Design to Value versus Design to Cost

Strategy+Business has an interesting article about the difference of designing to value versus designing to cost in the context of the auto industry.

We call this process “design to value.” It’s a far cry from “design to cost,” the typical approach used to make cars, in which a final price is set and the new car is then engineered to be sold profitably at that price; the concept of how consumers perceive value does not really enter into the equation. Design to value, on the other hand, involves a series of complex, varied, carefully thought-out decisions about which types of engines to use; which equipment should be standard; what safety add-ons to include; how parts and materials are engineered; and which designs are most attractive to the target customer base. And if an automaker hopes to differentiate its products from others in the market, these decisions must be made in light of the kinds of value decisions competitors are making.

The idea of baking in customer input by designing products to value can have a huge effect for companies well beyond the auto industry.

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