Embedded systems interaction with environment inherently complicates understanding of requirements and their correct implementation. However, product uncertainty is highest during early stages of development. Design verification is an essential step in the development of any system, especially for Embedded System. This paper introduces a novel adaptive design methodology, which incorporates step-wise prototyping and verification. With each adaptive step product-realization level is enhanced while decreasing the level of product uncertainty, thereby reducing the overall costs. The back-bone of this frame-work is the development of Domain Specific Operational (DOP) Model and the associated Verification Instrumentation for Test and Evaluation, developed based on the DOP model. Together they generate functionally valid test-sequence for carrying out prototype evaluation. With the help of a case study 'Multimode Detection Subsystem' the application of this method is sketched. The design methodologies can be compared by defining and computing a generic performance criterion like Average design-cycle Risk. For the case study, by computing Average design-cycle Risk, it is shown that the adaptive method reduces the product development risk for a small increase in the total design cycle time.