Design Centric Companies Increase Shareholder Value

Design & Branding Index.7

Introducing the Design and Branding Index

Does good design increase a businesses’ bottom line? For over five years and in sixty posts we have shown examples of good design that increase sales, promotes products and increases brand awareness. However we wanted to quantitatively analyze if investments in good design actually raises companies profits and increases shareholder value. To answer that inquiry we have created a stock Index debuting as the Design and Branding Index or DBI that follows sixteen companies that have a strong commitment to quality design, and a strong brand position in its market.  We then have taken these companies and compared their total returns, over a ten-year period, to the returns of the S&P 500. As the nearby chart illustrates returns of the design centric organizations outperformed the S&P by 179% between 2006 and 2016.

The companies selected for the DBI are culled from a wide cross-section of industries including: technology, retail, industrial and consumer non-durable goods. These diverse market sectors illustrates that design centric organizations do not need to be confined to those traditionally associated with design such as technology or luxury retail. Rather companies from any industry sector can innovate with a focus on the design of its products, services and customer experiences they craft.

The sixteen companies included in the DBI index are:

Apple, Google, Ford, Black & Decker, Whirlpool, Knoll, Sherman Williams, Proctor & Gamble, Target, Tiffany, Nike, Williams Sonoma, Starbucks, Coke, Disney and Marriott.

The selection criteria for companies included in the Index are:

  1. Companies with strong product, services and user experiences that enhance the consumer experience.
  2. Companies with leading brand positions in their markets.
  3. Companies with a market capitalization of over $1 Billion that have been listed on an American Stock exchange for a minimum of ten years.
  4. Companies with corporate leadership that identifies design as a strategic advantage and a corporate structure with request resources to exercise that advantage.

These criteria eliminate many highly qualified design companies that could be included in the index if it weren’t for the fact that they fall outside of the criteria. For example, Dyson with its 1,000 engineers is an innovation juggernaut, but as a private British Company it is not included in the DBI. OXO, the famous ergonomic product design firm, is owned by a conglomerate and is grouped with basket of lack luster brands and is therefore not included in the index. It is our intent to publish the DBI twice a year in order to track over time whether this outsized increase in shareholder value is an outlier or can be consistently maintained over time and through various business cycles.

Bottom Line: Good design sells, and design centric organizations outperform their industry peers thereby increasing shareholder value.

Our DBI index is inspired by an Index developed by the Design Management Institute and Motive Strategies in 2013 called the Design Value Index or DVI. The DVI index uses a more rigorous company selection criteria and greater in-depth research into each of the companies than we have the resources to complete. Anyone who see value in our index is encouraged to visit DMI’s site and review their index, work and methodologies.

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