"Over the last several years, we've seen design become firmly ingrained as a core component of company building—at the earliest stages, across a range of functions, and at the highest levels of an organization," said Lee, NEA's Design Partner. "We undertook this survey to address a significant gap between the trends we were observing and the quantitative data that would enable us to better understand those trends—the latter simply didn't exist. Now we have data not only confirming the trends we've observed, but also suggesting that the impact is even broader in terms of geography and sector, and that momentum is likely to accelerate over the next few years."
Companies represented were a diverse mix of large and small; U.S. and international; and enterprise and consumer. In fact, while design focus is often considered a hallmark of purely consumer-facing companies, at least half of the survey participants were enterprise-focused companies or companies focused on both enterprise and consumer. Among all participants:
- 87% believe that design is important to their business
- 85% report that founders or C-level executives provide input on design decisions
- 68 companies reported a team of 20+ designers
Nearly one-third have a designer founder on their teams
Analysis of survey responses resulted in several concentric subgroups—the smaller the circle, the greater the perception of design's value and impact among respondents. This categorization also illuminated some important trends related to team size and structure and future growth plans.
- Design-centric (302 companies)
The design-centric group includes venture-backed companies that consider design to be "important" or "very important" to their business. Among design-centric companies, nearly all reported plans to grow their design teams by at least 50% in 2017.
- Design-committed (97 companies)
Design-committed companies said design is "very important" to their business and have either a designer co-founder or 5+ designers on staff.
- Design-mature (47 companies)
In addition to considering design "very important" to their business, design-mature companies have a designer as a co-founder and/or 20-plus designers on staff, and have raised at least $20 million in venture capital funding.
"One of the most notable and even surprising things about this survey was discovering this cohort of companies that have embraced design to a greater degree, and integrated it more fully into their organization," said Grayson, a Partner at NEA who invests in design-centric enterprise and consumer businesses. "Among these four dozen or so design-mature companies, which include the largest and most successful businesses among all survey respondents, there is a phenomenally higher perception of design's organizational value and business impact. This group also reported significantly more aggressive plans in terms of future hiring and organizational structure."
The design-mature companies reported greater design impact across many facets of their businesses, including:
- Design leads to higher sales: +25% among design-mature companies
- Design leads to higher customer retention: +16% among design-mature companies
- Design leads to higher customer engagement: +16% among design mature companies
- Design leads to faster product cycles: +15% among design-mature companies
Within the design-mature group, eight companies had a valuation exceeding $1 billion. These companies were designated "design unicorns," and they linked company success with design more than any other group:
- Design leads to higher sales: +14% among design unicorns
- Design leads to higher customer retention: + 44% among design unicorns
- Design leads to higher customer engagement: +21% among design unicorns
- Design leads to faster product cycles: +30% among design unicorns
There was also a strong belief among design-mature companies and design unicorns that design is accretive to a company's valuation. Nearly half of all design-mature companies and 75% of design unicorns believed that design contributed to an increased valuation of their business.
Looking forward, the survey results indicate the following emerging or accelerating trends:
- Ongoing talent wars
There will continue to be a highly competitive market for design talent, particularly product designers but also for senior design talent who can manage and nurture teams at fast-growing companies.
- Design from the top
CEOs and founders will need to continue to develop "design fluency" and be involved in design decisions, fostering a culture and organizational structure that is conducive to hiring and retaining top design talent
- Product design as 'design'
An emerging discipline of 'product design' will continue to be refined with respect to its role within a company, while the "design team as a service bureau" model will become outmoded.
- Maturing of external help
The growing ecosystem of external partners for high-growth start-ups across brand and product will continue to mature, and new engagement models will develop to deliver services at reasonable costs for cash constrained start-ups.
A summary of results is available on the survey website, with the full report also available for download via the website. Questions and requests for updates may also be submitted via the survey website or by emailing email@example.com.
Collaborators supporting the Future of Design in Start-Ups 2016 survey include FiftyThree, Casper, Enigma, Gander, IDEO, Jet, InVision, MetaLab, O'Reilly, OnShape, Plaid, Pocket, Re7d Antler, the MFA Interaction Design program at New York's School for Visual Arts, and Uber.
About Design at NEA
NEA believes that design is an essential element in building successful products and companies. The firm is committed to nurturing design-centric companies and supporting the many design leaders working with start-ups and fueling design-led entrepreneurship across the tech ecosystem.
New Enterprise Associates, Inc. (NEA) is a global venture capital firm focused on helping entrepreneurs build transformational businesses across multiple stages, sectors and geographies. With nearly $17 billion in cumulative committed capital since inception NEA invests in technology and healthcare companies at all stages in a company's lifecycle, from seed stage through IPO. The firm's long track record of successful investing includes more than 200 portfolio company IPOs and more than 320 acquisitions. www.nea.com.
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SOURCE New Enterprise Associates, Inc.