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Discover the impact of design implementation on business performance in Flanders based on 2003 and 2007 studies. Learn about the key indicators and evolution in business performance for manufacturing and service companies.
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The economical impact of design on companies in Flanders
The 2003 study In 2003 we studied the impact of implementing design on business performance. Design was defined as … … a holistic dealing with matters, that besides the styling and restyling of products, extends to the application of innovative and alternative materials, ergonomics, engineering, ecology and ethics, psychology, culture and last but not least management. (Definition of ‘design’ according to Flemish Ministry of Economy) For this study, 400 managers of Flemish manufacturing companies were interviewed about the way they run their business. Business performance and the evolution in business performance (1999-2001) was analysed in function of the extent to which the companies implement design activities.
The 2007 study In the 2007 study, a new random sample of 500 managers was interviewed about their design implementation, their attitude towards design and its impact on business performance. Amongst them were 400 managers of manufacturing companies and 100 managers of businesses in the service sector. Business performance and the evolution in business performance (2001-2005) was analysed in function of the extent to which the companies implement design activities. The latter analysis was also performed on the 2003 sample. To that end the 2003 sample was enriched with business performance indicators for 2005.
Survey 2003 Questionnaire Business Performance Indicators Survey 2007 Questionnaire Business Performance Indicators amongst 400 manufacturing companies with at least 5 employees amongst 400 manufacturing companies and 100 service companies with at least 5 employees Comparison Manufacturing companies Comparison Manufacturing vs. Service companies Evolution in function of design implementation Evolution in function of design implementation
Indicators of business performance
Indicators of business performance • Business performance parameters included in the analysis: • Turnover • Number of employees • Profitability • Solvency • Liquidity
PROFIT EQUITY EQUITY TOTAL LIABILITIES CASH + ACCOUNTS RECEIVABLE < 1year CURRENT LIABILITIES / DEBTS <1year Indicators of business performance To what relative extent is the company making profit Profitability = To what extent can the company survive when business is bad Solvency = To what extent is the company able to fulfil short-term financial obligations Liquidity =
Measurement of design application • Implementation of design was measured in different ways: • By means of a straightforward question (European standard = Danish Design Ladder) • ‘Please indicate which situation you think is most typical for your company’: • No application of design • Occasional application of design • Only used in the stage of product finishing • Integrated in the production process • Applied strategically • By means of 28 design indicators (as in 2003)
Measurement of design application Regular rethinking of the production process Regular update of the technology used in products Focus on long lasting use of materials Continuous search for new materials Regular updates of the shape of products Regular updates of product models Research into user friendliness of products Development of more ecological products Rethinking of product functionalities Design used as tool for making a difference (USP) Product development in partnership In house designer 28 design indicators Visits to design fairs / consulting design magazines Regular updates of packaging Regular rethinking of packaging Explicit dress code exceeding safety requirements Regular rethinking of the work place interior House style developed by an external specialist Receive media attention for innovative products Packaging is designed by an external specialist The production hall is dressed Office furniture is designed by an external specialist Service design department Research into customer needs and expectations Development of procedures to improve our services Patent application Registration of brand names Registration of models
Already 12% of the Flemish companies indicate to apply design strategically
Implementation of design Degree in which design is used in the company. n=400 n=100
Implementation of design Average turnover (in million €) in function of the degree of design implementation Manufacturing companies
Implementation of design Average number of employees in function of the degree of design implementation Manufacturing companies
Survey 2003 Questionnaire Business Performance Indicators amongst 400 manufacturing companies with at least 5 employees Evolution in function of design implementation
Implementation of design Average turnover (in million €) in function of the degree of design implementation
Implementation of design Average number of employees in function of the degree of design implementation
There is a positive relationship between design implementation and the profitability of the company
Implementation of design Profitability Profitability is higher for implementers of design than for those who implement design rarely. In the Design group, profitability was lower in 2001 than in 1999. No such drop in profitability was observed in de non-Design group. In 2003 it was concluded that the Design group suffered more from the 9/11 crisis. In 2005, 4 years after 9/11 profitability is lower for all companies. The profile is however similar to that in 1999, with companies that implement design being more profitable than the other companies.
Implementation of design Profitability
Implementation of design: High vs. Low Profitability: increase or decrease from 2001 2005
There is no relationship found between design implementation and the solvability and liquidity of the company
Survey 2003 Questionnaire Business Performance Indicators Survey 2007 Questionnaire Business Performance Indicators amongst 400 manufacturing companies with at least 5 employees amongst 400 manufacturing companies and 100 service companies with at least 5 employees Comparison Manufacturing companies Comparison Manufacturing vs. Service companies Evolution in function of design implementation Evolution in function of design implementation
Although half of the companies indicate not to implement design, all of them do indicate to apply activities that can be considered as design activities
212 manufacturing companies and 53 service companies indicate NOT to apply design in their business. • However, when questioned about specific design activities, all of them do seem to apply design activities. Among the manufacturing companies that don’t apply design: • 78% develop procedures to improve services • 65% focus on long lasting use of materials • 59% continuously search for new materials • 42% regularly update the shape of products • 34% regularly update product models • 27% have their house style developed by an external specialist • 17% use an in-house designer
Implementation of design Based upon “The Danish Design Ladder” • Design is not implemented (n=212) • Design is implemented for styling (n=58) • Occasionally (n=24) • For product finishing (n=34) • Design is implemented systematically or strategically (n=129) • Integrated in business processes (n=81) • Strategically (n=48)
Implementation of design Based upon 28 indicators 25% companies with overall the highest degree of implementation (n=101) Vs. 25% companies with overall the lowest degree of implementation (n=97)
Implementation of design Average turnover (in million €) in function of the degree of design implementation Manufacturing companies
Implementation of design Average number of employees in function of the degree of design implementation Manufacturing companies
Design was mentioned as a key success factor for business performance
Design was, however, the least important of all factors presented
Implementation of design To which extent are the different aspects of doing business determining for the success of the company? n=400 n=100 Scores were given from 1 up to 7.
Better business performance is especially prominent (turnover, profitability, solvency, liquidity) in companies that implementeddesign for: • Multimedia applications • Communications & Brand • Interior & Exhibition design • Service design
Implementation of design Purposes of design. Which sub-aspects of design were used in the past 3 years? Percentages based on companies that implement design; 47% in the manufacturing sector; 47% in the service sector n=188 n=47
Multimedia applications • Design is used (n=97) • Design is not used (n=303)
Design used for multimedia applications Average turnover (in million €) in function of use of design Manufacturing companies
Design used for multimedia applications Number of companies with increased/decreased turnover
Design used for multimedia applications Average number of employees in function of use of design Manufacturing companies
Design used for multimedia applications Number of companies with increased/decreased # of employees
Design used for multimedia applications Profitability in function of use of design Manufacturing companies
Design used for multimedia applications Number of companies with increased/decreased profitability
Design used for multimedia applications Solvency in function of use of design Manufacturing companies
Design used for multimedia applications Number of companies with increased/decreased solvency
Design used for multimedia applications Liquidity in function of use of design Manufacturing companies
Design used for multimedia applications Number of companies with increased/decreased liquidity