Non-design-friendly firms set to fail, warns report

UK businesses must ‘use design or fail’. This is the stark warning to emerge from the Design Council’s fifth annual report – Design in Britain 2004 – a survey based on interviews with 1500 companies investigating how design operates in business today.

For the first time, the findings in the survey provide a ‘real body of evidence’ highlighting the direct relationship between the effective use of design in UK businesses and financial performance, according to the Design Council.

Overall, it reveals that companies that prioritise design are experiencing a positive and direct impact on all aspects of business performance, including sales, profits, quality, product, service development and market share.

Rapidly growing businesses rate design as the second most important factor for their success – ahead of financial management, while a third of the UK’s fastest growing companies consider design ‘integral’ to their business. Design is credited with boosting profits in 13 per cent of growing businesses, and 40 per cent of design-led businesses have expanded into new markets as a direct result of their use of design, according to the report.

Conversely, almost half of the companies that are failing to use design effectively are being forced to compete mainly on price, cutting margins and risking their long-term viability. Comparatively, only one fifth of those companies that prioritise design are being driven to compete on price.

However, the report quite clearly shows that, in general, companies are not doing enough to integrate design fully into their strategies. Last year, a similar design bugbear emerged, with statistics showing many companies failing to realise the full potential commercial value of design (DW 11 December).

In this year’s survey, only one third of UK companies have introduced a new product or service to market in the past three years, implying a continuing stagnant innovation process. More than six out of ten companies do not include design or designers in their product or service development services and a mere 3 per cent of companies that invest in design have an accounting mechanism in place to measure their return on investment for design projects.

Harry Rich, deputy chief executive at the Design Council, says, ‘The findings this year are significant. More companies should be working with designers beyond the packaging design process on the early stages of product design. Designers and business advisors should take the report, use it as evidence, and go out there to convince companies of the case for design.’

To encourage this, the Design Council is publishing the report in PowerPoint format for the first time.

Just as businesses are advised to ‘use design or fail’, equally, designers must react to the findings with urgency and meet the challenges thrown up by the report head on, says Rich.

The research is taken from the Design Council’s 2004 National Survey of Firms.