Understanding the impact of design credit.
ROI (return on investment) is a profitability metrics The investment is calculated as the ratio between the net profit and the initial cost. In the design world, similar to traditional investments, ROI can be used to measure the effectiveness of a given initiative and compare it to other available opportunities.
When measuring the ROI of managing the desired debt (paying it off and using it strategically), we need to consider two dimensions:
- effect over time
- short term – Some impacts, such as improved processes, will become immediately noticeable and directly impact the team on a daily basis;
- middle term — some results, such as a positive impact on company goals, will take time to become observable;
- long term – Some of the results should be treated as an investment that pays off in the distant future, such as harvesting the results of supporting innovation.
2. Limit of Effect
- Internal – changes affecting the way the team works and feels (more efficient processes and decision-making, a happier team, etc.);
- external – Impact on new and existing revenue (better service to customers, ability to ‘unlock’ new markets, etc.)
Read more about the extrinsic and intrinsic value of design
Matthew Godfrey’s ‘What is the ROI of Design?’.
Design debt management can affect product development and various areas of the company. I have listed the most important categories within which returns can be obtained:
- opening up new opportunities By paying off additional design debt that blocked innovative solutions, as well as using design debt for experimentation.
In my opinion, this is the most important return, as it allows for a significant amount of difference to be made for growth.
With fewer constraints, teams can enjoy the freedom of discovery that leads to uncovering new JTBDs and developing creative ways to serve them. This results in finding new ones as well as expanding existing markets, therefore creating a larger pool of users and potential customers.
- avoid linear growth Innovation has the potential to influence revenue and accelerate the growth curve.
In this case, the role of managing desirable debt (and technical debt) is to lay the foundation for initiatives that ultimately lead to exponential growth.
- Attract and retain high quality talent
The reputation of an innovative company that provides its employees with unusual growth opportunities makes it possible to work with the best people.
Company goals and bottom line
- Contribution to achieving business objectives By addressing the most common concerns regarding key workflows.
Reducing design debt affecting current and future customer workflows helps improve product-market fit or feature-market fit.
- TTV (time to value) This is an especially important metric for SaaS companies that focus primarily on recurring revenue.
TTV is the time it takes the user to see the price they were expecting; The so-called ‘ah moment.’ reducing TTV by paying off design debt and using it strategically Improve retention, MAU, and WAU – Metrics key for SaaS products.
Reducing TTV can help reduce customer churn, provide better turnover from sales efforts and trials, and create the potential for expansion in existing accounts.
Actively managing technical and design debt indicates a company’s maturity with respect to processes and product.
This is a good sign to the board and investors that the organization is focused on sustainability and investing in long-term value.
Team (Internal Influence)
- Team Velocity – By reducing operational design debt and improving processes, we can positively impact decision making, review cycles and resource management.
- team satisfaction – Talented people feel satisfied when they see the impact of their efforts on the company and its customers. Improvements in processes and management of design debt will have a positive impact in this area.
- an experiment-driven team Changing the company culture to manage design debt sustainably over the long term will support sustainable innovation.
When analyzing the ROI on management of design debt, we must remember that it is primarily a long-term investment.
Building the foundation is the first step that lays the foundation for future initiatives and increases the results over time due to compound interest.
As good practices and improvements accumulate, we will see faster growth, better adoption, ease of accommodating new features and requests, and as a result, a High ability to better serve more customers,
remains the key element in supporting this system A Culture of Sustainable Design Debt (and Technical Debt) Management, To achieve this, we need cooperation between:
- teams those who need to use debt consciously and actively prevent it from escalating;
- leaders Those who must be willing to invest the resources needed for these efforts, as well as actively educate their teams and other leaders.