Success by Design: 77% of tech professionals believe design contributes to a company’s growth
Brought to you by Start-Up Nation Central

A new study by Start-Up Nation Central and Shenkar, examining the perception of how design contributes to business performance in the Israeli ecosystem, reveals that two thirds of investors think Israeli companies invest less than their foreign counterparts in design and that investors do not recognize the full potential of design, ranking it lower in significance than other parameters such as quality of team or technological innovation

A new study by Start-Up Nation Central and Shenkar, examining the perception of how design contributes to business performance in the Israeli ecosystem, reveals that two thirds of investors think Israeli companies invest less than their foreign counterparts in design and that investors do not recognize the full potential of design, ranking it lower in significance than other parameters such as quality of team or technological innovation

Tel Aviv, March 31, 2022: Seventy seven percent of people working in the tech industry believe that design is a crucial factor in a company’s growth, a study by Start-Up Nation Central and Shenkar, has found that companies dealing directly with consumers (B2C companies) rate design at 4.6 out of 5 on a scale of importance, while companies working opposite businesses (B2B companies) only rate it at 3.9.

According to the study, design is not merely about a product’s styling or glossy finish; rather its real value is in the tried and tested methods used (often behind the scenes) to develop design solutions, with the design process itself offering a creative way to solve challenges. The study further showed that in the current era of hybrid employment, there is little distinction between the B2B and B2C user experience and that businesses nowadays expect the same well-designed user experience they became accustomed to as individual consumers.

Start-Up Nation Central and Shenkar share the belief, strengthened by the study’s findings, that Israeli startups should no longer rely solely on their technological capabilities and that the Israeli ecosystem is now prepared to deal with design’s role in technology in a more integrated manner.

“Innovative research and development have traditionally been the main growth drivers of Israeli startups, with most entrepreneurs giving little thought to design due to their desire to be acquired, often too soon, and because Israeli startups tend to focus on B2B solutions, where design is undervalued”, said Uri Gabai, CEO of Start-Up Nation Policy Institute (SNPI) “In recent years, however, the tech industry has seen several Israeli startups grow into unicorns rather than opting for being sold to international companies. This is a significant pivot for the sector and enabling it demands changes to the industry’s human capital foundation.”

“Design – is the bridge between information and understanding. Thus, according to the ingenious definition of painter Hans Hoffman, one can see the centrality of design, explains Prof. Shizaf Refaeli, President of Shenkar. “Great geniuses like Leonardo da Vinci or Steve Jobs have recognized the hidden opportunities in the conjunction of design, innovation and science. The challenge lies ahead: whether and how we will integrate design into our ways, and how do we use the insights about the importance of combining design and engineering

skills in the industry. The added value of design is that it is a power multiplier for entrepreneurship and sophistication. This finding is especially amplified in the entrepreneurial and innovative Israel. And this finding presents us with a challenge and an opportunity to build curricula, train personnel, educate and develop research and creativity in the assimilation of design thinking. ”

Inbal Gottesman, Senior Manager of Jerusalem Activities at Start-Up Nation Central elaborates: “Israeli startups can no longer rely solely on great technical solutions, but rather, need to think more holistically, better understand their costumers’ needs and build products that don’t only works great, but that also provide an exceptional and easy UX, and are needed in the market. These giant companies rely on products that offer much more than technological innovation. When designers and creative thinkers are involved in early stages of inception, it allows for stronger and more innovative companies to grow and for the companies to develop products that are better connected to their users and their needs”, Gottesman added.

The collaboration with Tech meets Design is another important step in ACT Shenkar’s Innovation and Creativity Entrepreneurship Center in promoting the creative economy and creative industries in Israel” explains Daniel Altman, Director of Innovation at Shenkar and Director of the ACT Shenkar Center.

“Value of Design in Tech” was jointly conducted by Start-Up Nation Central and Shenkar, measuring the way in which investors and tech executives perceive of the contribution of design to overall business performance. The study included qualitative interviews and quantitative surveys of Israeli investors, executives, and designers in the tech sector.

More than 40% of respondents said that design helped the company deal with its central challenges. Companies that defined “market penetration” and “product development” as their main challenges tended to view design as an important tool for overcoming them, while companies that defined their main challenges of as “technological innovation” and “financing” tended to view design as less relevant.

Start-Up Nation Central and Shenkar’s survey found that in companies that rated design’s contribution to growth as higher, the ratio of designers to engineers was smaller, meaning it employed more designers per developer. Thus, for example, in companies where the contribution of design to growth was rated 1, there were on average 17.4 developers for each designer, whereas in companies where design received a higher growth contribution rating, the ratio between designers and developers was closer to equal – 1.8 developers per designer.

Hardware companies are less sensitive to design (average score of 3.7) compared to pure software companies (4.2). Similar findings were seen regarding the question of design’s contribution to growth. It was found also that designers in key positions contribute to a company having a positive perception of design. Clear differences were seen between companies in which some of the founders or members of senior management were designers and companies where there were no designers among the founders or senior management.

According to the study, designers are more involved with companies that are in R&Ds stages and less involved in growing and mature companies. Nevertheless, researchers could not determine whether the difference comes from the companies’ stage of development or the year of their inception – that is, whether recently established companies are more aware of the importance of design than older companies.

In general, it appears that Israeli investors, unlike those who work in the industry, have yet to recognize the full potential of design and rated it lower than other parameters, such as quality of team and technological innovation. Sixty five percent of investors claimed that Israeli companies invest less in design than tech companies in other countries.

  • Read the full report here

About Start-Up Nation Central Start-Up Nation Central is the address for corporations, governments, and investors to connect with the Israeli tech ecosystem. Start-Up Nation Central catalyzes growth opportunities by bringing Israeli tech innovation to global business and societal challenges. Established in 2013 and headquartered in Tel Aviv, Israel, Start-Up Nation Central is a not-for-profit organization funded by philanthropy.