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Does Design Pay Off? Yes. (And There’s Data to Prove It.)

Design. Innovation. Disruption. Those buzzwords are driving strategies and decisions from boardrooms to bullpens across the globe. And yet: What is good design worth, and how can that value be measured?

The bottom line, in other words, is: Can design deliver for business’ bottom line?

“The answer is yes,” said McKinsey & Co. partner Ben Sheppard, and he has the research to prove it.

At Fortune’s Brainstorm Design conference in Singapore on Tuesday, Sheppard presented the results of a five-year study of 300 companies across a range of industries including healthcare, banking, and consumer goods. The research found that the 25% of companies that took particular types of decisions to incorporate design and “design thinking” into their organizations had better financial returns than those that did not.

“Organizations in the top quarter of design performance are growing their revenues at twice the rate of their peers, and their shareholder returns were growing 70% faster,’’ Sheppard said. “Those are numbers that would make any CEO or CFO pay attention.”

Measuring the effects and results of design, however, involves “a complex set of issues,” cautioned Prof. Jeanne Liedtka of the Darden School of Business at the University of Virginia, and author of the forthcoming book Designing for the Greater Good. 
”If we focus too much on revenues and profits, we lose some of the superpower of design.”

That power includes changes in the way leaders think and act—including accepting that some results can’t be measured in a relatively short period of time, and developing an openness to the unexpected.

That openness can bring rewards. Consider Viagra, Liedtka said.

The product failed at what it was designed for: reducing high blood pressure. Its unintended results, however, provided pharmaceutical giant Pfizer with one of the most successful products in its history. Pfizer’s commercial success with Viagra would not have been possible had its executives not been open to unintended results.

It’s not just corporate leaders that need to adjust how they think, Liedtka said. “We need to democratize innovation,’’ she said, by allowing design thinking to permeate an organization at all levels.

Still, it starts at the top, said Jason Wild, a senior vice president at business software company Salesforce. “Leaders and CEOs are realizing that you can’t delegate the future,” he said. “You have to lead the process.” But it is also important that designers be able to speak the language of the boardroom so they can win over executives, he added.

Visionary executives who incorporate design and design thinking are leading companies that stand a better chance of thriving in the future than those who don’t, Wild said. Many companies are like whales: When a whale dies, it takes years for it to sink to the bottom of the sea. Until it does, other sea creatures feed off its remains.

Companies that fail to adopt design thinking, Wild said, “don’t realize they are dead and dying and are being consumed.”

For more coverage of Fortune’s Brainstorm Design conference, click here.