A big statement.
There are many design agencies doing design audits. They are usually done as part of discovery for a branding or rebranding project. Typically they work with the marketing/comms people and look at competitors and customers to find out where the brand sits in the marketplace and the mind of the customer.
However there is a bigger picture approach; looking inside the company to identify where design can or does add value for the business. Trying to develop a design led business where it is integrated throughout the business.
The designing demand program in the UK did a great job of showing how to examine, then build design into a business to improve performance. Similarly, the Australian Federal, Victorian and Queensland governments have thrown buckets of money at consultants to prove that design can analyse and improve business performance.
The reality is until there’s a methodology every designer can use there won’t be any major uptake of design audits, design integration (or similar) by business owners. Our solution is to look at set of core activities found in every business, develop a system to analyse these activities and demonstrate which of them creates value. Then you can look at how design can add further value.
What is value?
Value in a business has two components, value capture and value creation.
Value capture is the process of retaining part of the value provided in every activity. For example, if you bring $1 million of revenue to a client, and you charge $100,000, you are capturing 10% of the value you created. But there’s a catch: the more value a seller captures (and therefore keeps), the less attractive their offer because there is less value captured by the buyer. One example of this would be a seller merely increasing the sell price to capture more value for themselves from a product.
This is the value that a business adds for its customers. This can be ownership of a product or a real dollar value. It can also be an intangible such as a satisfaction, user experience, physical connection or brand ownership.
Value creation and capture rely on having a system to determine the value of a product and the activity that creates it. That system is value chain analysis. Design can play a big part in this.
The value chain
The value chain recognises there is a business system that can capture and retain value from any product or service. Every business has a value chain. In some cases this goes unrecognised and the true potential of the business is never realised. In other cases business owners are able to analyse their value chain activities and gain competitive advantage. Designers who understand a value chain can also audit an organisation’s use of design and demonstrate how design can increase competitive advantage.
The design value chain
We have identified 10 activities that can make use of design to add value in every business:
- Research and development
- Human resources
- Inbound logistics
- Outbound logistics
- Marketing and sales
So how does this work?
Let’s use the design value chain project we did for a manufacturer based in the south east of Melbourne as an example. We used co creation workshops to uncover potential in their value chain activities.
The manufacturer produced their product in south east Melbourne and delivered to building sites across the state. An analysis of their outbound logistics showed there were a large number of deliveries to the western suburbs where there was a building boom.
Deliveries were made at the start of the work day. Contractors who miscalculated the quantity of material had to wait until the following day for further deliveries.
The cost of each delivery was calculated using their internal costing methods. Analysis showed that the manufacturer could create more value for the contractors by opening a distribution centre in the western suburbs. This would decrease transport costs because one large delivery could be made to the distribution centre and then shorter, smaller, site deliveries. It also gave contractors quick access to products if they ran short during the workday.
The manufacturer increased his value capture by reducing logistic costs and the contractor gained value by not having to stop work for a whole day if he short ordered.
Where does design come into the value chain?
The design value-add came through signage and identification of the new distribution centre as well as printed communication to contractors. A proposal to design a display centre was also developed. This would help with add-on sales to contractors when they visited the distribution centre. The co creation workshop also highlighted that contractors were poor at calculating the quantity of material needed on a job. This led to a redesign of the online ordering system to help contractors calculate materials.
A fact sheet ready-reckoner was also proposed as part of a marketing collateral review. The return on investment was calculated to show the payback period for the new centre.
Each of the 10 activities was analysed and a total business case for design (including a return on investment measure) was presented to the client.
Thinking about a design audit as a way to see how design is used throughout an organisation is more likely to give a total picture. This will help shape the branding process.
Want to know more about design pricing. Check out our Lunchtime learning on Spilling our guts on pricing.
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Design Business Council
Greg’s passion is the research and development of methods that improve design management and the role of design in business.
Greg has developed a series of processes and tools to help designers manage their business better along with a series of workshops that show designers how to use these tools.