The document discusses creative finance and measuring the value of design. It argues that design goes beyond just profits by creating value in a company's assets, investments, and shareholder value. It provides examples of how to measure a company's innovation culture, such as through a vitality index and contribution margin. The document also discusses accounting for design and using creative finance to start conversations that can change organizational culture and drive competitive advantage.

1. CREATIVE
FINANCE
© now+om | September 2010 | kelly@nowtom.com

2. INDEX
Creative Finance.
1.0 Intro.
2.0 Value creation.
3.0 Difference between design and marketing.
4.0 The value of design.
5.0 Measuring company innovation.
6.0 Measuring the design process.
7.0 Measuring design risk.
8.0 Accounting for design.
9.0 Summary.
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3. 1.0
INTRO

4. 4
CREATIVEFinance
… is not what caused the recent “financial meltdown”, (that was
“creative accounting” — and an entirely different story).

5. 1.0 INTRO
The Imagination Economy.
Creativity is no longer enough. Creativity can
only add value. Nowtom can help corporations
create value from the challenges facing them:
 What can we dream about?
 How far can we dream?
 How can we make these dreams a reality?
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6. 2.0
VALUE
CREATION

7. 2.0 VALUE CREATION
Qualitative.
Nowtom
 Is a design company, but in the “value creation”
business, not only for ourselves (as in any business) but it
is our ultimate client delivery.
 Focus (and increasingly becoming ever so important) on
compelling quantitative financial and economic
arguments for design!
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8. 2.0 VALUE CREATION
Quantitative.
 Influence on the purchasing decisions.
 Enabling strategy (new markets).
 Enabling product and service innovation.
 Reputation/awareness/brand value.
 Time to market/process improvement.
 Customer experiences.
 Cost savings/ROI.
 Developing communities of customers.
 Good design is good for all: triple bottom line accounting
for social, environmental, and business impact.
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9. 2.0 VALUE CREATION
“Evolutionary Economics”.
Key Concepts:
 Creative finance can guide organisations out of well-
practiced routines and product creation patterns.
 Can help continuous search to improve dynamic
capabilities (“Kaizen”).
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10. 3.0
DIFFERENCE
BETWEEN
MARKETING
& DESIGN

11. 3.0 DIFFERENCE BETWEEN MARKETING & DESIGN
Talking VS Listening.
 Fundamentally, marketing is about talking to
a group, design is about listening to an
individual.
 Both are important skill sets at different
stages of the process. But in the end, would
you rather buy from a company that talked
or one that listened?
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12. 3.0 DIFFERENCE BETWEEN MARKETING & DESIGN
Approach.
 Using a marketing approach too early on in
the process leads us to ask: What will
please the greatest number of people just
enough to buy our product?
 Using a design approach at first tends to lead
us through empathy, user centeredness and
the creativity to ask: What will delight
those who buy our product so much that
they tell other people about it?
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13. 4.0
VALUE
OF
DESIGN

14. 4.0 VALUE OF DESIGN
Good Design is More than Just Profit.
 Good design and creative finance have
significant implications across four areas of a
companies internal capital markets:
 Profits, assets, investments and
shareholder value.
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15. Profits
Assets
Profits from the radically
innovative product
Shareholdervalue
GoodDesign
Investments
Brand equity
Competitive position
Customer loyalty
Knowledge
Network position

16. 5.0
MEASURING
COMPANY
INNOVATION

17. 5.0 MEASURING DESIGN INNOVATION
Company Innovation Culture.
 How to help convince senior management of
the value of design thinking, innovation,
empathy, and of being more user-centered
across their whole organisation.
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18. 5.0 MEASURING DESIGN INNOVATION
Company Innovation Culture.
 Metrics to measure design impact within a business
(not to be confused with design effectiveness or
activities performed at each specific step in the
development process).
 Competitor innovation benchmarking (when/where
are competitors investing in innovation).
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19. 5.0 MEASURING DESIGN INNOVATION
Nowtom Valor ToolBETA
Vi + Cm + Bv + Ra + Rip
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Vitality index
Sales from products
created in last 3 years /
Total sales.
Contribution margin
(Sales - Direct costs) / Total sales
Return on assets
Net profit before tax /
Total assets
Return on
intellectual property
Total sales /
(Market capitalisation -
Physical assets)
Brand value
Expected net annual cashflow from
your branded products /
Your target annual return on
investment percentage

20. 6.0
MEASURING
INNOVATION
MANAGEMENT
& PROCESSES

21. 5.0 MEASURING DESIGN PROCESS.
Existing Metrics.
Innovation Management Dilemma.
 Careful balance of structure and co-ordination with
looseness and flexibility.
Methods.
 DIFOTAS (delivery in full on time as specified)
 ROII (Return on innovation investment)
 TTM (Time to market)
 Etc. TBC
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22. 7.0
MEASURING
DESIGN
RISK

23. 5.0 VALUE OF DESIGN
Measuring Design Risk.
Key Concepts:
 Allocating Innovative capital
 Creative destruction (B > C).
 Innovation sustainability.
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24. 8.0
ACCOUNTING
FOR
DESIGN

25. 3.0 VALUE OF DESIGN
Accounting-speak.
 In accounting terms the impact of design will be similar to
the "economic impact”, but the language you use to
articulate the impact will be very different. The financial
controller, CFO and accountant will be interested in any
project that can:
 Increase your revenue.
 Lower your cost of goods sold.
 Deliver a higher contribution margin (and gross margin).
 Lower your overheads from capital costs.
 Create more earnings before interest in tax (EBIT).
 Ensure ongoing positive cash-flow.
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26. 9.0
SMARTER
CONVERSATIONS
=
SMARTER
ORGANISATIONS

27. 9.0 SUMMARY
Conversation Starter.
 Using design thinking in your business is all about
organisational culture.
 To change culture, you need to change conversations.
 Creative finance can be that conversation starter.
 Design vision twinned with creative financial strategy
are the new competitive battleground.
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28. 9.0 SUMMARY
So, Give Me Some Examples!
 Muji’s new design vision is to achieve “consensus”
between consumer and designer.
 Price a major factor.
 Supported by strong internal cultural alignment.
 Only good design AND a creative financial strategy will
tie everything together…
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29. KIITOS
THANK YOU
DANKE
GRACIAS