Good UX design is good for business

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Companies that invest in the design of their product and service are economically more successful than their competitors. However, this is about much more than just fonts, colors, shapes and beautiful logos. It’s about the interdisciplinary design of processes, ways of working and innovations.¹

Holistic UX design means investing time in research, usability tests, user interviews and their evaluation before implementing the actual product. At first glance, this may seem costly and time-consuming. In the long run, however, even minimal adjustments increase sales.

And this is also a fact: The earlier errors or incorrect assumptions are discovered in the development process of a product, the less expensive it is to correct them. On the other hand, it is most expensive if the errors are only discovered when the (software) product is almost finished or completely finished. It therefore makes sense to involve users as early as possible in the design process, for example through interviews and testing, in order to prevent possible incorrect development.²

Early integration of UX design can thus save costs that arise from late, costly adjustments. Furthermore, a good user experience (UX) relies on good customer and user loyalty, which in turn increases sales.

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We therefore recommend regular and iterative testing in order to optimize the product in the long term and to develop only those features that actually offer the users added value. We are convinced that a good UX design is not a cost factor, but on the contrary a revenue driver.

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McKinsey study on design

A study by McKinsey also shows that participating companies that invested more in design were able to increase their sales and shareholder returns almost twice as fast as their competitors on an annual basis. The five-year study monitored 300 companies for their design activities. The aim was to find out whether the value of design can be measured at all in fact.³ McKinsey compared the design orientation of the companies with their financial performance and derived the McKinsey Design Index (MDI) from this. The result: those companies that offered design-oriented products and services achieved on average 32% higher revenues and up to 56% higher returns than their competitors without a focus on design.⁴ The authors of the study identified four areas which companies should focus on in order to be able to make a concrete contribution to value creation with design. These four areas are the basis of the MDI.

Analytical leadership

Design can and may be measured in numbers and is therefore also the responsibility of management. The companies with high MDI scores monitored design performance with the same precision and consistency as sales and costs. Even small adjustments, such as in the usability of a website or store, can yield big results.

„The CEO of one of the world’s largest banks spends a day a month with the bank’s clients and encourages all members of the C-suite to do the same.“

McKinsey, The Business Value of Design³

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Cross-functional talent

Interdisciplinary teams are the foundation for user-centered design. The companies with a high MDI score make user-centric products and services the responsibility of all employees. In particular, methods like design thinking are there to engage a company across all departments.

„One of the strongest correlations we uncovered linked top financial performers and companies that said they could break down functional silos and integrate designers with other functions.“ 

McKinsey , The Business Value of Design³

Continuous iteration

Design is a continuous process that should involve users at every stage of development. Companies with a high MDI score reduce the risk of a new development by constantly listening, testing, repeating, discarding and improving – and always in dialog with the end users. This iterative approach reduces the risk of undesirable developments, and processes and working methods are also continuously put to the test.

„Design flourishes best in environments that encourage learning, testing, and iterating with users.“

McKinsey,  The Business Value of Design³

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User experience

Good design is not just limited to the product or service. Rather, it is about a holistic user experience, whether online or offline.
Companies with high MDI scores do not distinguish between physical, digital and service design. Barriers between departments are counterproductive. The goal is to create a holistic user experience.

„Only 50 % of the companies we surveyed conducted user research before generating their first design ideas or specifications“

McKinsey, The Business Value of Design³

Conclusion

The companies that achieved a high MDI score in McKinsey’s study nearly doubled their growth and return on investment compared to their peers. The study thus establishes a link between design best practices and financial performance. The important thing here is not to do well in just one or two design disciplines, but to be strong in all four dimensions. Thus, companies that want to design good products and technologies should take a holistic approach.

„Design is more than a feeling: it is a CEO-level priority for growth and long-term performance.“

McKinsey, The Business Value of Design³

And the companies that strive for this and put design at the center of their activities can also expect a good MDI score. This disproves the myth that UX design is uneconomical, because good design is also good for business.

Sources:

Eva Nenninger

Eva Nenninger

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