Before the value of design to a firm can be measured

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Before the value of design to a firm can be measured, it is crucial to measure that firm s efficiency in relation to the efficiency of its industry. Each market sector has its specific growth potential and its norms in terms of profitability. In other words, the first question to ask a design manager is whether the superior product or service achieved through design brings profits
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superior to the mean in the industry. Designers should keep in mind that there are more differences among companies in the same industry than among companies across industries. In every industry, technology, distribution, and marketing tend to be similar. A company competes through inventing a combination of these resources that make its offer unique and its EVA (economic value added) superior.Value in management science happens by achieving a result superior to that of the competition, not just by making a well-designed product. And a superior result is defined as a greater ratio between the profits realized and the capital invested. Let us assume that your organization has a result that is close to the mean of your industry and that you think design can bring better value to your organization. Or perhaps you want to invent a new business unit that boasts a superior EVA. How do you teach managers and CEOs to be better at their jobs because of the input of design? You can explain that through design they can develop a competitive advantage that will be valued by the market truly, an objective of any manager (Figure 2). But how do you build that advantage? First, consider that competitive advantage can take two forms: 1. Design as differentiator. External, marketbased advantage derived from the designbased differentiation of the company s product or service (design of products, design as perceived value, brand design value, corporate image) 2. Design as coordinator or integrator. Internal competitive advantage that comes from a unique, invisible, and difficult-to-imitate combination of organizational processes and resources (that is, a resource-based view: design as process, design as knowledge, design science, design as resource, advanced design for new business) Companies in the first camp are really thinking of design in a reputational, or brand, context. Companies in the second camp understand design as a core competency. Now, consider that EVA comes from two types of value: financial and substantial. ECONOMIC VALUE ADDED (EVA) COMPETITIVE ADVANTAGE (External or Resource Based) SUBSTANTIAL VALUE Customer Value Performance Value Strategic Value FINANCIAL VALUE Figure 2. A competitive advantage brings economic value added if both substantial value and financial value are created. Financial value is the value created for the company shareholders, partners, or investors
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or even society at large, in the case of companies that practice sustainable development through finance, investment, or mergers. Designers often forget this financial perspective or think of it only in terms of economic value (sales, margin,
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