The occasional light expression

Is there a direct relationship between a company’s design investments and its stock market performance? Can PE firms and venture funds use such a relationship to select winners just as they use environment friendliness and carbon footprints?

The British Design Council which first came up with the ‘Design Index’ and ‘Emerging Index’ seems to think that there is. In a comprehensive study first released in 2005 (and updated in early 2008), they showed how an index of 61 top design-award winning companies had outperformed the FTSE by 200%.

The Design Council primarily used prestigious design awards (including by Interbrand). I think if someone wanted to take this research ahead, they could additionally look at:

-         Media coverage of customer reactions to the ‘design’ or ‘user experience’ of the company’s products and services

-         The company’s resource (human and infrastructure) investments in building core design competencies

-         The company’s global footprint (in case of multinationals)

-         The company’s history of using quantitative design and usability metrics to track improvements longitudinally

In these volatile financial times, I would be personally happy if someone could prove a ‘strong corelation’ between Design and stock market performance – at least then companies in India and China would ‘get’ the value of design and invest in building world class design teams and infrastructures.