be accused of too much back-slapping, but for once it seems warranted. Thanks to a first-time, untitled survey by the Design Council and published last week, the business of design has more than proved its worth.

Almost 3 per cent of UK business turnover is accounted for by in-house design work or external consultancy services, according to the council’s study. It reveals that the recent boom in design spending has seen clients totting up an enormous £26.7bn a year “on design”, in an industry that now employs one million (fulland part-time) people a year in the corporate sector.

Three per cent is significant – £26.7bn is serious. However, let’s be clear about what we are dealing with before we get carried away. This is design in the broadest sense of the word. Design consultancies are certainly not responsible for generating 3 per cent of corporate output, not without the help of manufacturing industry anyway. There is design and there is design (although Richard Seymour might have something to say about this non-active use of the word).

For this study, the council has had to let surveyed companies use their own definition about what design actually is. As Design Council chief executive Andrew Summers explains, this differs depending on whether the company in question is Rolls Royce, or a financial services business. The Design Council contacted some 700 chief executives and design heads for its research.

“This is very much about design in the broad sense, as defined by the companies themselves,” says Summers. “This survey indicates, in hard cash terms, just how seriously many of the UK businesses are investing in design and why.”

Comparing these design industry figures with other sectors is not straightforward. But Summers points to UK research and development spends, which accounted for 2 per cent of corporate turnover in 1999. The R&D sector receives far more recognition of its value by the business community and support in the way of Government initiatives, he suggests. These figures, he says, demonstrate it is high time for the contribution of the broader industry to be better recognised.

“Senior managers should be taking more account of design as something which can add value to their business,” Summers adds.

But what do these figures represent in terms of design consultancy work? In order to discern the worth of design as a bought-in marketing services discipline, we need to be much more specific with our definitions. There are a number of reports around about the value of the sector, it is just that “the sector”‘ is never the same thing.

According to the Design Council’s open definition, the direct contribution to private sector business made by bought-in design services was a whopping £4.5bn for the year ending 1999. (Last November, in a separate report, it valued consultancy services being worth £6bn – presumably including public sector work.)

Other studies are more modest about the industry’s worth. Data from accountant Willott Kingston Smith & Associates’ data paints a picture of the industry from another perspective: the combined turnover of its top 30 UK design groups was £339.2m in 2000 (up 22 per cent on 1999).

Interestingly, compared with the top 30 UK groups in advertising, media buying, PR and direct marketing/ sales promotion, design businesses account for proportionately small amounts of turnover. In fact, only 2.81 per cent of the combined revenue of the top players in every sector.

WKS’s study is much more in line with Design Week’s own Top 100 survey which, last year, saw UK annual turnover of the biggest 100 consultancies at £792m. (Our latest figures will be published at the end of next month).

March will also see the publication of the second Department Of Culture Media and Sport mapping document for the creative industries, which will look back over the last two years, sector by sector. Hopefully, this will do more than its last one in 1998, which deplored the fact that “definitive statistics are not collected” in terms of design industry revenues. We shall have to wait and see whether its 13 March report uses yet another definition of what constitutes the design industry, or uses the Design Council’s pragmatic, open definition.

Clearly, the council now has its work cut out to convince Government and the 700 corporations it has talked to, that the industry is under-valued strategically given its new-found worth. Encouragingly for Summers, 88 per cent of businesses recognise that they would actually benefit from further advice.

Design Council figures for the UK

Businesses invest £26.7bn a year in design (see breakdown of figures by sector in table below)

3 per cent of all business turnover is spent on design

46 per cent of businesses say profits increased by design

46 per cent say design improved market share

58 per cent use design as a strategic business tool

Big businesses spend £5bn a year on design

Businesses with fewer than 20 staff spend £11bn a year on design

One million people are employed in the design sector

Source: Public Corporate Economic Consultants, 2000

Value of design by sector

Financial and business services Worth: £8.7bn Staff: 438 000

Construction, transport, storage and communications Worth: £6.3bn Staff: 148 000

Manufacturing Worth: £5.1bn Staff: 245 000

Consumer services Worth: £4.9bn Staff: 170 000

Agriculture & Extraction Worth: £1.7bn Staff: 2000

Source: Public Corporate Economic Consultants, 2002 The report can be found at: www.designcouncil.org.uk/news/archive/newspr56.html

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