In selling the idea of Design Thinking to management, it’s often helpful to back it up with some research. However, as Jeanne Liedtka points out in Exploring The Impact of Design Thinking in Action, “rigorous academic research in scholarly management journals on the impact of the methodology on organizational outcomes remains scant, though anecdotal data is plentiful concerning its ability to improve outcomes when innovation is the goal.”
Forrester recently did a comprehensive study of the impact of Design Thinking at IBM. We’ve found that the “numbers-heavy” results are useful in getting reluctant management teams on board. Here’s a summary:
1. Project teams doubled design and execution speed with IBM Design Thinking. Profits from faster releases combined with reduced design, development, and maintenance costs to deliver $678K per minor project and $3.2M per major project, for $20.6M in total value.
Organizations slashed the time required for initial design and alignment by 75%. The model demonstrates cost savings of $196K per minor project and $872K per major project.
Project teams leveraged better designs and user understanding to reduce development and testing time by at 33% This equates to cost savings of $223K per minor project and $1.1M per major project.
IBM’s Design Thinking practice helped projects cut design defects in half. Projects were more successful in meeting user needs, thereby reducing design defects and subsequent rework to save $77K per minor project and $153K per major project.
Faster time-to-market enabled increased profits from net- new customers and the higher present value of expected profits. Faster time-to-market increased profits by $182K per minor project and $1.1M per major project.
2. Human-centered design improved product outcomes, reduced the risk of costly failures, and increased portfolio profitability. Refined strategic prioritization enabled investments in solutions that were less likely to fail. Better design increased average product profits. IBM helped expand design thinking at the organization over three years to penetrate one quarter of the entire portfolio, enabling $18.6M in increased profits.
3. Cross-functional teams collaborated to share problems and find solutions, reducing costs by $9.2M in streamlined processes.
Additionally, data from sixty survey respondents provided the following notable insights:
Improved collaboration and business strategy drove increased customer experience and sales, streamlined processes, and reduced project labor.
72% of IBM clients utilize design thinking in most or all teams
52% of survey respondents associated IBM with design thinking
Likewise, the study details benefits hard-to-quantify, yet clearly visible, benefits:
Encouraged an empowered, engaged, and happy workforce.
Perfected internal processes for HR, sales, and beyond.
Enhanced KPIs such as UI, UX, CX, NPS, and brand energy.
And, finally, since management folks always appreciate a cost-benefit discussion, the interviewed organizations experienced the following risk- adjusted costs:
Internal labor and IBM fees for projects totaled $6.8M, driven by distinct costs of $159K per minor project and $1.5M per major project.
Transformation costs reached $5M in IBM resources and internal labor.
Training incurred costs of $218K in IBM facilitation and internal labor.
Forrester’s interviews with four existing IBM clients, data from 60 survey respondents, and subsequent financial analysis found that a composite organization based on these interviewed organizations experienced benefits of $48,360,958 over three years versus costs of $12,045,247 by engaging with IBM’s Design Thinking practice, adding up to a net present value (NPV) of $36,315,711 and an ROI of 301%.
And, the of course, there is the Design Value Index (DVI), an investment tool that shows companies that integrate design thinking into corporate strategy can outpace industry peers by as much as 228%.
We’d like to hear from you!
What’s been your experience in getting management on board with Design Thinking? Are there steps or insights we didn’t mention here that you think are important? Please let us know in the comments!
*Photo by Amy Hirsch