November 22, 2022
4 min read

Why Good Design is Good Business

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The statement that “Good Design Is Good Business” was first made by IBM’s CEO Thomas J Watson Jr. more than fifty years ago, and it still holds true today - design-driven companies outperform the S&P 500 by 219%. "Good design" has the power to dramatically change an organization's course, so how do you evaluate it?

What Does “Good Design is Good Business” Even Mean?

Prior to discussing the evaluation of design’s impact on business, it’s helpful to define the concept of “good design” altogether. There is a solid foundation (for good design) laid by Dieter Rams' 10 Principles of Good Design, regardless of the medium for which the design is intended. 

According to Dieter Rams, good design:

  • Is innovative
  • Makes a product useful
  • Is aesthetic
  • Makes a product understandable
  • Is unobtrusive
  • Is honest
  • Is long-lasting
  • Is thorough down to the last detail
  • Is environmentally friendly
  • Involves as little design as possible

While the principles are not all-inclusive of every designed object or interface in existence, they do provide one of the more comprehensive and well-regarded traits that many would consider “good design” — which leads to good products, which leads to sales, which leads to sustainable business.  

Consumers are also demanding corporate leadership and accountability in light of unprecedented social and environmental challenges. As these challenges grow, people are looking for innovative but attainable future roadmaps that address them, or at the very least intend to! They know that reactive organizations that don't embrace innovation will not lead the future, as we've seen in the past. 

Most 'leading' companies now embrace Rams' principles in their product design and collective brand experience. As a result, these companies are being recognized as "successful businesses" (at least, by their performance).

Ultimately, teams that embrace ‘good design’ can create clarity of mission, culture, and environments primed for innovation to flourish within an organization. The goal of design-led organizations is to develop products and services that are holistically designed and resonate with their brand as a result of research and a deep understanding of the values and needs of their (future) users.

Who is Responsible for “Good Design”?

Design teams play a variety of roles around the world, each with its own specialized skills, strengths, and weaknesses. In-house teams enable design programs as embedded SME ‘nuclear’ enablers. It is the role of freelancers to provide designers on tap, while universities offer valuable research and resources for R&D programs. Agencies provide unique and fresh perspectives and agile project support.

All of these efforts, often led by the head of design at the in-house design team, can contribute significantly to the creation of good design.

A “Good Design Solar System” in most “good design” organizations, led by a Chief Design Officer, VP of Design, or similar title might look something like this:

Solar system of design careers and leadership

There is no one right way to exercise “good design” for every organization, brand, or product. However, the “Solar System” above is a similar structure to what many leading brands use today to balance both in-house stability and creative direction with a scalable workforce and the rotation of outside consultants to carry out specialized initiatives when needed.

How Do You Measure the Return on Design Investment?

In the same way that sales or marketing performance can be measured, design performance can be measured using key performance indicators. The value contribution of a design team to an organization can be evaluated using these KPIs. What KPIs can businesses use to determine whether their investment in design was worthwhile?

Quantitative factors that measure the impact of good design in business:

  • Sales performance
  • Marketing performance
  • Design awards and prestige
  • Investor or investment sentiment
  • Crowdfunding
  • Material and manufacturing optimization
  • Supply chain optimization

Additionally, consumers and users have developed high expectations for their product and service experiences. People expect more corporate responsibility and transparency with regard to social and environmental matters from companies and brands. Their purchasing power and social influence can directly affect a brand’s profitability.

Qualitative factors that measure the impact of good design in business:

  • Product-consumer relationships
  • Design research and defining new market opportunities
  • Brand or product narratives
  • Culture and mission
  • Ratings and surveys (from users and publications)
  • User-generated content
  • Virality

As sustainability targets become more ambitious and urgent, design leadership is now being incorporated into strategic business initiatives. Nike, for instance, has committed to reducing its carbon footprint and transitioning to renewable energy by 2025; Volvo has committed to becoming carbon-neutral by 2040; Apple has committed to becoming carbon-neutral by 2030 across its entire supply chain and products, and Philips has committed to becoming carbon-neutral by 2040. A common denominator amongst all of these companies? Design leadership is paramount to their mission statements and success.

Ultimately, good design and design-led organizations have been proven countless times to increase profits for companies, which is why it's good for business. In addition to leading with innovation-first and separating a product from its competitors, good design improves the user experience and enhances a brand's image — all of which result in higher customer satisfaction.

Put simply, good design is, indeed, good business.

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