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5 Ways Design Thinking Makes IBM Millions

August 23, 2018 by Doug Rangi
For IBM, design thinking added +$20.6M in revenue, improved customer relations, and internally bridged gaps across product and design teams to dramatically improve profits from IBM’s product portfolio for a total ROI of 301%.

The results (as you can already tell) were huge for IBM and their customers. If you have a lot of time on your hands, you can download the full 45 page Forrester Total Economic Impact Study. If not, we suggest checking out our top 5 key takeaways below. Enjoy!

Forrester IBM Design Thinking Report

But First, What is ‘Design Thinking’?

IBM discusses design thinking as a framework for placing “end user needs at the center of the design process and enables teams to collaborate and work more efficiently”.

In practice, it’s bringing diverse teams together to discuss each project phase with a razor focus on what is the intended benefit for the end user.

In sum, it’s about never forgetting the underlying human need driving the immediate business objective – it’s about design that matters.

5 Ways Design Thinking Makes IBM Millions:

Once you check out the 5 benefits below, you’ll see the value in adopting the framework for your team’s next project:

  1. 75% Reduced Time for Initial Designs and Alignment

The How – Teams met with real or intended user groups early on in the discovery phase to develop product personas. Having product personas defined fostered better goal alignment and eliminated a lot of the back and forth between teams during a project’s initial planning phases.

The Numbers – Savings of $196k per minor project and $872k per major project. These savings came from a 75% reduction in time required to gather and align on initial requirements across teams, reducing 16-week timelines to four weeks.

  1. 33% Reduced Development and Testing Costs

The How – With product personas and clear user objectives developed early on, QA and Engineering teams had more time to prepare for testing scenarios, resulting in a reduced total development and testing time.

When interviewed by Forrester, an SVP of technology services said,”We have members of the agile development team work, learn, and listen at the inception of the discovery phase. This framework and the UX resources carry through into delivery to tie development, DevOps, and QA all the way to Production.

The Numbers – Minor projects with 24 week expected timelines were completed in 16 weeks with cost savings of $222,783, while major projects with 60 week timelines were reduced to only 40 weeks resulting in a cost savings of $1,137,534.

  1. 2x Faster Time to Market

The How – Framing each meeting by getting back to the human problem that sparked the need for the project in the first place. This lead to reduced overall time for designing, developing, and testing processes.

The Numbers – Minor project timelines were reduced from 40 weeks to 20 weeks, resulting in $182,096 in profit, while major project timelines were reduced from 100 weeks to 50 weeks, bringing in $1,050,240 in profit.

  1. 38% Increase in Portfolio Profitability and Reduced Risk

The How – By applying IBM design thinking to future investments, IBM added value beyond reduced production costs and time. Using the design thinking framework to dictate what projects should be pursued and what should be scraped proved to show impressive returns.

The Numbers – IBM Design Thinking was used to launch 27 out of 100 products over the course of 3 years. Thanks to IBM’s Design Thinking practice, products applying the framework outperformed their traditional product portfolio expectations by $30M within the 3 years. Check out IBM’s graph below for a breakdown of the savings from reduced risk versus increased revenue:

reduced risk with design thinking

  1. 50% Reduction in Design Defects

The How – Although no project is immune to a few errors here and there, better definitions of user’s needs earlier in the discovery phase produced higher quality projects. With fewer defects, teams didn’t have to allocate costly resources to redesigning and repairing a product after launch. A huge savings opportunity given that Forrester argues that the costs of repairs post-launch can be 3-4 times more expensive:

costs from redesign defects

The Numbers – Minor projects saw a decrease from 30 to 15 defects, while major projects saw a drop from 60 to 30 defects. By factoring in that each defect is expected to take 100 developer hours to resolve, there were $76,628 in cost savings per minor project and $153,255 per major project.

Okay, So Now What?

Here at DesignMap, we love that enterprises like IBM are starting to catch on. The value of design thinking and creating designs that matter to your end users is something we’ve understood ever since we opened our doors back in 2006. We’ve been doing work for companies like Cisco, Docker, HP, and Salesforce for over a decade and we’re glad someone helped us crunch the numbers.

Design thinking has always been valuable, but applying the framework at an enterprise level can be an incredible challenge. With diverse, disparate teams working at different cadences, keeping teams aligned on the human need of each project is tough to say the least. If you’re up to the challenge of changing the way your entire organization thinks of design, check out IBM’s how-to article on practicing design thinking.



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