Wal t Disne y Whirlpool TheFeature Power TGOODITLE HERE DESIG N& DRIVES Value SHAREHO ofLDER Design VALUE Continues to Grow across the S&P 500 aA Specialpple Report Sponsored For by the DesignD Management h erman- Institute in Conjunction with Motiv Strategies s ap s tanle yBla ck&De cker s tar Buck s s tar Woo D s teel c ase c oc a-c ola DESIGN-CENTRIC COMPANIES: APPLE FORD HERMAN-MILLER IBM INTUIT NIKE PROCTER & GAMBLE SAPStANLEYBLACK&DECKER StARBUCKS STARWOOD StEELCASE COCA-COLA WALT DISNEY WHIRLPOOL APPLE FORD HERMAN- MILLER IBM INTUIT NIKE PROCTER & GAMBLE SAPStANLEYBLACK&DECKER St4 DMI VOL.27,A ISSUE 4RBUCKS STARWOOD StEELCASE COCA-COLA WALT DISNEY WHIRLPOOL APPLE FORD HERMAN- Feature GOOD DESIGN DRIVES SFHAREHOeatureL TITDERLE V HEREALUE MILLER IBM INTUIT NIKE PROCTER & GAMBLE SAPSTANLEYBLACK&DECKER STARBUCKS STARWOOD Design Value Index Exemplars STEELCASE COCA-COLA Outperform the S&P 500 DESIGN-CENTRIC Index (Again) and a New Crop COMPANIES: APPLE FORD of Design Leaders Emerge HE Design Management Institute’S year in a row we have seen such results in 2015 Design Value Index (DVI), based excess of 200% over the S&P. HERMAN-MILLER IBM INTUIT on a portfolio of 16 publicly-traded Seeing the accomplishments of this year’s stocks from companies considered exemplars and studying the new companies to be “design-centric” contingent to watch has opened my eyes on a number of NIKE PROctER & GAMBLE on a set of criteria that reflects best fronts. First, I no longer think that it takes Tpractices in design management, shows a 211% 10 years to build a highly-functional design SAPSTANLEYBLACK&DECKER return over the S&P 500. This marks the third organization. With the right leadership and DESIGN VALUE INDEX 2005-2015 DESIGN-CENTRIC $45,000 STARBUCKS StARWOOD COMPANIES: APPLE COca-COLA $40,000 FORD STEELCASE COCA-COLA HERMAN-MILLER $35,000 IBM INTUIT DVI NIKE $30,000 WALT DISNEY WHIRLPOOL PROCTER & GAMBLE SAP $25,000 % STARBUCKS 211 APPLE FORD HERMAN- STARWOOD $20,000 STANLEY BLacK & DECKER S&P 500 STEELcasE $15,000 MILLER IBM INTUIT NIKE TaRGET WaLT DISNEY $10,000 WhIRLPOOL PROctER & GAMBLE 06/2005 06/06 06/07 06/08 06/09 06/10 06/11 06/12 06/13 06/14 06/15 12/15 SAPSTANLEYBLACK&DECKER STARBUCKS StARWOOD DMI VOL.27, ISSUE 4 5 STEELCASE COCA-COLA The Power & Value of Design Continues to Grow across the S&P 500 A Special Report Sponsored by the Design Management Institute in Conjunction with Motiv Strategies senior level support, an enterprise-wide design IDEO in 2004, SAP’s Co-founder, Hasso Plattner, function that produces results can be built in became convinced that human-centered design less and less time. Second, the widespread use was the way to tackle complex challenges and of design as a strategic capability is unlikely to make its software more intuitive and easier to go away anytime soon. In fact, today there may use. He founded its SAP’s Design Services Team be more nontraditional organizations – services, as an organizational transformation incubator non-profit, management consulting firms, and and followed it by making a $35 million personal governments– trying to build design capabilities donation to found the Hasso Plattner Institute of than ever before. Third, design thinking and Design at Stanford, commonly known as simply co-creation isn’t a fad, but rather a new way for “the d.school.” To reinforce its commitment all problem solvers to put the user at the center of to design, SAP proceeded to train thousands a problem to develop solutions from the outside of design thinking coaches, offer SAP design in rather than the inside out. As a result, we see services to enable customers in experience design not as a pure factor that makes our DVI design, and established co-creation centers company’s stocks perform better on the stock in four locations around the world, called market, but rather as a highly integrated and AppHauses, including its newest in South Korea. influential force that enables the organization to Like many companies on the journey to become achieve outsized results. design-centric, it went to work integrating design The Design Management Institute and Motiv into its product development processes and fought Strategies created the Design Value Index* as the common battle to drive design thinking and a means to measure the value of implementing innovation into a then 40,000 person, now nearly best-in-class design management practices. 80,000 person, engineering-driven company. Led Companies in the Index meet a set of six criteria by Stanford-trained Chief Design Officer, Sam Yen, for inclusion that includes the following: SAP has built a staff of over 500 people working 1) Design operates at scale across the enterprise. in its world-wide design function and won over 27 2) Design holds a prominent place on the awards, including 7 Red Dot awards. Also notable company organizational chart, and either sits is SAP’s extreme generosity in helping everyone on the leadership team or directly reports to a in its path get better at understanding design leadership team member. through numerous educational platforms such as 3) Experienced executives manage the massive open online courses (MOOCs) to train Design function. software engineering teams, co-innovating with 4) Design sees a growing level of investment its customers through its AppHaus centers, and to support its growing influence. collaborating with universities such as Stanford, 5) Design enjoys senior leadership support from the Hasso Plattner Institute outside of Berlin, and the top tier of the organization. the University of California, San Diego’s Design The company has been publicly-traded on a Lab, as well as authoring and making publicly U.S. exchange for the last ten years and thereby available a plethora of useful design tools on its adheres to GAAP accounting rules. website, www.build.me. — *The Design Value Index, begun in SAP Joins the Design Value Index DVI Best Practices: Senior leadership support, 2013, tracks the value of a portfolio Joining the group this year is SAP. Headquartered design executive leadership, increasing investment, of publicly traded companies that meet specific design management in Germany with global operations, it has worked 10 year history of design management, working at criteria. It monitors the impact of tirelessly in the last ten years to infuse design into enterprise scale, reporting into a member of its board. their investments in design on their stock value over a ten-year period, everything it does. Upon reading a BusinessWeek — relative to the overall S&P Index. cover story written by Bruce Nussbaum about 6 DMI VOL.27, ISSUE 4 Feature GOOD DESIGN DRIVES SFHAREHOeatureL TITDERLE V HEREALUE Newell Rubbermaid leaves the Index following the best practices criteria set by the As many of us have seen over the years, business DMI for companies that are eligible to belong in conditions and decisions can impact how the Design Value Index. a corporation is able to keep pace with best Here are short profiles of these firms featuring practices in design management. DMI’s Design examples of the type of progress they have made, Value Index companies will go through changes most within the past 5 years. as well, including staff reductions, cost cutting and mergers and acquisitions that may severely Honeywell Invests IN USER EXPERIENCE WITH HUE impact a firm’s ability to maintain the criteria we In 2011, David Cote, chairman and CEO of have set to be part of the index. Honeywell, noticed that many things in his One such company this year is Newell Brands, personal life as a consumer were getting easier Inc., formerly known as Newell Rubbermaid. In 2015 and more convenient to accomplish but this had Newell bought Jardin Brands, which added about not translated into the industrial sector where 120 brands such as Mr. Coffee, Oster, and Sunbeam Honeywell does most of its business. It was then to Newell’s portfolio of 30 brands which are he decided that he wanted Honeywell to become managed out of its new design center in Kalamazoo, the “Apple of the industrial sector.” MI. While this acquisition added over $11 billion Of course, we’ve heard this battle cry before. in revenue to Newell’s $5 billion thereby tripling When the iPhone was taking off every company its size, the design management practices used by wanted to be the Apple of their sector. But this Jardin, who now make up the majority of Newell particular CEO has been driving the organizational Brands revenue, do not meet the criteria set for change required to actually make it happen, the Design Value Index. Hence with the business especially in the industrial sector where he believed decision that maintains 1/3rd of the company in taking a human-centered design approach to adherence with the Design Value Index criteria, and everything touched by its customers would be a real 2/3rds out of adherence, this gap in practice requires differentiator. To lead the effort, Honeywell hired us to remove Newell from the Index. Doug Beaudet as vice president, Global Experience — Design, who brought decades of user experience DVI Gap Practice: Design management not design from Whirlpool and Eastman Kodak. operating at scale across the enterprise; design does Since 2012, Honeywell has hired more than not have a prominent role in the company. 300 designers and built 10 studios around the — world. The initiative was branded the Honeywell User Experience (HUE) and was integrated into Corporate design thrives – the company’s innovation and new product ‘Our Ones to Watch’ (OTW) development processes. The HUE team is In the last several years we have seen an driving end-to-end customer-centered design unprecedented level of S&P 500 corporations on hundreds of projects.