Return on investment is easy to measure. You put money in, you measure money out, divide and prosper.
But return on design? (Design: graphics, system engineering, user interface etc.)
Design can take money and time and guts, and what do you get in return? It turns out that the sort of return you're getting (and hoping for) will drive the decisions you make about design.
I think there are four zones of return that are interesting to think about. I find it's more useful to look at them as distinct states as opposed to a graduated line, because it's easy to spend a lot of time and money on design but not move up in benefits the way you might expect. Crest might have a better package than Colgate (or the other way around, I can't remember), but it doesn't sell any more units…
Negative return. The local store with the boarded up window, the drooping sign and the peeling paint is watching their business suffer because they have a design that actually hurts them. Software products suffer from this ailment often. If the design actively gets in the way of the story you tell or the utility you deliver, you lose money and share.
No impact. Most design falls into this category. While aesthetically important, design in this case is just a matter of taste, not measurable revenue. You might not like the way the liquor store looks, or the label on that bottle of wine, but it's not having any effect on sales. It's good enough.
Positive return. We're seeing a dramatic increase in this category. Everything from a bag of potato chips to an online web service can generate incremental sales and better utility as a result of smart design.
The whole thing. There are a few products where smart design is the product (or at least the product's reason for being). If you're not in love with the design of a Porsche 911, you would never consider buying it–same as an OXO peeler. The challenge of building your product around breakthrough design is that the design has to in fact be a breakthrough. And that means spending far more time or money than your competitors who are merely seeking a positive return.
Knowing where you stand and where you're headed is critical. If you have a negative return on design, go ahead and spend enough money to get neutral, asap. But don't spend so much that you're overinvesting just to get to neutral. Watching a local store build an expensive but not stellar custom building is the perfect example of this mismatch.
If you're betting the whole thing, building your service launch on design first, skimping on design is plain foolish.The Guggenheim in Bilbao would be empty if they'd merely hired a very good architect.