The ROI case for why a company should invest in design, particularly user-centric design, beyond simply market research, is often hard to make in terms of hard, bottom-line numbers. Often, the business sponsors or owners of projects either just believe in or don't believe in the importance of investing in design as a fundamental part of the development of products, services, and interfaces with customers. With this context, PG at work sends around a very interesting experiment in trying to quantify the value of user experience-focused design, by the design firm Teehan + Lax.
In brief:
In brief:
The UX Fund was created to test our belief that companies who deliver a great user experience will see it reflected in their stock price. On November 1, 2006 we invested $50,000 in 10 companies we felt:
1. Demonstrated care in the design of their products and Web site
2. Has a history of innovation
3. Inspired loyalty in their customer base
4. Doing business with them was a positive experience
Obviously, this financial portfolio-based approach to trying to value a nebulous variable has precedents and is subject to many, many caveats. That said, the overall performance of the portfolio was compelling (certainly from an investment point of view), although Teehan+Lax' commentary indicates a certain definite caution in extrapolating too far.
One major observation that jumps out is how much more strongly those companies performed that have product design, user experience, or brand experience as central to their value (Apple, EA, Nike, Yahoo) when compared to those businesses (Target, Progressive, JetBlue) where design and brand may be important, but at the end of the day, there is a core business (retail, insurance, an airline) that has to be run, with management and competitive stresses that far exceed the influence of design.
Another factor may be the cycle-time for bringing design ideas to market, which is (or should be) much shorter for software, internet, and even consumer goods products, when compared to service industries and industries with deep investments in physical capital which are less subject to change.
One major observation that jumps out is how much more strongly those companies performed that have product design, user experience, or brand experience as central to their value (Apple, EA, Nike, Yahoo) when compared to those businesses (Target, Progressive, JetBlue) where design and brand may be important, but at the end of the day, there is a core business (retail, insurance, an airline) that has to be run, with management and competitive stresses that far exceed the influence of design.
Another factor may be the cycle-time for bringing design ideas to market, which is (or should be) much shorter for software, internet, and even consumer goods products, when compared to service industries and industries with deep investments in physical capital which are less subject to change.
2 comments:
At 27.5% today, they rock.
http://www.teehanlax.com/uxfund/
Thanks for turning me on to this!
wow, this is some of the best investment advice i've ever gotten from a non-financially centered source
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