No Accounting for Design? Essay

Two years ago, Jones made a pitch to add some injection-molded ornamentation to a KitchenAid refrigerator's redesign, which would have added about $5 to the per-unit cost. The company's resource-allocation team asked him to estimate the return on investment, but Jones couldn't produce the numbers to make such a forecast. As a result, he was forced to fall back on a rationale that was simultaneously elitist and lame: Trust me. I'm a designer.

That argument didn't fly.

Defeated, Jones resolved to improve on what he dubbed his "Las Vegas approach" to investing in design, "where you're basically asking people to roll the dice and hope for the best." As a first step, he surveyed 15 "design-centric" companies, including BMW, Nike, and Nokia. To his surprise, few had a system for forecasting return on design. Most simply based future investments on past performance. "No one," Jones says, "had really figured this stuff out."

The reasons are twofold, according to two Northeastern University accounting professors, Julie Hertenstein and Marjorie Platt, who described the phenomenon in a Journal of Product Innovation Management article. First, it's incredibly difficult to untangle design's contribution from all of the business drivers--engineering, manufacturing, distribution, marketing--that ultimately fuel a product's performance in the marketplace. Then there's the accounting problem: Design investments are immediately written off as expenses. Months (or years) later, when a product finally hits shelves, companies are loath to retrieve the data necessary to calculate returns.

Beyond those issues, designers themselves can't agree on how to approach return on design--or even whether to. One camp argues that the surest way for designers to make manifest their capacity to drive corporate success is to bring objective business measurements into the process. A design solution might be technically masterful and aesthetically pleasing, but if you can't quantitatively calculate its clout, you can't claim its success. "If we don't sort out the ROI, design will continue to be viewed with skepticism in many corners," warns Rob Wallace, managing partner of Wallace Church Inc., a brand-identity consultancy.

Then there are those who contend that design is an inherently creative pursuit that won't easily take on the yoke of measurement. Design is one part technical and one part magic, they argue, and you can't quantify magic. "I'm not suggesting that we shouldn't try to prove the impact of design," says Harry Rich, deputy chief executive of the UK Design Council. "Let's just be realistic about what we can prove."

Rich hints at a possible way out of the dilemma: Prove what's provable, then trust that financial results will follow. In a sense, this is the path that Whirlpool has taken. Jones has shifted his focus from bottom-line returns to customer preferences. His logic? If he can objectively measure what customers want in a product and then fulfill their desires, the company will reap big financial rewards.

Jones's team has created a standardized companywide process that puts design

Show More

Accounting Software and Epacris Garden Design Essay

ACC 340 Week 5 Learning Team Assignment Integrate Accounting Paper

Importance Of Information Technology

Management Accounting: Information for Creating Value and Managing Resources Essay

Changing Dynamics Of Accounting

Tasteless Tea Company Essay

Not Done yet Essay

Analysis Of An Accounting Information System

An Introduction To Accounting

Essay about 15 W07 Managing Quality