The economical impact of design on
companies in Flanders
The 2003 study
The 2003 study
In 2003 we studied the impact of implementing design
on business performance. Design was defined as …
… a holistic dealing with matters, that besides the styling and
restyling of products, extends to the application of innovative
and alternative materials, ergonomics, engineering, ecology
and ethics, psychology, culture and last but not least
management.
(Definition of ‘design’ according to Flemish Ministry of Economy)
For this study, 400 managers of Flemish manufacturing
companies were interviewed about the way they run
their business. Business performance and the evolution
in business performance (1999-2001) was analysed in
function of the extent to which the companies
implement design activities.
The 2007 study
The 2007 study
In the 2007 study, a new random sample of 500
managers was interviewed about their design
implementation, their attitude towards design and its
impact on business performance. Amongst them were
400 managers of manufacturing companies and 100
managers of businesses in the service sector.
Business performance and the evolution in business
performance (2001-2005) was analysed in function of
the extent to which the companies implement design
activities.
The latter analysis was also performed on the 2003
sample. To that end the 2003 sample was enriched
with business performance indicators for 2005.
Survey 2003
Survey 2007
amongst 400
manufacturing companies
with at least 5 employees
Questionnaire
amongst 400
manufacturing companies
and 100 service companies
with at least 5 employees
Comparison
Manufacturing
companies
Questionnaire
Comparison
Manufacturing vs.
Service companies
Business
Performance
Indicators
Business
Performance
Indicators
Evolution in function
of design
implementation
Evolution in function
of design
implementation
Indicators of
business performance
Indicators of business performance
Business performance parameters included
in the analysis:
• Turnover
• Number of employees
• Profitability
• Solvency
• Liquidity
Indicators of business performance
To what relative extent is the company making profit
Profitability =
PROFIT
EQUITY
To what extent can the company survive when business is bad
Solvency =
EQUITY
TOTAL LIABILITIES
To what extent is the company able to fulfil short-term financial obligations
Liquidity =
CASH + ACCOUNTS RECEIVABLE < 1year
CURRENT LIABILITIES / DEBTS <1year
Measurement of design
application
Measurement of design application
Implementation of design was measured in different
ways:
• By means of a straightforward question
(European standard = Danish Design Ladder)
‘Please indicate which situation you think is most
typical for your company’:
- No application of design
- Occasional application of design
- Only used in the stage of product finishing
- Integrated in the production process
- Applied strategically
• By means of 28 design indicators (as in 2003)
Measurement of design application
Regular rethinking of the production process
Regular update of the technology used in products
Focus on long lasting use of materials
Continuous search for new materials
Regular updates of the shape of products
Regular updates of product models
Research into user friendliness of products
Development of more ecological products
Rethinking of product functionalities
Design used as tool for making a difference (USP)
Product development in partnership
In house designer
Visits to design fairs / consulting design magazines
Regular updates of packaging
Regular rethinking of packaging
Explicit dress code exceeding safety requirements
Regular rethinking of the work place interior
House style developed by an external specialist
Receive media attention for innovative products
Packaging is designed by an external specialist
The production hall is dressed
Office furniture is designed by an external specialist
Service design department
Research into customer needs and expectations
Development of procedures to improve our services
Patent application
Registration of brand names
Registration of models
28 design
indicators
Half of the Flemish
companies indicate to
apply design
Already 12% of the Flemish
companies indicate to
apply design strategically
Implementation of design
Degree in which design is used in the company.
production 2007
Design as a strategic value
Use of design for the development of products
No systematic use of design
No implementation of design
12%
n=400
11%
services 2007
n=100
0%
20%
9%
12%
12%
25%
6%
Use of design for the finishing of products
53%
11%
53%
50%
75%
100%
Implementation of design
Average turnover (in million €) in function of the degree of design implementation
Manufacturing companies
50
2001'
2005'
41,4
40
35,8
28,8
30
20
19,5
20,7
22,2
20,3
19,9
17,2
14,9
12,5
9,7
10
0
Sample
(Turnover)
Not applied
(Turnover)
Occasionally
(Turnover)
For product
finishing
(Turnover)
Integrated
(Turnover)
Strategic
(Turnover)
Implementation of design
Average number of employees in function of the degree of design implementation
Manufacturing companies
75
68,4
2001'
67,7
2005'
48,9
50
43,5
44,8
41,5
40,7
39,5
36,7
33,7
33,8
28,2
25
0
Sample
(#employees)
Not applied
(#employees)
Occasionally
(#employees)
For product
finishing
(#employees)
Integrated
(#employees)
Strategic
(#employees)
Survey 2003
amongst 400
manufacturing companies
with at least 5 employees
Questionnaire
Business
Performance
Indicators
Evolution in function
of design
implementation
Implementation of design
Average turnover (in million €) in function of the degree of design implementation
50
40
34,9
34,5
30,1
30
20
18,3
17,7
14,0
10
9,9
10,9
2001'
2005'
5,9
0
1999'
Sample (Turnover)
Low group (Turnover)
High group (Turnover)
Implementation of design
Average number of employees in function of the degree of design implementation
125
106,6
103,9
99,0
100
75
50
25
43,2
42,4
42,1
21,3
20,9
20,4
1999'
2001'
2005'
0
Sample (# employees)
Low group (# employees)
High group (# employees)
There is a positive relationship
between design implementation
and the profitability of the
company
Implementation of design
Profitability
Profitability is higher for implementers of design than for those who implement
design rarely.
In the Design group, profitability was lower in 2001 than in 1999. No such drop in
profitability was observed in de non-Design group. In 2003 it was concluded that
the Design group suffered more from the 9/11 crisis.
In 2005, 4 years after 9/11 profitability is lower for all companies. The profile is
however similar to that in 1999, with companies that implement design being
more profitable than the other companies.
Implementation of design
Profitability
50
40
36,6
33,2
30
33,1
32,6
29,3
30,7
29,6
25,2
23,2
20
10
0
1999'
Sample (Profitability)
2001'
Low group (Profitability)
2005'
High group (Profitability)
Implementation of design: High vs. Low
Profitability: increase or decrease from 2001 2005
100%
75%
48,15%
57,94%
56,90%
42,06%
43,10%
Sample
Low
50%
25%
51,85%
0%
Increased
High
Decreased
There is no relationship found
between design implementation
and the solvability and liquidity
of the company
Survey 2003
Survey 2007
amongst 400
manufacturing companies
with at least 5 employees
Questionnaire
amongst 400
manufacturing companies
and 100 service companies
with at least 5 employees
Comparison
Manufacturing
companies
Questionnaire
Comparison
Manufacturing vs.
Service companies
Business
Performance
Indicators
Business
Performance
Indicators
Evolution in function
of design
implementation
Evolution in function
of design
implementation
Although half of the companies
indicate not to implement design,
all of them do indicate to apply
activities that can be considered
as design activities
212 manufacturing companies and 53 service
companies indicate NOT to apply design in their
business.
However, when questioned about specific design
activities, all of them do seem to apply design
activities. Among the manufacturing companies that
don’t apply design:
•78% develop procedures to improve services
•65% focus on long lasting use of materials
•59% continuously search for new materials
•42% regularly update the shape of products
•34% regularly update product models
•27% have their house style developed by an external specialist
•17% use an in-house designer
Implementation of design
Based upon “The Danish Design Ladder”
• Design is not implemented (n=212)
• Design is implemented for styling (n=58)
• Occasionally (n=24)
• For product finishing (n=34)
• Design is implemented systematically or strategically (n=129)
• Integrated in business processes (n=81)
• Strategically (n=48)
Implementation of design
Implementation of design
Based upon 28 indicators
25% companies with overall the highest degree of implementation
(n=101)
Vs.
25% companies with overall the lowest degree of implementation
(n=97)
Implementation of design
Average turnover (in million €) in function of the degree of design implementation
Manufacturing companies
40
2001'
32,6
2005'
30
27,5
20,7
20
19,5
14,4
13,2
10
0
Sample (Turnover)
Low group (Turnover)
High group (Turnover)
Implementation of design
Average number of employees in function of the degree of design implementation
Manufacturing companies
75
2001'
65,3
63,2
2005'
50
43,5
41,5
26,9
26,2
25
0
Sample (# employees)
Low group (# employees)
High group (# employees)
Design was mentioned as
a key success factor for
business performance
Design was, however, the
least important of all
factors presented
Implementation of design
To which extent are the different aspects of doing business determining for the success
of the company?
Production 2007
Services 2007
n=400
n=100
5,06
Financial management
5,11
4,98
Internal communication
5,23
4,71
Operational management
4,84
4,39
Marketing and sales
4,27
3,91
R&D
3,94
3,17
Design
2,89
1
2
Scores were given from 1 up to 7.
3
4
5
6
7
Better business performance is especially
prominent (turnover, profitability, solvency,
liquidity) in companies that implemented
design for:
- Multimedia applications
- Communications & Brand
- Interior & Exhibition design
- Service design
Implementation of design
Purposes of design. Which sub-aspects of design were used in the past 3 years?
Percentages based on companies that implement design; 47% in the manufacturing sector;
47% in the service sector
production 2007
services 2007
n=188
n=47
52%
Multimedia applications
70%
51%
Product&industrial design
30%
40%
Communications&brand
62%
38%
Interior&exhibition design
55%
28%
Service design
47%
19%
Clothing or textiles
15%
0%
25%
50%
75%
100%
Multimedia applications
• Design is used (n=97)
• Design is not used (n=303)
Design used for multimedia applications
Average turnover (in million €) in function of use of design
Manufacturing companies
30
2001'
25,1
2005'
20,7
20
19,5
19,5
18,9
19,4
10
0
Sample (Turnover)
No Use of design (Turnover)
Design of Multi Media (Turnover)
Design used for multimedia applications
Number of companies with increased/decreased turnover
100%
33,33%
39,58%
42,16%
60,42%
57,84%
Sample
No use of design
75%
50%
66,67%
25%
0%
Increased
Design in Multi Media
Decreased
Design used for multimedia applications
Average number of employees in function of use of design
Manufacturing companies
75
2001'
2005'
57,3
54,9
50
43,5
41,5
39,1
37,2
25
0
Sample (# employees)
No Use of design (# employees)
Design of Multi Media (#
employees)
Design used for multimedia applications
Number of companies with increased/decreased # of employees
100%
75%
50,29%
50,78%
48,81%
48,54%
48,45%
48,81%
Sample
No use of design
Design in Multi Media
50%
25%
0%
Increased
Decreased
Design used for multimedia applications
Profitability in function of use of design
Manufacturing companies
100
2001'
2005'
75
65,5
56,3
50
46,2
42,0
32,3
30,8
25
0
Sample (Profitability)
No Use of design (Profitability)
Design of Multi Media
(Profitability)
Design used for multimedia applications
Number of companies with increased/decreased profitability
100%
75%
57,25%
58,15%
54,93%
41,18%
40,76%
42,25%
Sample
No use of design
Design in Multi Media
50%
25%
0%
Increased
Decreased
Design used for multimedia applications
Solvency in function of use of design
Manufacturing companies
50
2001'
2005'
43,5
39,8
36,7
38,6
38,5
36,2
25
0
Sample (Solvency)
No Use of design (Solvency)
Design of Multi Media (Solvency)
Design used for multimedia applications
Number of companies with increased/decreased solvency
100%
39,02%
40,46%
56,36%
54,58%
Sample
No use of design
34,52%
75%
50%
25%
61,90%
0%
Increased
Design in Multi Media
Decreased
Design used for multimedia applications
Liquidity in function of use of design
Manufacturing companies
30
2001'
2005'
20
16,6
15,3
13,2
14,9
13,6
12,1
10
0
Sample (Liquidity)
No Use of design (Liquidity)
Design of Multi Media (Liquidity)
Design used for multimedia applications
Number of companies with increased/decreased liquidity
100%
38,10%
75%
45,80%
48,28%
54,20%
51,72%
Sample
No use of design
50%
61,90%
25%
0%
Increased
Design in Multi Media
Decreased
Communication & Brand
• Design is used (n=75)
• Design is not used (n=325)
Design used for communication & brand
Average turnover (in million €) in function of use of design
Manufacturing companies
40
2001'
2005'
29,0
30
21,7
20,7
20
19,5
18,9
18,4
10
0
Sample (Turnover)
No Use of design (Turnover)
Design of communication
(Turnover)
Design used for communication &brand
Number of companies with increased/decreased turnover
100%
32,26%
39,58%
41,59%
60,42%
58,41%
Sample
No use of design
75%
50%
67,74%
25%
0%
Increased
Design in communication
Decreased
Design used for communication &brand
Average number of employees in function of use of design
Manufacturing companies
75
67,9
2001'
65,2
2005'
50
43,5
41,5
38,3
36,5
25
0
Sample (# employees)
No Use of design (# employees)
Design of communication (#
employees)
Design used for communication &brand
Number of companies with increased/decreased # of employees
100%
75%
50,29%
50,00%
51,67%
48,54%
48,58%
48,33%
Sample
No use of design
Design in communication
50%
25%
0%
Increased
Decreased
Design used for communication &brand
Profitability in function of use of design
Manufacturing companies
100
2001'
2005'
75
60,0
56,3
55,9
50
42,0
38,7
40,3
25
0
Sample (Profitability)
No Use of design (Profitability)
Design of communication
(Profitability)
Design used for communication &brand
Number of companies with increased/decreased profitability
100%
75%
47,92%
57,25%
59,42%
50%
25%
50,00%
41,18%
39,13%
Sample
No use of design
0%
Increased
Design in communication
Decreased
Design used for communication &brand
Solvency in function of use of design
Manufacturing companies
50
2001'
2005'
40,1
39,8
36,7
38,5
37,1
35,1
25
0
Sample (Solvency)
No Use of design (Solvency)
Design of communication
(Solvency)
Design used for communication &brand
Number of companies with increased/decreased solvency
100%
39,02%
38,95%
39,34%
56,36%
55,79%
59,02%
Sample
No use of design
Design in communication
75%
50%
25%
0%
Increased
Decreased
Design used for communication &brand
Liquidity in function of use of design
Manufacturing companies
30
2001'
2005'
20
15,7
15,3
13,2
13,8
13,2
10,5
10
0
Sample (Liquidity)
No Use of design (Liquidity)
Design of communication
(Liquidity)
Design used for communication &brand
Number of companies with increased/decreased liquidity
100%
75%
45,80%
45,42%
47,54%
54,20%
54,58%
52,46%
Sample
No use of design
Design in communication
50%
25%
0%
Increased
Decreased
Interior & Exhibition design
• Design is used (n=72)
• Design is not used (n=328)
Design used for interior & exhibition design
Average turnover (in million €) in function of use of design
Manufacturing companies
30
2001'
25,1
2005'
23,1
20,7
20
19,5
18,8
19,1
10
0
Sample (Turnover)
No Use of design (Turnover)
Design of workplace (Turnover)
Design used for interior & exhibition design
Number of companies with increased/decreased turnover
100%
39,58%
40,50%
60,42%
59,50%
Sample
No use of design
34,78%
75%
50%
65,22%
25%
0%
Increased
Design in workplace
Decreased
Design used for interior & exhibition design
Average number of employees in function of use of design
Manufacturing companies
75
2001'
2005'
48,5
50
43,5
41,5
42,5
47,6
40,2
25
0
Sample (# employees)
No Use of design (# employees)
Design of workplace (#
employees)
Design used for interior & exhibition design
Number of companies with increased/decreased # of employees
100%
75%
50,29%
51,06%
48,54%
47,87%
Sample
No use of design
46,67%
50%
25%
51,67%
0%
Increased
Design in workplace
Decreased
Design used for interior & exhibition design
Profitability in function of use of design
Manufacturing companies
100
2001'
2005'
75
61,0
56,3
52,3
50
42,0
39,7
33,3
25
0
Sample (Profitability)
No Use of design (Profitability)
Design of workplace (Profitability)
Design used for interior & exhibition design
Number of companies with increased/decreased profitability
100%
39,13%
75%
57,25%
61,24%
50%
54,35%
25%
41,18%
38,28%
Sample
No use of design
0%
Increased
Design in workplace
Decreased
Design used for interior & exhibition design
Solvency in function of use of design
Manufacturing companies
50
2001'
2005'
43,5
40,0
39,8
36,7
36,9
35,9
25
0
Sample (Solvency)
No Use of design (Solvency)
Design of workplace (Solvency)
Design used for interior & exhibition design
Number of companies with increased/decreased solvency
100%
31,67%
39,02%
40,56%
56,36%
56,29%
56,67%
Sample
No use of design
Design in workplace
75%
50%
25%
0%
Increased
Decreased
Design used for interior & exhibition design
Liquidity in function of use of design
Manufacturing companies
30
2001'
2005'
20
16,6
15,3
13,2
14,9
13,8
10,6
10
0
Sample (Liquidity)
No Use of design (Liquidity)
Design of workplace (Liquidity)
Design used for interior & exhibition design
Number of companies with increased/decreased liquidity
100%
75%
45,80%
46,67%
54,20%
53,33%
Sample
No use of design
41,67%
50%
25%
58,33%
0%
Increased
Design in workplace
Decreased
Service design
• Design is used (n=53)
• Design is not used (n=347)
Design used for service design
Average turnover (in million €) in function of use of design
Manufacturing companies
30
2001'
2005'
23,2
20,7
20
19,5
20,1
20,3
16,3
10
0
Sample (Turnover)
No Use of design (Turnover)
Design of services (Turnover)
Design used for service design
Number of companies with increased/decreased turnover
100%
27,27%
39,58%
41,80%
75%
50%
72,73%
60,42%
58,20%
Sample
No use of design
25%
0%
Increased
Design in services
Decreased
Design used for service design
Average number of employees in function of use of design
Manufacturing companies
75
2001'
2005'
50
46,5
43,5
41,5
43,1
45,0
41,0
25
0
Sample (# employees)
No Use of design (# employees)
Design of services (# employees)
Design used for service design
Number of companies with increased/decreased # of employees
100%
75%
50,29%
51,01%
48,54%
47,64%
Sample
No use of design
45,65%
50%
25%
54,35%
0%
Increased
Design in services
Decreased
Design used for service design
Profitability in function of use of design
Manufacturing companies
100
2001'
2005'
75
59,1
56,3
50
42,0
42,3
39,8
39,7
25
0
Sample (Profitability)
No Use of design (Profitability)
Design of services (Profitability)
Design used for service design
Number of companies with increased/decreased profitability
100%
75%
57,25%
58,26%
41,18%
40,37%
Sample
No use of design
51,35%
50%
25%
45,95%
0%
Increased
Design in services
Decreased
Design used for service design
Solvency in function of use of design
Manufacturing companies
50
2001'
2005'
39,9
39,8
36,7
39,2
37,2
33,4
25
0
Sample (Solvency)
No Use of design (Solvency)
Design of services (Solvency)
Design used for service design
Number of companies with increased/decreased solvency
100%
32,61%
39,02%
40,00%
56,36%
55,33%
Sample
No use of design
75%
50%
25%
63,04%
0%
Increased
Design in services
Decreased
Design used for service design
Liquidity in function of use of design
Manufacturing companies
30
2001'
2005'
20
15,5
15,3
13,2
13,7
13,6
10,2
10
0
Sample (Liquidity)
No Use of design (Liquidity)
Design of services (Liquidity)
Design used for service design
Number of companies with increased/decreased liquidity
100%
36,96%
75%
45,80%
47,16%
50%
63,04%
25%
54,20%
52,84%
Sample
No use of design
0%
Increased
Design in services
Decreased
Domain of implementation and company size
There is a positive relationship between the domain of
design implementation and the company size.
• Packaging design (78 low vs. 89 high)
-Regular updates of packaging
-Regular rethinking of packaging
-Packaging is designed by an external specialist
• Client-centred design (94 low vs. 67 high)
-Research into user friendliness of products
-Rethinking of product functionalities
-The production hall is dressed
-Service design department
-Research into customer needs and expectations
• Cooperation with external partners (73 low vs. 73 high)
-Product development in partnership
-House style developed by an external specialist
The attitude of companies
towards design is
broadening
Attitude towards design: association with design
n=400
production 2003
n=4002007
production
n=100
services
2007
34%
20%
Form, design, product appearance
32%
6%
20%
Renewing, innovative
14%
11%
19%
In a modern way
12%
4%
13%
12%
Distinctive, original
0%
9%
10%
Creation, Product development, invention
22%
7%
Differently
3%
9%
5%
5%
Style, irradiation
3%
Packaging
1%
0%
25%
50%
75%
100%