Professor Ulla Johansson Sköldberg about the relationship between design and profitability

Ulla Johansson Sköldberg is a professor emerita in design management and has almost forty years of research behind her. She was previously professor of design management and director of the business and design lab at the Gothenburg School of Economics, and she has researched and written about the relationship between design and profitability.

Among many other scientific studies throughout the years, she carried out a comprehensive evaluation of the more than 300 companies that had design projects funded by the government between 2003 and 2005. The results of the evaluation were very clear: design focus pays off.

Ulla was supposed to join us for our breakfast seminar on the business value of design (watch the video from the conference below), but unfortunately, she had to cancel her appearance due to illness. We thought we’d get ahold of her now instead and talk to her about her view on the relationship between design and profitability.

It’s about fifteen years since you carried out this huge scientific evaluation of the design projects funded by the Swedish government in the early 2000’s. How did the design interventions affect the participating companies?

The value and continuing effects of the designer’s work are so complex that it isn’t even worth trying to capture it in numbers. What often happens when a designer has been in a company is that those who have worked with them adopt a new way of thinking, they get more of a user’s perspective and they become more creative. They’re finding new ways to handle situations and problems and they become more visual in their way of thinking.

But these things are very hard to measure, soinstead of trying to do that for the 350 companies and organizations that were involved, I looked for one or two variables that could justify the entire venture. It was a pretty vast task to evaluate all of these different projects – and they were very different – but I found that some of the more successful projects had generated major sales increases.

Ulla Sköldberg Johansson

I read your paper on this a while ago, and the financial figures were pretty astounding, right?

Yes! For example, I found that twenty-seven companies, which represented around 7-8% of the total of 350 companies, had collectively increased their sales by more than 200 million SEK. These companies were convinced that this wouldn’t have been possible at all without the design projects that they had participated in.

Another nineteen companies, that had seen an increase in sales by somewhere between 300 and 500 million SEK, said that the design projects were not essential for the increase, but that they certainly had contributed to it. I estimated that somewhat more than a 100 million SEK of that increase could be attributed to the design projects.

Just looking at the sales increase, I could conclude that the Swedish government’s initiative had been a good capital venture. They invested 51 million SEK in total over a three-year period, and the extra sales tax generated by the increased sales alone was about three times their investment. So, it was certainly a very good investment for both the government and the companies in the project.

What about the companies and organisations that didn’t experience increased sales? Where they disappointed, or did their projects contribute in non-financial ways that made it worthwhile for them as well?

Even if only a minority of them showed financial profits that were easily measurable, almost all of the companies considered their projects successful because they helped develop new ways of thinking. That was regarded as very positive.

And since the companies that did experience financial growth performed so well that they justified the whole venture financially, all of the more qualitative outcomes – the design thinking know-how that was instilled in the companies, that in the long run probably were the most valuable – could be regarded as a bonus.

What did the companies that experienced financial growth have in common? Why did they succeed?

I think almost all of them could be regarded as being on the top of the design matureness ladder, where the first step is “viewing design as giving form” and the last is “seeing design as part of an integrated innovation process”.

If I were to point to one single factor that’s crucial for that, it’s leadership! If you see design as an integrated innovation process, you are sure to find a number of obstacles along the way, and one important task for leaders in an innovation company is to eliminate those obstacles. Also, an integrated innovation process needs a lot of open and efficient interdiscursive communication, and providing the prerequisites for that is a matter of leadership. As a leader you also need courage to dare to meet the unknown. That’s really important.

In addition to studying design interventions, you have also done a similar study about artistic interventions in companies in Sweden. What’s an artistic intervention?

Artistic interventions are where the world of the arts is brought into organization. An artist enters a company or organization and applies his or her methods, just as a designer applies his or her specific methods and brings about change, given specific problems that the organization wants to solve.

In this study, I collaborated with an organization in Gothenburg called TILLT, which has worked with artist-driven development projects and has done so for fifteen years. They probably have the world’s largest archive of artistic interventions. Often the projects have achieved quite fantastic results with the help of artists, for example in the healthcare and manufacturing industries, which are examples I have included in the book that the study subsequently resulted in.

Ulla’s evaluation of the government’s design initiative is available in Swedish here (a summary of the results is also available in Swedish). Her book “Artistic Interventions in Organizations” is available in Swedish. Ulla is also one of the authors of an anthology in English on the same subject, which you can find here.