Presentation by Antti Pitkänen held at the Design. Innovation. Europe.II- event at the Ministry of Economy and Energy, Berlin 30.11.2015 Design ROI was a research project conducted in 2011 and 2012 with the aim of developing a model and a set of metrics for measuring the return on investments in design. The developed Design ROI framework connected four focus areas of design, the resulting benefits and types of cash flow effects. Since it’s publication, the project has encouraged conversations with other institutions researching the topic of design value and metrics. For more information, please visit www.designroi.fi

1. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Best Practices “Value of Design”
Antti Pitkänen
Design. Innovation. Europe. II
Design ROI – Research Project

2. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Introductions
Antti Pitkänen
EDUCATION
(Ma) Industrial and Strategic Design
+ International Design Business Management
PROFESSIONAL
Agile Work Oy
Insights and Strategy Director
Agile Work
Seos Design Oy
Managing Director and Co-Founder
www.seos.fi
Design ROI - Research project
Project Manager
www.designroi.fi
Finnish Design Business Association
Co-founder and Member of the Board
www.fdba.net
OTHER
Entrepreneur, Curator, Facilitator, Lecturer…
CONTACT
+358505734645
antti.pitkanen@seos.fi
@anttipitkanen
@seosdesign
@agile _work
@Design_ROI
fi.linkedin.com/in/
anttipitkanen
Suomen Muotoilutoimistot
Finnish Design Business Association ry

3. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
A research project with an aim to
research and develop tool and
methodology to measure
economic impact of design

4. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II

5. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Main Partners
Design Agencies
Others
Partners
Suomen Muotoilutoimistot
Finnish Design Business Association ry

6. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
“That what I can not measure,
I can not manage.”
Paul Lillrank

7. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
(Source: Raulik-Murphy in Whicher et al., 2011)
Levels of Design Evaluation
MACROLEVELMICROLEVEL
PRIVATE SECTOR PUBLIC SECTOR
Levels of Design Evaluation
Individual
Companies
Individual
Programs
and policies
National
Industry
National
Economy/
Society
2
1
4
3

8. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Top Mngmnt
Middle Mngmnt
Employees
Board
CLIENT DESIGN AGENCY
What is it all about?

9. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
7%
22%
47%
23%
0% 20% 40% 60% 80% 100%
Design is not
relevant for us
We are doing well
without design
We haven’t found
the right designers
We don’t believe in working
with external designers
( Source: Association for Finnish Work, 2012)
Why hasn’t your company invested
in design in the last two years? (n=578)
Limiting Factors 2012:

10. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
3%
10%
24%
12%
23%
15%
20%
17%
37%
26%
47%
36%
45%
46%
79%
54%
50%
42%
40%
40%
34%
0% 20% 40% 60% 80% 100%
Not enough resources to allocate for
design
Design services are too expensive
Lack of design know-how in the
company
Lack of need for for design know-how
The pricing factors of design services
are unclear
The needed skills are not available on
the market
Limited considerably Has not limitedLimited to a certain extent
Which factors have limited or inhibited the
use of design in your company? (n=150)
( Source: Ministry of Employment and the Econonmy, 2015)
Limiting Factors 2015:

11. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
From Qualitative to Financial
%%
Qualitative Quantitative Financial

12. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Challenges in Measuring Design ROI
Lack of clear
Definition
Time delay in-between
Design and Return
Isolating from
other functions

13. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
“That what I can not create,
I can not understand”
Richard Freynman

14. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
%%
Qualitative Quantitative Financial
OBJECT OF DESIGN DESIGN BENEFITS EFFECTS ON CASH FLOW
PRODUCT BRAND
SERVICE SPACE
STRATEGIC
TACTICAL
OPERATIVE
FASTER
CASH FLOW
GREATER
CASH FLOW
LESS
COSTS
ACCUMU-
LATION OF
CAPITAL
Figure 18 The hypothesis of the Design ROI research:
design benefits can be achieved by using design, and these benefits
have impact on company’s cash flow and intangible capital.
OBJECT OF DESIGN DESIGN BENEFITS EFFECTS ON CASH FLOW
PRODUCT BRAND
SERVICE SPACE
STRATEGIC
TACTICAL
OPERATIVE
FASTER
CASH FLOW
GREATER
CASH FLOW
LESS
COSTS
ACCUMU-
LATION OF
CAPITAL
Figure 18 The hypothesis of the Design ROI research:
design benefits can be achieved by using design, and these benefits
have impact on company’s cash flow and intangible capital.
%%
Qualitative Quantitative F
OBJECT OF DESIGN DESIGN BENEFITS EFFECTS ON CASH FLOW
PRODUCT BRAND
SERVICE SPACE
STRATEGIC
TACTICAL
OPERATIVE
FASTER
CASH FLOW
GREATER
CASH FLOW
LESS
COSTS
ACCUMU-
LATION OF
CAPITAL
Figure 18 The hypothesis of the Design ROI research:
design benefits can be achieved by using design, and these benefits
have impact on company’s cash flow and intangible capital.
The Building Blocks

15. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
ROI (%)=
Gain
Investment
X 100

16. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
NPV = -C0+ + +…+
C1
1+r
C2
(1+r)
2
CT
(1+r)
T
Co = alkuinvestointi
C = kassavirta
r = laskentakorkokanta
Co = Initial Invesment
C = Cashflow
R = Discount rate / the
opportunity cost of capital
T = Time

17. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
How Would it Work?

18. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
First Prototype of the Tool

19. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Publications
REPORTS
DESIGN ROI - Mitattavaa muotoilua
October 2012
DESIGN ROI –Measurable Design
June 2013
Available at www.designroi.fi
ARTICLES
Design ROI – Mitattavaa Muotoilua
Teknova / Muotoiluajattelu ( Toim. Satu Miettinen) 2014
Design ROI – Framing the Question
IDBM Nordcode seminar paper, June 2012
The Finnish Design ROI project
Article in Sharing Experience Europe (SEE)
Bulletin Issue 9 June 2013
THESIS
Design: The driving force behind intangible capital?
Anni Harju, Master’s Thesis, May2012
Design performance measures in the context of Finnish design consultancies and their client
companies
Jenny Jonkka. Master’s Thesis, 2012
Evaluating the Impact of Industrial Design to Company Performance in Product Development
Maria Salo Master’s Thesis, April 2013
MITATTAVAA
MUOTOILUA
SEE PLATFORM BULLETIN ISSUE 9 – MAY 2013
SHARING EXPERIENCE EUROPE
POLICY INNOVATION DESIGN
EDITORIAL
RESEARCH
Design ROI
POLICY IN PRACTICE
Lapland Design Policy
INTERVIEWS
Design Policy and Promotion Map: Taiwan, Denmark, Poland
SPECIAL REPORT
Design & Public Services: Design Commission Inquiry
Design for Public Good Report
CASE STUDY
SME Wallet
EDII NEWS
European Action Plan for Design
Supported by
the European
Commission

20. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Changes in Design Since 2012
Rise of
Design Thinking
Design
Acquisitions
Design in
Tech

21. Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Design ROI – Best Practices ”Design Value”
Antti Pitkänen
Design. Innovation. Europe. II
Best Practices “Value of Design”
Antti Pitkänen
Design. Innovation. Europe. II
Design ROI – Research Project