GSS cIRcle Open Scholar Award (UBCV Non-Thesis Graduate Work)

The Role of Design in Business ROI: A Literature Review 2012

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The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  1 The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  	
   	
   Prepared	
  by	
   Angèle	
  Beausoleil,	
  ISGP	
  MA	
  Student	
   	
   Abstract:	
  This	
  paper	
  reviews	
  select	
  literature	
  that	
  examines	
  the	
  role	
  of	
  design	
  in	
  shaping,	
   influencing	
  and	
  affecting	
  an	
  organization’s	
  return	
  on	
  investment	
  (ROI).	
  It	
  explores	
  the	
  meaning,	
   context	
  and	
  application	
  of	
  the	
  concept	
  of	
  “design	
  ROI”	
  across	
  disciplines	
  and	
  sectors	
  and	
  provides	
   an	
  analysis	
  of	
  the	
  most	
  recent	
  research	
  on	
  the	
  subject	
  of	
  the	
  economic	
  value	
  and	
  performance	
  of	
   design.	
  The	
  bulk	
  of	
  this	
  paper	
  highlights	
  the	
  authors	
  and	
  organizations	
  currently	
  investing	
  in	
   research	
  and	
  proposing	
  design	
  value	
  metrics.	
  The	
  vast	
  inventory	
  of	
  research	
  and	
  methodologies	
   infers	
  the	
  need	
  for	
  a	
  linguistic	
  typology	
  -­‐-­‐	
  a	
  common	
  and	
  shared	
  vocabulary	
  -­‐-­‐	
  to	
  better	
   communicate	
  design’s	
  positive	
  economic	
  impact	
  across	
  economic	
  and	
  industry	
  sectors.	
  It	
   concludes	
  that	
  good	
  design	
  is	
  good	
  for	
  business	
  and	
  suggests	
  research	
  gaps	
  to	
  better	
  understand	
   the	
  value	
  of	
  design	
  in	
  business.	
  The	
  purpose	
  of	
  this	
  research	
  is	
  to	
  broaden	
  the	
  understanding	
  of	
   the	
  impact	
  of	
  design	
  on	
  business	
  ROI	
  and	
  to	
  present	
  evidence	
  on	
  why	
  design	
  is	
  good	
  for	
  business.	
   	
   Keywords:	
  design	
  ROI,	
  business	
  return	
  on	
  investment,	
  design	
  economics,	
  design	
  performance.	
  	
   	
   Introduction:	
  	
   	
   Design	
  is	
  central	
  to	
  every	
  experience,	
  product	
  or	
  service	
  created	
  and	
  consumed.	
  Successful	
   companies	
  such	
  as	
  Apple,	
  P&G	
  and	
  BMW	
  are	
  often	
  cited	
  as	
  corporate	
  leaders	
  that	
  clearly	
   understand	
  the	
  business	
  value	
  of	
  good	
  design.	
  In	
  today’s	
  economy,	
  scholars	
  and	
  practitioners	
   (Brown,	
  2009;	
  Bryson	
  and	
  Rutsen,	
  2010;	
  Kelley,	
  2005;	
  Martin,	
  2009;	
  Meinel,	
  2011)	
  position	
   design	
  as	
  a	
  company’s	
  most	
  critical	
  competitive	
  advantage.	
  Their	
  collective	
  research	
  provides	
   evidence	
  that	
  the	
  design	
  process,	
  design	
  thinking	
  and	
  designed	
  products	
  matter,	
  and	
  make	
  a	
   major	
  contribution	
  to	
  economic	
  and	
  national	
  competitiveness.	
  	
   	
   This	
  paper	
  examines	
  recent	
  research	
  on	
  the	
  value	
  of	
  design	
  in	
  business	
  ROI	
  and	
  serves	
  as	
  the	
  first	
   inventory	
  of	
  published	
  design-­‐ROI	
  oriented	
  research.	
  It	
  aims	
  to	
  create	
  a	
  better	
  understanding	
  of	
   the	
  value	
  of	
  design	
  through	
  the	
  business	
  language	
  of	
  return	
  on	
  investment	
  (ROI).	
  	
   	
   The	
  methodology	
  for	
  this	
  literature	
  review	
  took	
  into	
  account	
  the	
  current	
  characteristics	
   of	
  design	
  evaluation	
  methods	
  in	
  the	
  context	
  of	
  design	
  as	
  a	
  discipline	
  (Cross,	
  2001).	
  The	
  approach	
   was	
  discursive	
  because	
  the	
  research	
  examined	
  on	
  the	
  topic	
  came	
  from	
  a	
  number	
  of	
  disciplines	
   and	
  cultures	
  and	
  has	
  not	
  been	
  undertaken	
  systematically	
  or	
  by	
  economic	
  sectors.	
  The	
   interpretations,	
  observations	
  and	
  conclusions	
  were	
  derived	
  from	
  a	
  variety	
  of	
  small-­‐scale,	
  well-­‐ organized,	
  in-­‐depth	
  case	
  studies,	
  theoretical	
  frameworks	
  and	
  industry	
  surveys	
  that	
  illustrated	
   good	
  practice	
  and	
  provided	
  useful	
  insights	
  into	
  the	
  understanding	
  of	
  design	
  ROI.	
  	
  	
   	
   During	
  the	
  review	
  of	
  the	
  literature	
  both	
  academic	
  and	
  industry	
  sources	
  were	
  accessed	
  and	
  the	
   topic	
  “design	
  ROI”	
  was	
  searched	
  across	
  multi-­‐disciplinary	
  databases	
  from	
  the	
  David	
  Lam	
   Management	
  Research	
  Library	
  and	
  included	
  articles	
  from	
  science,	
  technology,	
  arts	
  and	
  sociology	
   libraries.	
  Industry	
  reports	
  were	
  then	
  sourced	
  using	
  the	
  web’s	
  search	
  engines	
  and	
  e-­‐news	
  media	
   websites.	
  The	
  literature	
  reviewed	
  includes	
  journal	
  articles,	
  books,	
  news	
  media,	
  dissertations	
  and	
   industry	
  reports	
  and	
  whitepapers.	
  When	
  identifying	
  relevant	
  literature,	
  abstracts	
  and/or	
  full	
  texts	
   and	
  chapters	
  of	
  the	
  identified	
  articles	
  and	
  reports	
  were	
  evaluated	
  based	
  on	
  the	
  criteria	
  of	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  2 providing	
  insights	
  on	
  the	
  topic	
  of	
  design	
  evaluation	
  methods,	
  based	
  on	
  the	
  return	
  on	
  investment	
  	
   (ROI)	
  model.	
  The	
  data	
  gathering	
  process	
  uncovered	
  information	
  on	
  typologies	
  within	
  design-­‐ oriented	
  industries	
  and	
  gaps	
  in	
  linguistic	
  typologies	
  on	
  the	
  topic	
  design	
  evaluation	
  and	
  ROI	
  in	
   non-­‐design	
  industries.	
  Linguistic	
  typology	
  challenges	
  surfaced	
  when	
  initially	
  searching	
  for	
  the	
   term	
  “design	
  ROI”.	
  To	
  locate	
  high-­‐quality	
  research	
  studies,	
  understanding	
  the	
  language	
  and	
   vocabulary	
  used	
  to	
  describe	
  the	
  economic	
  value	
  of	
  design	
  was	
  critical.	
  Thus,	
  with	
  only	
  a	
  few	
   studies	
  resulting	
  from	
  the	
  initial	
  search,	
  the	
  subject	
  and	
  keyword	
  phrase	
  was	
  extended	
  to	
  include	
   “design	
  performance”,	
  “design	
  evaluation”,	
  “cost	
  benefit	
  analysis	
  of	
  design”	
  and	
  “design	
   economics”,	
  in	
  order	
  to	
  yield	
  greater	
  and	
  relevant	
  research	
  results.	
  	
   	
   During	
  the	
  analysis	
  phase,	
  themes	
  emerged	
  from	
  the	
  literature	
  that	
  could	
  form	
  the	
  basis	
  of	
  a	
   classification	
  framework	
  as	
  an	
  aid	
  to	
  better	
  understand	
  the	
  economics	
  of	
  design.	
  The	
   classification	
  framework	
  themes	
  were	
  design	
  as	
  product,	
  service,	
  process,	
  people,	
  place	
  and	
   policy.	
  Further	
  research	
  on	
  design	
  value	
  metrics,	
  by	
  design	
  theme	
  across	
  economic	
  sectors	
  is	
   highly	
  recommended.	
   	
   The	
  selected	
  literature	
  reviewed	
  for	
  this	
  paper	
  is	
  presented	
  in	
  three	
  sections:	
  the	
  first	
  section	
   explores	
  the	
  role	
  of	
  design	
  in	
  creating	
  business	
  value	
  as	
  described	
  by	
  scholars	
  and	
  practitioners,	
   the	
  second	
  section	
  provides	
  a	
  discussion	
  on	
  the	
  concept	
  of	
  design	
  economies	
  with	
  industry	
   examples	
  across	
  the	
  three	
  economic	
  sectors,	
  and	
  the	
  third	
  section	
  examines	
  the	
  shared	
   vocabulary,	
  meaning	
  and	
  models	
  of	
  design	
  ROI	
  across	
  disciplines.	
  It	
  concludes	
  with	
  a	
  discussion	
   on	
  the	
  gaps	
  in	
  the	
  literature	
  and	
  areas	
  for	
  further	
  research.	
   	
   1.	
  The	
  value	
  of	
  design	
  for	
  business	
  	
   	
   Design	
  has	
  been	
  recognized	
  as	
  one	
  of	
  the	
  critical	
  factors	
  for	
  business	
  success	
  (Yin,	
  Qin	
  and	
   Holland,	
  2011).	
  It	
  is	
  defined	
  as	
  the	
  act	
  of	
  conceiving,	
  planning	
  and	
  making	
  products,	
  services,	
   systems,	
  brands,	
  or	
  environments	
  that	
  serve	
  users	
  and/or	
  organizations	
  (Gajendar,	
  2003);	
  as	
  the	
   interface	
  between	
  consumer	
  behaviour	
  and	
  product	
  development	
  (Bryson	
  and	
  Rutsen,	
  2010);	
   and	
  as	
  a	
  process	
  of	
  innovation	
  (Brown,	
  2009;	
  Kelley,	
  2005;	
  Martin,	
  2009;	
  Whicher	
  et	
  al,	
  2010),	
  a	
   complex	
  method	
  that	
  involves	
  collaboration	
  between	
  participants	
  from	
  different	
  disciplines	
   leading	
  to	
  a	
  specific	
  outcome.	
  Design’s	
  value	
  is	
  often	
  communicated	
  based	
  on	
  the	
  role	
  it	
  plays	
   (Design	
  Council,	
  2007)	
  either	
  as	
  a	
  process,	
  product,	
  service,	
  person,	
  policy	
  or	
  corporate	
   competitiveness.	
  For	
  the	
  purpose	
  of	
  identifying	
  the	
  breadth	
  of	
  design	
  ROI	
  research,	
  this	
  paper	
  is	
   examines	
  “holistic”	
  design	
  (Guo,	
  2010),	
  meaning	
  design’s	
  role	
  in	
  the	
  widest	
  sense,	
  from	
  the	
  visual	
   to	
  the	
  financial	
  and	
  strategic,	
  and	
  by	
  the	
  value	
  it	
  brings	
  to	
  commercial	
  or	
  business	
  organizations.	
   	
   A	
  growing	
  body	
  of	
  research,	
  from	
  practitioners	
  and	
  scholars,	
  provides	
  evidence	
  of	
  the	
  positive	
   association	
  between	
  design	
  and	
  business	
  value.	
  Business	
  Week’s	
  Helen	
  Walters	
  in	
  her	
  article	
  The	
   Value	
  of	
  Design	
  (Walters,	
  2011)	
  writes	
  IDEO’s	
  Diego	
  Rodriguez	
  makes	
  the	
  case	
  that	
  good	
  business	
   arises	
  from	
  a	
  design-­‐centric	
  process	
  that	
  incorporates	
  marketing,	
  research,	
  and	
  ideas	
  while	
  RKS	
   Design's	
  Ravi	
  Sawhney	
  and	
  Deepa	
  Prahalad	
  outline	
  four	
  specific	
  areas	
  in	
  which	
  design	
  can	
  create	
   value:	
  understanding	
  the	
  consumer,	
  mitigating	
  risk,	
  boosting	
  marketing	
  and	
  branding,	
  and	
  driving	
   sustainable	
  business	
  practices.	
  Walters’	
  also	
  mentions	
  angel	
  investor	
  Dave	
  McClure’s	
  belief	
  that	
   design	
  and	
  marketing	
  are	
  more	
  important	
  than	
  engineering	
  for	
  the	
  firms	
  with	
  which	
  he	
  works,	
   and	
  highlights	
  how	
  Dr.	
  Jay	
  Parkinson,	
  a	
  pediatrician	
  and	
  preventive	
  medicine	
  specialist,	
  believes	
   the	
  role	
  that	
  design	
  through	
  disruptive	
  innovation	
  can	
  play	
  in	
  retooling	
  the	
  U.S.	
  health-­‐care	
   system.	
  (Walters,	
  2010)	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  3 The	
  value	
  of	
  design	
  and	
  design	
  thinking	
  is	
  demonstrated	
  through	
  case	
  study	
  research	
  by	
  IDEO’s	
   Tim	
  Brown	
  and	
  Tom	
  Kelley,	
  who	
  present	
  findings	
  on	
  Fortune	
  100	
  companies	
  such	
  as	
  Steelcase,	
   P&G	
  and	
  McDonald’s,	
  that	
  have	
  organically	
  and/or	
  systematically	
  incorporated	
  design	
  thinking	
   into	
  their	
  culture	
  and	
  processes,	
  resulting	
  in	
  positive	
  correlation	
  between	
  human-­‐centered	
   design	
  and	
  economic	
  success	
  (Brown,	
  2009;	
  Kelley,	
  2009).	
  Roger	
  Martin	
  adds	
  the	
  business	
  value	
   of	
  design	
  is	
  through	
  integrating	
  design	
  thinking	
  into	
  the	
  corporate	
  culture	
  which	
  leads	
  to	
  new	
   business	
  models,	
  breakthrough	
  innovations,	
  market	
  demand	
  and	
  business	
  sustainability,	
  as	
   illustrated	
  in	
  his	
  research	
  on	
  Cirque	
  du	
  Soleil	
  and	
  RIM	
  (Martin,	
  2009).	
   	
   Research	
  on	
  product	
  design	
  and	
  Norwegian	
  manufacturers	
  (Bryson	
  and	
  Rutsen,	
  2010)	
  also	
   provide	
  evidence	
  that	
  good	
  design	
  does	
  not	
  just	
  enhance	
  the	
  profitability	
  of	
  a	
  company	
   producing	
  the	
  product,	
  but	
  can	
  also	
  enhance	
  the	
  profitability	
  of	
  business	
  partners.	
  A	
   complimentary	
  study	
  on	
  design	
  management	
  performance	
  (Chiva	
  and	
  Algere,	
  2009)	
  finds	
  good	
   design	
  does	
  not	
  emerge	
  by	
  chance	
  or	
  by	
  simply	
  investing	
  in	
  design,	
  but	
  rather	
  is	
  the	
  result	
  of	
  a	
   managed	
  process.	
   	
   While	
  the	
  case-­‐study	
  based	
  research	
  asserts	
  a	
  design	
  approach	
  is	
  positively	
  linked	
  to	
  business	
   success	
  (Walters,	
  Brown,	
  Kelley,	
  Martin	
  et	
  al),	
  it	
  also	
  suggests	
  only	
  a	
  fraction	
  of	
  global	
   organizations,	
  across	
  economic	
  sectors,	
  are	
  applying	
  design	
  strategies,	
  activities	
  and	
  thinking	
  into	
   their	
  business	
  modeling	
  and	
  practice.	
  The	
  level	
  of	
  corporate	
  adoption	
  of	
  design	
  strategies	
  and	
   activities	
  may	
  be	
  linked	
  to	
  a	
  lack	
  of	
  a	
  universal	
  understanding	
  of	
  design	
  and	
  its	
  role	
  in	
  creating	
   business	
  value	
  across	
  disciplines	
  and	
  sectors.	
  	
   	
   2.	
  Design	
  Economies:	
  measuring	
  the	
  impact	
  of	
  design	
  by	
  economic	
  sector	
   	
   Academics,	
  policymakers	
  and	
  business	
  leaders	
  increasingly	
  recognize	
  that	
  design	
  is	
  a	
  both	
  an	
   inherently	
  creative	
  activity	
  that	
  sits	
  at	
  the	
  intersection	
  of	
  art,	
  business	
  and	
  technology	
  (Vinodrai,	
   2011),	
  and	
  an	
  economic	
  driver	
  (Design	
  Council,	
  2007)	
  for	
  the	
  production	
  and	
  commercialization	
   of	
  goods	
  and	
  services	
  for	
  traditional	
  and	
  emerging	
  sectors.	
  	
   	
   This	
  section	
  provides	
  evidence	
  on	
  design’s	
  impact	
  on	
  ROI	
  within	
  the	
  three	
  economic	
  sectors	
   theorized	
  by	
  economists	
  Colin	
  Clark	
  and	
  Jean	
  Fourastié	
  (1950s).	
  The	
  three	
  sectors	
  are	
  defined	
  as	
   the	
  primary	
  sector	
  (businesses	
  focused	
  on	
  the	
  extraction	
  of	
  raw	
  materials,	
  such	
  as	
  mining,	
   agriculture	
  and	
  forestry);	
  the	
  secondary	
  sector	
  (businesses	
  focused	
  on	
  manufacturing,	
  the	
   conversion	
  of	
  raw	
  materials	
  provided	
  by	
  primary	
  industry	
  into	
  commodities	
  and	
  products	
  for	
  the	
   consumer);	
  and	
  the	
  tertiary	
  sector	
  (businesses	
  focused	
  on	
  providing	
  services,	
  including	
  both	
   profit	
  and	
  non-­‐profit	
  making	
  organizations).	
  The	
  select	
  literature	
  provides	
  the	
  basis	
  of	
  who	
  is	
   leading,	
  publishing	
  and	
  investing	
  in	
  research	
  studies	
  on	
  the	
  topic	
  of	
  design	
  ROI,	
  however	
  it	
  also	
   exposes	
  knowledge	
  gaps,	
  suggesting	
  a	
  classification	
  framework	
  may	
  be	
  required	
  to	
  better	
   navigate	
  and	
  understand	
  the	
  meaning	
  and	
  value	
  of	
  design	
  economies’	
  research	
  within	
  and	
  across	
   economic	
  sectors.	
   	
   a)	
  Primary	
  Sector	
   Only	
  one	
  in	
  20	
  businesses	
  in	
  the	
  UK’s	
  primary	
  sector	
  think	
  design	
  is	
  crucial	
  to	
  their	
  success,	
  yet	
   two	
  out	
  of	
  three	
  businesses	
  agree	
  that	
  design	
  is	
  integral	
  to	
  the	
  UK’s	
  overall	
  economic	
   performance	
  and	
  believe	
  there’s	
  a	
  link	
  between	
  design	
  and	
  profitability	
  (Design	
  Council,	
  2007).	
   This	
  UK	
  study	
  might	
  explain	
  the	
  lack	
  of	
  research	
  observing	
  design	
  activities	
  and	
  performance	
  in	
   the	
  primary	
  sector	
  in	
  other	
  nations.	
  	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  4 	
   The	
  Netherlands	
  shipping	
  industry	
  is	
  one	
  industry	
  investigating	
  design	
  ROI.	
  A	
  study	
  analyzing	
  the	
   relationship	
  between	
  technical	
  specifications,	
  services	
  provided	
  and	
  earnings	
  potential	
  (Veenstra,	
   2006),	
  outlines	
  a	
  framework	
  for	
  ship	
  owners	
  to	
  measure	
  the	
  costs	
  and	
  benefits	
  (aka	
  earnings	
   potential)	
  of	
  three	
  design	
  factors	
  critical	
  to	
  their	
  business:	
  cargo	
  carrying	
  capacity,	
  speed	
  and	
   versatility	
  (Veenstra,	
  2006).	
   	
   In	
  a	
  sector	
  that	
  makes	
  use	
  of	
  natural	
  resources	
  to	
  generate	
  wealth,	
  and	
  could	
  benefit	
  from	
   evaluating	
  design’s	
  value	
  in	
  operational	
  efficiencies,	
  and	
  R&D	
  of	
  new	
  technologies	
  for	
  harvesting	
   and	
  transportation,	
  design	
  ROI	
  research	
  is	
  completely	
  underexplored.	
   	
   b)	
  Secondary	
  Sector	
   In	
  the	
  manufacturing	
  sector,	
  where	
  production	
  process	
  and	
  product	
  are	
  critical	
  for	
  survival	
  and	
   growth,	
  design	
  is	
  highly	
  valued	
  –	
  from	
  a	
  requirements	
  perspective	
  to	
  ensure	
  the	
  right	
  product	
  is	
   being	
  developed,	
  to	
  the	
  manufacturability	
  and	
  cost	
  of	
  the	
  product	
  (Wynn	
  and	
  Clarkson,	
  2009).	
   	
   Half	
  of	
  the	
  manufacturers	
  surveyed	
  in	
  a	
  UK’s	
  Design	
  Council	
  study	
  (Design	
  Council,	
  2008)	
  suggest	
   design	
  has	
  an	
  either	
  integral	
  or	
  significant	
  role	
  to	
  play	
  in	
  their	
  business	
  and	
  are	
  convinced	
  it	
  has	
  a	
   vital	
  impact	
  on	
  UK	
  economy.	
  The	
  majority	
  agreed	
  that	
  design	
  is	
  integral	
  to	
  UK’s	
  future	
  economic	
   performance	
  and	
  recognize	
  the	
  link	
  between	
  design	
  and	
  profitability	
  (Design	
  Council	
  2008).	
   Canadian	
  manufacturing	
  companies	
  are	
  aligned	
  with	
  the	
  UK	
  study,	
  and	
  are	
  changing	
  the	
  way	
   they	
  conduct	
  product	
  design	
  and	
  development	
  and	
  innovation	
  practices	
  to	
  stay	
  competitive	
   (Industry	
  Canada,	
  2010).	
  Studies	
  show	
  those	
  who	
  invest	
  more	
  in	
  product	
  design	
  and	
   development,	
  generate	
  additional	
  business	
  benefits	
  from	
  new	
  or	
  significantly	
  improved	
  products,	
   increased	
  client	
  satisfaction,	
  increase	
  revenues	
  and	
  improved	
  access	
  to	
  new	
  export	
  markets	
   (Industry	
  Canada,	
  2010).	
  Over	
  the	
  last	
  two	
  decades,	
  Japan,	
  Taiwan,	
  Korea,	
  and	
  Hong	
  Kong	
  has	
   used	
  design	
  to	
  move	
  from	
  manufacturing	
  to	
  producing	
  well-­‐known	
  branded	
  products	
  resulting	
  in	
   a	
  transformation	
  from	
  ‘‘Made	
  in	
  China’’	
  to	
  ‘‘Designed	
  in	
  China’’	
  (Guo,	
  2010).	
  This	
  strong	
   commitment	
  to	
  product	
  design	
  will	
  help	
  China	
  reap	
  some	
  of	
  the	
  success	
  of	
  its	
  western	
   competitors.	
   	
   Design	
  as	
  manufactured	
  artefact	
  (product)	
  has	
  deep	
  roots	
  in	
  history	
  across	
  the	
  globe,	
  yet	
  it	
  is	
   only	
  since	
  the	
  last	
  century	
  that	
  its	
  role	
  in	
  distinctive	
  product	
  development	
  and	
  Intellectual	
   Property	
  ownership,	
  has	
  it	
  been	
  identified	
  as	
  impacting	
  the	
  world’s	
  economy.	
  Iconic	
  product	
   designs,	
  manufactured	
  in	
  large	
  volumes	
  are	
  protected	
  through	
  patents,	
  trademarks,	
  and	
  trade	
   dress,	
  thus	
  play	
  a	
  crucial	
  role	
  in	
  business	
  success	
  (Ratner,	
  et	
  al,	
  2006).	
  Design	
  ROI	
  through	
   product	
  development	
  is	
  just	
  starting	
  to	
  be	
  researched	
  by	
  copyright	
  and	
  intellectual	
  property	
   lawyers,	
  who	
  use	
  product	
  designs	
  to	
  illustrate	
  that	
  protections	
  provided	
  by	
  patents,	
  trademarks,	
   and	
  trade	
  dress,	
  lead	
  to	
  business	
  success	
  (Ratner,	
  et	
  al,	
  2006).	
  	
   	
   An	
  automobile	
  industry	
  study	
  (Pauwels,	
  et	
  al,	
  2004)	
  analyses	
  the	
  economic	
  importance	
  of	
  new	
   product	
  introductions	
  and	
  sales	
  promotions	
  to	
  the	
  bottom	
  line	
  and	
  finds	
  new	
  product	
   introductions	
  have	
  a	
  positive	
  short	
  and	
  long-­‐term	
  impact	
  on	
  the	
  firm’s	
  top-­‐line	
  bottom-­‐line	
  and	
   stock	
  market	
  performance,	
  and	
  have	
  a	
  positive	
  correlation	
  to	
  the	
  level	
  of	
  product	
  design	
  and	
   innovation	
  (Pauwels,	
  et	
  al,	
  2004).	
  	
  	
   	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  5 Scholars	
  (Guo,	
  2010;	
  Ratner	
  et	
  al,	
  2006;	
  Pauwels	
  et	
  al,	
  2004;	
  Wynn	
  and	
  Clarkson,	
  2009)	
   recommend	
  that	
  companies	
  in	
  the	
  manufacturing	
  sector	
  focus	
  on	
  process	
  and	
  new	
  product	
   introductions	
  to	
  generate	
  business	
  value	
  and	
  resist	
  relying	
  on	
  sales	
  and	
  marketing.	
  	
   	
   c)	
  Tertiary	
  Sector	
   	
   The	
  tertiary	
  or	
  service-­‐oriented	
  sector,	
  which	
  represents	
  an	
  extensive	
  global	
  network	
  of	
  design-­‐ industry	
  associations	
  and	
  design	
  as	
  service	
  companies,	
  is	
  the	
  most	
  prolific	
  sector	
  publishing	
  dROI	
   research.	
  Service	
  industry	
  studies	
  on	
  Small	
  Medium	
  sized	
  Enterprises	
  (SMEs)	
  suggest	
  they	
  see	
   design	
  as	
  very	
  important,	
  having	
  a	
  positive	
  correlation	
  with	
  brand	
  image,	
  improving	
  the	
  quality	
  of	
   the	
  services	
  and	
  increasing	
  profits/performance	
  (Design	
  Council,	
  2007;	
  Larsen,	
  Tonge	
  and	
  Lewis,	
   2007).	
  Businesses	
  in	
  the	
  real	
  estate,	
  finance	
  and	
  business	
  services	
  industry	
  were	
  the	
  most	
   positive	
  towards	
  design	
  investment	
  with	
  four	
  out	
  of	
  five	
  businesses	
  thinking	
  design	
  has	
  a	
  role	
  to	
   play	
  in	
  their	
  operations	
  and	
  business	
  profitability.	
  The	
  majority	
  agreed	
  that	
  design	
  is	
  integral	
  to	
   the	
  wider	
  economic	
  context	
  and	
  future	
  economic	
  performance	
  of	
  the	
  UK	
  (Design	
  Council,	
  2007).	
  	
   	
   Design	
  oriented	
  and	
  technology	
  service	
  industries	
  invest	
  in	
  User	
  Experience	
  design	
  ROI	
  research.	
   Recent	
  studies	
  (Marcus,	
  2002;	
  Mayhew,	
  2012;	
  Momentum	
  Lab,	
  2009)	
  provide	
  businesses	
  with	
   the	
  language	
  and	
  evidence	
  to	
  articulate	
  value	
  of	
  design	
  thinking,	
  process	
  and	
  application	
  to	
  new	
   technology	
  products.	
  (User-­‐experience	
  is	
  a	
  design	
  process	
  that	
  is	
  simple	
  to	
  measure	
  since	
  the	
   quantitative	
  metrics	
  are	
  captured	
  directly	
  from	
  digital	
  consumer	
  behaviour,	
  such	
  as	
  click-­‐through	
   rates,	
  website	
  visits,	
  app	
  downloads,	
  purchases,	
  etc.)	
  Apple's	
  iPod	
  is	
  the	
  archetype	
  of	
  a	
  product	
   for	
  UE	
  dROI	
  as	
  it	
  delivers	
  exceptional	
  user	
  experience	
  and	
  positive	
  ROI	
  (Mayhew,	
  2002).	
   	
   Organizations	
  from	
  the	
  service	
  sector	
  understand	
  the	
  value	
  of	
  design	
  from	
  a	
  human	
  resource	
   point	
  of	
  view.	
  There	
  is	
  a	
  belief	
  (Kesler,	
  2010)	
  that	
  to	
  reap	
  the	
  benefits	
  of	
  investments	
  in	
  talent,	
  a	
   company	
  needs	
  an	
  organizational	
  environment	
  that	
  inspires	
  and	
  supports	
  employees	
  from	
  the	
   front	
  line	
  to	
  the	
  CEO	
  to	
  do	
  their	
  best	
  work.	
  Kesler	
  (2010)	
  discusses	
  characteristics,	
  aptitudes	
  and	
   thinking	
  styles	
  relating	
  to	
  design	
  as	
  a	
  person/function	
  as	
  “organization	
  design”	
  which	
  enables	
   effective	
  business	
  decisions	
  leading	
  to	
  sustained	
  success	
  (Kesler,	
  2010).	
  	
   	
   Geographically,	
  the	
  most	
  active	
  service	
  sectors	
  researching	
  design	
  evaluation	
  models	
  are	
  located	
   in	
  Denmark,	
  Finland	
  and	
  the	
  UK	
  (Sorvali	
  and	
  Nieminen,	
  2008),	
  where	
  government	
  supported	
   design-­‐industry	
  trade	
  organizations	
  reside.	
  Their	
  interest	
  in	
  design	
  research	
  is	
  reflected	
  in	
  their	
   policy-­‐making	
  programs	
  and	
  promotion	
  of	
  design	
  (Design	
  Council,	
  2007;	
  DTI,	
  2005;	
  Danish	
  Design	
   Centre,	
  2003;	
  Raulik	
  et	
  al,	
  2009).	
  Other	
  countries	
  publishing	
  design	
  research	
  reports	
  are	
  listed	
   below	
  (figure	
  1)	
  in	
  the	
  Global	
  Watch	
  2008:	
  Digital	
  and	
  Innovation	
  report	
  (Sorvali	
  and	
  Nieminen,	
   2008):	
  	
   	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  6 	
   	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  Figure	
  1.	
  Global	
  Design	
  Watch	
  2008:	
  Design	
  and	
  Innovation	
  Centres	
  (Sorvali	
  and	
  Nieminen,	
  2008)	
   	
   Generally,	
  the	
  industrialized	
  nations	
  are	
  exploiting	
  design	
  as	
  an	
  asset	
  for	
  their	
  economic	
   advantage	
  and	
  for	
  the	
  international	
  promotion	
  of	
  their	
  image	
  (Ralik,	
  et	
  al,	
  2008).	
  In	
  contrast,	
   developing	
  countries	
  -­‐	
  with	
  very	
  few	
  exceptions	
  -­‐	
  have	
  disregarded	
  design	
  as	
  a	
  tool	
  for	
  economic	
   and	
  social	
  development	
  (Ralik,	
  et	
  al,	
  2008).	
   	
   Despite	
  the	
  evidence	
  that	
  design	
  is	
  critical	
  to	
  the	
  competitiveness,	
  innovativeness	
  and	
  prosperity	
   of	
  firms,	
  communities,	
  cities	
  and	
  nations	
  (Brown,	
  2009;	
  Kelley,	
  2009;	
  Martin,	
  2009;	
  Whicher	
  et	
  al,	
   2010)	
  design	
  is	
  not	
  particularly	
  prominent	
  across	
  all	
  three	
  economic	
  sectors.	
  The	
  primary	
  sector	
   has	
  invested	
  the	
  least	
  in	
  dROI	
  research	
  while	
  the	
  secondary	
  or	
  manufacturing	
  sector	
  shows	
  a	
   growing	
  interest	
  in	
  dROI	
  models	
  in	
  order	
  to	
  meet	
  changing	
  consumer	
  needs	
  and	
  sustain	
  market	
   growth.	
  The	
  majority	
  of	
  dROI	
  research	
  is	
  being	
  led	
  by	
  the	
  service-­‐sector,	
  especially	
  the	
  design-­‐ oriented	
  and	
  new	
  technology	
  industries,	
  driven	
  by	
  market	
  competitiveness	
  and	
  profitability.	
  It	
  is	
   worth	
  noting	
  that	
  the	
  cultural	
  industries	
  are	
  also	
  researching	
  dROI	
  models	
  (Vinodrai,	
  2009)	
  with	
  a	
   focus	
  on	
  industry	
  investment	
  and	
  policy-­‐making.	
  	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  7 	
   3.	
  Shared	
  vocabulary,	
  meaning	
  and	
  models	
  of	
  design	
  ROI	
   	
   Research	
  has	
  firmly	
  established	
  that	
  businesses	
  that	
  use	
  design	
  effectively	
  will	
  be	
  those	
  who	
   survive	
  and	
  prosper	
  in	
  increasingly	
  demanding	
  world	
  markets	
  (Design	
  Council,	
  1998;	
  2007).	
  Yet	
  it	
   is	
  suggested	
  (Trueman	
  and	
  Jobber,	
  1998)	
  that	
  companies	
  must	
  see	
  a	
  tangible	
  benefit	
  showing	
   where	
  and	
  how	
  design	
  is	
  associated	
  with	
  improved	
  business	
  performance,	
  before	
  taking	
  design	
   seriously	
  (Larsen,	
  et	
  al,	
  2007).	
  Thus,	
  it	
  is	
  important	
  to	
  communicate	
  design’s	
  tangible	
  benefits	
  in	
  a	
   way	
  that	
  most	
  businesses	
  can	
  understand	
  and	
  ultimately	
  adopt.	
  This	
  section	
  explores	
  design	
  ROI	
   across	
  disciplines	
  and	
  sectors	
  in	
  an	
  effort	
  to	
  communicate	
  design’s	
  tangible	
  benefits.	
  It	
  presents	
   the	
  first	
  published	
  inventory	
  of	
  design	
  ROI-­‐related	
  research	
  studies	
  and	
  suggests	
  the	
  need	
  for	
  a	
   linguistic	
  typology	
  -­‐-­‐	
  a	
  shared	
  vocabulary	
  and	
  meaning	
  -­‐-­‐	
  of	
  design	
  ROI	
  models.	
   	
   The	
  most	
  common	
  approach	
  to	
  measuring	
  the	
  business	
  value	
  of	
  new	
  and	
  improved	
  processes	
   and/or	
  product	
  offerings	
  is	
  the	
  Return	
  on	
  Investment	
  model	
  or	
  ROI.	
  It	
  is	
  defined	
  as	
  the	
  simple	
   arithmetic	
  ratio	
  of	
  benefits	
  to	
  costs,	
  measured	
  in	
  dollars	
  and	
  cents.	
  If	
  benefits	
  returned	
  are	
  above	
   costs	
  (and	
  expenses),	
  profits	
  are	
  achieved	
  and	
  the	
  value	
  of	
  an	
  investment,	
  along	
  with	
  actual	
   benefits,	
  cost	
  savings,	
  and	
  efficiencies	
  are	
  obtained	
  (Rico,	
  2005).	
  Since	
  the	
  ROI	
  model	
  is	
   concerned	
  with	
  benefits	
  and	
  costs,	
  the	
  literature	
  reviewed	
  explores	
  how	
  this	
  model	
  (benefits	
  to	
   costs)	
  is	
  being	
  applied	
  to	
  design	
  activities.	
   	
   Gregory	
  (1966)	
  first	
  expressed	
  the	
  concept	
  of	
  design	
  “as	
  a	
  pattern	
  of	
  behaviour	
  employed	
  in	
   inventing	
  things	
  of	
  value	
  which	
  do	
  not	
  yet	
  exist”.	
  Cross	
  (2001)	
  then	
  suggested	
  the	
  science	
  of	
   design	
  could	
  improve	
  our	
  understanding	
  of	
  design	
  through	
  scientific	
  (aka	
  systematic)	
  methods	
  of	
   investigation	
  (Cross,	
  2001;	
  2006).	
  Baldwin	
  and	
  Clark	
  (2002)	
  then	
  provided	
  a	
  design	
  valuation	
   methodology	
  based	
  on	
  hypothesis	
  that	
  every	
  artifact	
  has	
  a	
  design,	
  and	
  thus	
  designs	
  are	
  an	
   important	
  class	
  of	
  information	
  goods	
  and	
  called	
  it	
  “The	
  Fundamental	
  Theorem	
  of	
  Design	
   Economics”	
  (Baldwin	
  and	
  Clark,	
  2002).	
   	
   For	
  this	
  paper,	
  design	
  economics	
  is	
  interpreted	
  by	
  a	
  design	
  ROI	
  (dROI)	
  models	
  which	
  are	
  most	
   prevalent	
  in	
  design-­‐oriented	
  industries.	
  Studies	
  on	
  User	
  Experience	
  Design	
  affirm	
  positive	
  return	
   on	
  investment	
  on	
  user-­‐centric	
  activities,	
  especially	
  within	
  the	
  software	
  development	
  process	
   (Momentum	
  Design	
  Lab,	
  2009).	
  The	
  dROI	
  of	
  UE	
  in	
  software	
  companies	
  is	
  measured	
  by	
   lowered	
  development	
  costs,	
  fewer	
  missed	
  deadlines,	
  more	
  cost-­‐effective	
  maintenance,	
  improved	
   customer	
  satisfaction	
  and	
  loyalty	
  directly	
  contributing	
  to	
  business	
  success	
  (Smith,	
  Reinersten	
  and	
   Marcus,	
  2002).	
  the	
  usability	
  or	
  UE	
  returns	
  many	
  benefits	
  (ROI)	
  to	
  products	
  developed	
  for	
  either	
   internal	
  use	
  or	
  for	
  sales.	
  Package	
  design	
  ROI	
  models	
  (Wallace,	
  2001)	
  measure	
  impulse	
  purchasing	
   at	
  shelf	
  against	
  production	
  costs.	
  Wallace’s	
  study	
  (2001)	
  illustrates	
  over	
  two	
  thirds	
  of	
  consumer	
   product	
  purchase	
  decisions	
  are	
  made	
  at	
  the	
  point	
  of	
  sale	
  correlating	
  brand	
  identity	
  and	
  package	
   design	
  investment	
  drives	
  a	
  positive	
  ROI	
  value	
  (Wallace,	
  2001).	
  Design	
  ROI	
  as	
  a	
  cultural	
   investment	
  tool	
  has	
  recently	
  surfaced	
  through	
  the	
  value	
  of	
  “signature	
  architecture”	
  (Plaza,	
  2006).	
   One	
  notable	
  study	
  argues	
  the	
  positive	
  ROI	
  of	
  the	
  Guggenheim	
  Museum	
  in	
  the	
  city	
  of	
  Bilbao	
  can	
   be	
  analyzed	
  by	
  statistical	
  data	
  analysis:	
  the	
  visitor	
  rates	
  (over	
  7	
  million	
  between	
  1997	
  and	
  2004);	
   the	
  increase	
  of	
  overnight	
  hotel	
  stays;	
  the	
  effects	
  on	
  the	
  employment	
  and	
  tax	
  income	
  generated	
   by	
  extended	
  tourism	
  activities	
  (Plaza,	
  2006).	
  	
   	
   Design	
  evaluation	
  models	
  simulating	
  the	
  ROI	
  model	
  also	
  suggest	
  that	
  companies	
  that	
  invest	
  in	
   design	
  tend	
  to	
  be	
  more	
  innovative,	
  more	
  profitable	
  and	
  grow	
  faster	
  than	
  those	
  who	
  do	
  not	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  8 (Whicher,	
  Raulik-­‐Murphy	
  and	
  Cawood,	
  2010).	
  Examples	
  of	
  design	
  performance	
  models	
  in	
   chronological	
  order	
  include:	
  	
   • The	
  Product	
  Archeology	
  Approach	
  	
  (Ulrich	
  and	
  Pearson,	
  1998)	
  measures	
  design	
   performance	
  through	
  an	
  analysis	
  of	
  physical	
  products,	
  cost	
  estimation	
  and	
   manufacturing	
  environment.	
  The	
  approach	
  references	
  the	
  cost	
  of	
  the	
  industrial	
  design	
   products,	
  a	
  theoretical	
  model	
  combined	
  data	
  collected	
  through	
  observation	
  in	
  the	
   marketplace	
  of	
  an	
  artifact’s	
  design	
  attributes	
  that	
  drive	
  costs,	
  with	
  public	
  financial	
  data.	
  	
  	
   • The	
  Design	
  Ladder	
  (Danish	
  Design	
  Centre,	
  2003)	
  evaluates	
  design	
  and	
  economics	
  benefits	
   through	
  a	
  linear	
  regression	
  analysis	
  model,	
  measuring	
  economic	
  effects	
  of	
  design	
  against	
   the	
  effects	
  of	
  other	
  factors,	
  such	
  as	
  company	
  size	
  and	
  the	
  number	
  of	
  staff	
  university	
   graduates,	
  etc.	
  The	
  Design	
  Ladder	
  is	
  now	
  being	
  adopted	
  as	
  a	
  performance	
  tool	
  by	
  other	
   European	
  countries,	
  including	
  Austria,	
  Ireland,	
  Sweden	
  and	
  Switzerland.	
   • The	
  Design	
  as	
  Element	
  of	
  Innovation	
  model	
  (Candi,	
  2005)	
  	
  provides	
  a	
  basis	
  for	
  isolating	
   and	
  evaluating	
  design	
  along	
  three	
  dimensions	
  visceral,	
  behavioural	
  and	
  reflective	
  design	
   to	
  evaluates	
  its	
  performance	
  in	
  operationalizing	
  a	
  firm’s	
  activities,	
  methods	
  and	
  efforts.	
   • The	
  structural	
  equation	
  model	
  (Chiva	
  and	
  Algere’s	
  (2009)	
  provides	
  a	
  methodological	
   contribution	
  to	
  design	
  management’s	
  role	
  in	
  enhancing	
  a	
  firm’s	
  performance	
  as	
  observed	
   through	
  Italian	
  and	
  Spanish	
  ceramic	
  tile	
  industries.	
   • The	
  Design	
  Structure	
  Matrix	
  (Wynn	
  and	
  Clackson,	
  2009)	
  is	
  a	
  modelling	
  tool	
  that	
  connects	
   product	
  to	
  systems	
  and	
  components	
  and/or	
  people	
  to	
  project	
  teams	
  and	
  has	
  a	
  great	
   bearing	
  on	
  an	
  organization’s	
  operations	
  efficiency	
  and	
  effectiveness.	
  It	
  is	
  an	
  adopted	
  ROI	
   method	
  within	
  the	
  engineering	
  design-­‐oriented	
  sectors	
  such	
  as	
  aerospace,	
  automobile,	
   architecture	
  and	
  construction	
   • The	
  European	
  Innovation	
  Scoreboard	
  model	
  (Hollanders,	
  2009)	
  measures	
  a	
  country’s	
   performance	
  of	
  creativity	
  and	
  design	
  using	
  35	
  indicators.	
  The	
  scoreboard	
  ranks	
  Sweden	
   and	
  Denmark	
  as	
  Europe’s	
  top	
  performing	
  design-­‐led	
  innovative	
  countries	
  while	
  Bulgaria,	
   Poland	
  and	
  Romania	
  are	
  ranked	
  the	
  lowest.	
   • The	
  10	
  ways	
  to	
  measure	
  design’s	
  success	
  model	
  (Lockwood,	
  2010)	
  proposes	
  a	
  framework	
   for	
  effectively	
  measuring	
  the	
  value	
  of	
  design	
  through	
  success	
  criteria.	
  The	
  success	
  criteria	
   includes	
  purchase	
  influence,	
  building	
  brand	
  image,	
  improved	
  time	
  to	
  market;	
  securing	
   new	
  markets	
  and	
  creating	
  valuable	
  intellectual	
  property.	
  	
  	
   • The	
  Five	
  Milestone	
  Model	
  (Kesler,	
  2010)	
  measures	
  outcomes	
  against	
  the	
  organizational	
   design	
  process,	
  which	
  includes	
  smart,	
  practical	
  judgments	
  rooted	
  in	
  a	
  business	
  case,	
   supported	
  by	
  facts,	
  and	
  often	
  developed	
  through	
  a	
  series	
  of	
  tested	
  hypotheses	
  and	
  is	
   typically	
  crafted	
  in	
  a	
  roadmap	
  format.	
   • Digital	
  Dividends	
  (Vinodrai,	
  2011)	
  is	
  a	
  dROI	
  model	
  for	
  the	
  cultural	
  economies	
  whereby	
   both	
  cultural	
  and	
  economic	
  value	
  is	
  generated	
  through	
  a	
  “design	
  dividend”	
  for	
  a	
  city-­‐ region.	
  	
   • Design	
  for	
  X	
  (DfX)	
  (Industry	
  Canada,	
  2010)	
  is	
  an	
  approach	
  to	
  product	
  design	
  and	
   development	
  directed	
  at	
  maximizing	
  the	
  production	
  requirements	
  demands	
  (such	
  as	
   assembly,	
  quality,	
  disassembly,	
  manufacturability,	
  safety	
  and	
  environment	
  friendliness)	
   while	
  simultaneously	
  minimizing	
  costs.	
  Design	
  for	
  Environment	
  (DfE)	
  is	
  an	
  applied	
   example	
  of	
  DfX	
  for	
  firms	
  seeking	
  to	
  meet	
  changing	
  consumer	
  preferences	
  with	
  a	
  concern	
   for	
  the	
  environment.	
   • The	
  Design	
  Performance	
  Measurement	
  model	
  (Yin,	
  Qin	
  and	
  Holland,	
  2011)	
  measures	
  key	
   factors	
  of	
  success	
  and	
  failure	
  of	
  a	
  new	
  product	
  development	
  process,	
  such	
  as	
  market	
   share,	
  investment	
  return	
  rate,	
  and	
  customer	
  feedback.	
  The	
  tool	
  supports	
  a	
  design	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  9 manager’s	
  method	
  to	
  measure	
  and	
  improve	
  collaborative	
  design	
  performance	
  and	
   development,	
  the	
  design	
  team’s	
  strengths	
  and	
  weaknesses,	
  team	
  communication,	
  and	
   suitable	
  responsive	
  actions.	
  	
   	
   The	
  dROI	
  and	
  simulated	
  evaluation	
  models	
  provide	
  theoretical	
  evidence	
  that	
  the	
  use	
  of	
  design	
   has	
  a	
  positive	
  impact	
  on	
  the	
  performance	
  of	
  a	
  company,	
  measured	
  in	
  terms	
  of	
  profitability,	
  share	
   price,	
  employment	
  or	
  exports.	
  Industry	
  analysts	
  (Souza,	
  2001	
  and	
  Bevan,	
  2005)	
  suggest	
  providing	
   cost	
  benefit	
  analysis	
  models	
  and	
  simple	
  spreadsheet	
  tools	
  for	
  companies	
  to	
  calculate	
  their	
  own	
   cost	
  benefit	
  analyses	
  of	
  design	
  ROI.	
  A	
  framework	
  may	
  be	
  required	
  to	
  determine	
  common	
  success	
   metrics	
  for	
  design	
  investment	
  since	
  ROI	
  varies	
  based	
  on	
  product	
  or	
  service	
  type,	
  industry	
  vertical,	
   company	
  size,	
  production	
  process	
  and	
  client	
  type.	
  Further	
  research	
  is	
  recommended	
  on	
  adopting	
   and	
  experimenting	
  with	
  these	
  models.	
   	
   A	
  new	
  and	
  growing	
  area	
  of	
  research	
  is	
  design	
  as	
  innovation	
  practice	
  with	
  design	
  ROI	
  models	
   increasingly	
  being	
  observed	
  through	
  the	
  perspective	
  of	
  how	
  it	
  is	
  applied	
  to	
  innovative	
  strategies,	
   business	
  models	
  and	
  organizational	
  structures	
  and	
  processes	
  (Leavy,	
  2012;	
  Zott,	
  2007).	
  Instead	
  of	
   thinking	
  about	
  “what	
  to	
  build,”	
  prototyping	
  is	
  about	
  “building	
  in	
  order	
  to	
  think,”	
  and	
  the	
   prototyping	
  process	
  itself	
  “creates	
  the	
  opportunity	
  to	
  discover	
  new	
  and	
  better	
  ideas	
  at	
  minimal	
   cost”	
  (Leavy,	
  2012).	
  From	
  business	
  model	
  design,	
  to	
  incorporating	
  different	
  kinds	
  of	
  people,	
   prototyping	
  and	
  iteration,	
  design	
  is	
  intrinsically	
  linked	
  to	
  innovation	
  across	
  all	
  sectors	
  (Zott,	
  2007	
   and	
  Osterwalder,	
  2010).	
  	
  	
   	
   4.	
  Conclusion	
   	
   This	
  paper	
  presents	
  an	
  analysis	
  of	
  select	
  published	
  research	
  on	
  the	
  topic	
  of	
  design	
  ROI	
  (dROI)	
  and	
   affirms	
  good	
  design	
  is	
  good	
  for	
  business	
  (Brown,	
  2009;	
  Kelley,	
  2009;	
  Martin,	
  2009;	
  Walters	
  ,2010;	
   Whicher	
  et	
  al,	
  2010	
  et	
  al).	
  This	
  research	
  contributes	
  to	
  existing	
  design	
  research	
  literature	
  by	
   aggregating	
  and	
  examining	
  dROI	
  and	
  dROI-­‐related	
  studies	
  into	
  one	
  paper,	
  with	
  the	
  aim	
  to	
  better	
   understand	
  the	
  impact	
  of	
  design	
  practices	
  in	
  business	
  ROI.	
  It	
  also	
  attempts	
  to	
  bring	
  the	
  reader	
  up	
   to	
  date	
  on	
  the	
  most	
  recent	
  research	
  on	
  the	
  subject.	
   	
   The	
  research	
  corroborates	
  a	
  positive	
  association	
  between	
  investments	
  in	
  design	
  and	
  economic	
   performance	
  in	
  terms	
  of	
  employment,	
  sales,	
  growth	
  and	
  profitability,	
  however	
  a	
  limitation	
  of	
  this	
   literature	
  review	
  was	
  in	
  adequately	
  sourcing	
  and	
  qualifying	
  the	
  most	
  important	
  research.	
  Many	
   gaps	
  were	
  observed	
  that	
  include:	
  a	
  lack	
  of	
  research	
  examining	
  the	
  complex	
  relationship	
  between	
   design	
  and	
  superior	
  economic	
  performance	
  within	
  and	
  across	
  economic	
  sectors,	
  and	
  within	
   business	
  structures	
  (i.e.	
  Enterprise	
  vs	
  SMEs);	
  lack	
  of	
  shared	
  citations	
  and	
  foundational	
  theories	
   between	
  the	
  numerous	
  and	
  varied	
  methods	
  and	
  models	
  examining	
  design’s	
  business	
   performance	
  within	
  industry	
  sectors;	
  and	
  differing	
  perspectives	
  and	
  vocabulary	
  from	
  domain	
   dependent	
  studies	
  in	
  both	
  academic	
  disciplines	
  and	
  industry	
  sectors,	
  on	
  design’s	
  business	
  value	
   and	
  ROI.	
  	
   	
   One	
  approach	
  towards	
  better	
  understanding	
  design’s	
  role	
  in	
  providing	
  superior	
  benefits	
  over	
   costs	
  is	
  through	
  a	
  classification	
  framework	
  that	
  could	
  index	
  key	
  design	
  disciplines	
  and	
  practices	
  -­‐-­‐ such	
  as	
  product,	
  service,	
  process,	
  people,	
  place	
  and	
  policy	
  -­‐-­‐	
  against	
  their	
  value	
  metrics	
  (ROI)	
  and	
   across	
  economic	
  sectors.	
  Further	
  research	
  on	
  developing	
  such	
  a	
  design	
  ROI	
  classification	
  model	
  is	
   recommended.	
   	
   The	
  role	
  of	
  Design	
  in	
  Business	
  ROI:	
  A	
  Literature	
  Review	
  –	
  August	
  23,	
  2012  10 Of	
  note,	
  the	
  limited	
  research	
  specifically	
  defined	
  as	
  “dROI”	
  may	
  itself	
  be,	
  by	
  design.	
  If	
  design’s	
   value	
  could	
  be	
  proven	
  and	
  universally	
  recognized,	
  business	
  leaders	
  would	
  be	
  challenged	
  to	
   ignore	
  the	
  evidence	
  and	
  forced	
  to	
  evolve	
  their	
  businesses.	
  With	
  dROI	
  knowledge,	
  companies	
  will	
   be	
  able	
  to	
  justify	
  adding	
  the	
  much	
  needed	
  design	
  resources,	
  feel	
  obligated	
  to	
  review	
  current	
   management	
  processes;	
  enhance	
  production	
  budgets;	
  and	
  redefine	
  compensation	
  structures	
   (Tim	
  Brown,	
  2009).	
  	
   	
   Finally,	
  further	
  research	
  on	
  developing	
  a	
  linguistic	
  typology	
  for	
  design	
  ROI	
  is	
  also	
  suggested	
  as	
  a	
   way	
  of	
  conversing	
  about	
  design	
  that	
  is	
  both	
  interdisciplinary	
  and	
  disciplined,	
  leading	
  to	
  a	
   common	
  understanding	
  and	
  adoption	
  of	
  design	
  practices	
  and	
  valuation.	
   	
   -­‐-­‐-­‐-­‐-­‐-­‐	
   	
   5.	
  References	
  (*	
  are	
  listed	
  in	
  annotated	
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  K.	
  B.	
  (2002).	
  The	
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  Theorem	
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  Design	
  Economics	
   Harvard	
  Business	
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   Bevan,	
  N.	
  (2005).	
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  evidence	
  and	
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   Briggs,	
  R.O.	
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  On	
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  and	
  Kātz,	
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  Change	
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  Harper	
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   Bryson,	
  J.R	
  and	
  Rutsen,	
  G.	
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  Changing	
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  http://www.bno.nl/upload/publicaties/effectiviteit-­‐van-­‐ design/RSM_DESIGN_EFFECTIVITEIT_ENG_DEF.pdf	
   	
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  design	
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  recyclability:	
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   Application.	
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  the	
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  Proceedings	
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  R.	
  and	
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  Investment	
  in	
  Design	
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   Role	
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  role	
  of	
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  ways	
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  design	
  discipline	
  versus	
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  Design	
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  importance	
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  design,	
  Strategic	
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  World	
  for	
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  Consumers.	
  The	
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  Design	
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  Shaping	
  the	
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  Publisher.	
   	
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  Proposing	
  a	
  New	
  Approach	
  to	
  Discussing	
  Economic	
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  Journal	
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  A	
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  for	
  Raising	
  Business	
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  among	
  Design	
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  Conference	
   	
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