Design Thinking for Cost Leadership
Debate Each Nickel (or Each Minute!)through the Lens of Your Customer
Design Thinking is the customer-centered creative process for consistent innovation. In a cost leadership strategy, the focus is not on traditional design problems of form or function, but rather to deliver the lowest retail price at the highest margin with acceptable product quality. Surprisingly, the design thought process has a lot to say about what customers find acceptable within this framework.
One case in the Trig Innovation portfolio comes to mind. We developed a product for a company in the kitchen cabinet industry—a design that made zero changes to the aesthetics while significantly impacting the customer experience. The application of design thinking to the customer assembly process reduced assembly time by 95%, resulting in a remarkable assembly times averaging less than 2 minutes. This resulted in an extraordinary solution that fit the client's cost leadership strategy.
At the opening price point for kitchen cabinets, we found the person making the purchase decision is usually the installer—a true do-it-yourself customer. These DIYers often used their cabinet purchases for renovations of secondary homes and rental properties. Once they have selected their cabinet of choice, these installers are minimally influenced by aesthetics. Savings—in terms of both time and money—drives these purchasers. Since they save 28 minutes of installation time on each cabinet purchased, these installers can do more jobs in a week, directly impacting their take-home pay with no added costs.
The purchase decision for products at the opening price point is complex. Customers are willing to compromise on many aspects of a product to get the lowest price. In order to create disruptive innovation at a cost leadership position, design thinking discovers critical factors for the customer. In this case, speed of assembly was the key differentiator among similarly priced kitchen cabinets. All in all, the result was a huge win for both manufacturer and customer.