UK study links effective design with strong financial performance

A recent study has demonstrated for the first time the direct relationship between the effective use of design and a company’s financial performance.

While it is a UK study – it is the most comprehensive and robust study that we are aware of. It compares the performance of design savvy companies over the ten-year period (1994 – 2003) and, concludes that these companies more than outperformed the companies listed on the FTSE 100 over the full period by 200%.

"Design is an important indicator of good management."

The Design Council UK funded the study, which was completed by Dr Andrew Black, a former PricewaterhouseCoopers consultant and author of ‘In Search of Shareholder Value’. David Kester, Chief Executive of the Design Council said: ‘The research shows that design is an important indicator of good management, and that this feeds directly through to the financial performance of these companies. Any investors who backed this group over the last ten years will have seen a consistent and significant out performance in their portfolio versus the FTSE All-Share index.’

"The most design-effective, high-performing businesses are among the UK's leading brands."

Among the companies in the Design Portfolio – the most design-effective, high-performing businesses (identified through the design awards) are many of the UK’s leading brands including; Royal Bank of Scotland, HSBC, Barclays and Egg in financial services; Tesco, Marks & Spencer, J Sainsbury and Boots from the retail sector; air transport companies such as British Airways, EasyJet and BAA; together with a wide variety of companies representing the industrial and manufacturing base, such as ICI, BAE Systems, Rolls-Royce and Shell.

A significant aspect of the research is that investors would have achieved out-performance by investing in these shares throughout the cycle. During the bull market, the design portfolio beat the FTSE All-Share in excess of 120% while, during the bear market, by more than 17%. As the UK economy has been recovering, the portfolio has been running at between 14% and 38% ahead of the FTSE 100.

"Design is a critical component of business performance."

We are happy to be able to say, with complete confidence and substantiation, that design is a critical component of business performance and the link between shareholder return and investment in great design is no longer scarce or anecdotal. The Design Council UK research establishes, that a commitment to excellent design - throughout an organisation - delivers benefits to a company and its shareholders in terms of long-term financial performance.

Ignition Marketing Communications Ltd

www.54321ignition.co.uk, tel: 01252 711318

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