I read a great article in a recent issue of Fast Company, titled No Accounting for Design? that I urge all marketers to read. The article profiles Whirlpool's highly-regarded, much-talked-about, resident design expert, Chuck Jones, and his topic du jour: how consumer product companies can gauge the financial return (ROI) that an investment in great design brings to their bottom lines.
When asked two years ago by the company's resource allocation team to provide them with an ROI estimate on a subtle design addition he wished to make to a KitchenAid refrigerator's redesign, Jones couldn't provide it. That's when the old proverb kicked in: "When the going gets tough, the tough get going." Jones decided to study the manner in which applauded design-centric companies like BMW, Nike and Nokia were calculating the ROI of design.
He found out, to his surprise, that no real formula was in place. "Most simply based future investments on past performance," the article states.
Jones's answer? To shift Whirlpool's emphasis to measuring consumer preferences by putting design prototypes in front of focus groups. Specific measurements are taken in the following areas: aesthetics, craftsmanship, performance, ergonomics and usability. The company then charts results against competitors' products as well as its own. This data is used as an objectively derived baseline upon which to make sound decisions concerning new design investments.
While a number of companies use focus groups, how many take detailed measurements of their findings and plot them against competitors' products and their own past product offerings?
With the company's launch of the KitchenAid Architect Series II freestanding range, two years worth of this new methodology were put to the test. Results: the new range won top scores in customer preference tests, and a 15% increase in return on investment over its predecessor. In its first three months on the market, the Architect Series II redesigned range returned 30% more in profits to the company over its predecessor, as well.
The most important lesson in all of this: Chuck Jones believes this new ROI-based approach to proving the worth of design is transforming Whirlpool's culture. By making the case for design, and all that it makes possible in real business terms–top line sales growth and bottom line profits--companies like Whirlpool will have greater confidence in investing in it. In fact, they will be emboldened to embrace design-centric, not merely innovative R&D stances.
Question: doesn't Chuck Jones's methodology bring the whole idea of sound marketing to the fore? The marriage of design, innovation and product manufacturing might just be the way for more consumer product companies to go if they want to be sustainable and successful for the long haul.
Great design is an important element in driving corporate profits. And, as Chuck Jones demonstrates: working closely with the ultimate consumer, this can be proven.
Continue reading "What Whirlpool Knows: The ROI of Good Design" ... Read the full article
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