Canadian Digital User Experience and Design agency Teehan+Lax started an experiment in 2005 inspired by the findings of the 'Design Index' study carried out by the UK Design Council. They wanted to test the theory that companies that value good design and a high level of user experience will be more successful, profitable and thus out perform the stock market average.
They invested $50,000 of their own money in several companies including Apple, Netflix and Target that met the following criteria:
- Demonstrated care in the design of their products and web site
- Showed a history of innovation
- Inspire loyalty in their customer base
- Doing business with them is a positive experience
The experiment was run for a year and the results were very positive even though a couple of their selected companies were hit by unforeseeable problems which effected the overall performance. They also had self imposed limitations such as not being able to rebalance their portfolio over the year and had predefined dates for buying shares meaning better results could have been achieved had they been able to buy when the prices were lower. The graph below demonstrates the success of the fund.
Jon from Teehan+Lax very kindly answered some questions for me regarding the current state of the UX Fund in 2009:
Are you still running the UX Fund and how is it performing?
If you go to the page the data in there is correct. As of 10:50 am the portfolio is -3.48% since inception. But it is significantly out performing the indices. As an investing philosophy its as good as any and statistically has proven itself throughout the time
The hardest part is that in these large public companies there are so many forces at work it is difficult to isolate good UX as being the primary driver of the business. JetBlue is a good example. No matter how nice the plane is and the kiosks its business is determined largely by fuel costs. Although arguably their Valentine's Day screw up was so damaging to their CX that they've never really recovered.
Netflix which was a dog in the first year has really lived up to the promise we saw in it and is being very innovative.
I feel that if we more actively managed the fund we could have gotten better returns. Although in general most companies doing really great UX aren't publicly traded (e.g. zappos).
If I had to do it again, I would have added Amazon to our list. It was trading around $37.00 on Nov 1, 2006. It is now at $85. Their work on S3 and Amazon has been very solid.
Do you feel the current economic crisis has put paid to the idea for now as many businesses are struggling and measuring results is harder?
I think the current economic crisis has helped these companies. Companies that make a good product that people want will survive. I think Warren Buffet said, "when the tide goes out you see who isn't wearing a bathing suit", I feel we chose companies who all have very stylish bathing suits.
Also companies we chose tend to have an underlying faith in UX and design as a business driver if they are compromising that in a recession, we shouldn't be owning them.
Due to the current global economic problems carrying out such an experiment yourself might be less attractive but it makes interesting reading to see how the UX fund has coped. It helps highlight the value of good design, not only in the traditional sense, but also in the overall company philosophy and 'user experience' provided to clients and customers.
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment