One of the great dangers in these complex times is to try to adapt a new “one size fits all” model, back to a kind of one-size-fits-all thinking.
First of all, and fortunately, some companies have absolutely no need to reduce their costs, given their activities and the evolution of their positions in the markets they serve. It would therefore be wrong to claim that a slimming diet in this context would be THE priority.
It’s true, you may say, that costs need to be constantly monitored, but in this case we’re talking about strategic and operational priorities. The problems faced by a fast-growing company are not the same as those faced by a company in a sales recession.
Secondly, the approach generally proposed is “cost-killing”, a source of disastrous results in the short and medium term because, like a headless rooster, choices can be unfounded, based not on any strategy but exclusively on the search for the lowest costs, without taking into account customers, the competitive context, etc…
Beware, then, of the hucksters who guarantee easy, shimmering results on costs, while forgetting to consider objectives, customers, employees, the competition, etc. Courage to flee, for the rapid destruction of value lurks after so much effort in implementing and obtaining results.
Consequently, in the current period, the solution seems to lie more in Strategic Cost Management / Optimization.
Focusing on the company’s strategy and objectives, and taking into account positions with customers, this approach enables resources to be allocated to key areas (and it’s often complicated to make these choices), employee buy-in to be won through clarity in decisions, ultimately to free up cash and profits, even in the very short term, and finally to make these choices SUSTAINABLE.
Without going into detail, as each company is a special case, a McKinsey study entitled “Reset & reallocate: SG&A in the next normal – June 2020”, involving 195 executives worldwide, rightly presents the two graphs below: Cost Management is the priority for 88% of them, and 60% believe they are ill-prepared to reallocate resources.
Don’t you think it’s time to do just that, with outside operational help from a CEO to guarantee complete objectivity and implementation that won’t impact on the company’s (other) priorities? Yes? so if you believe, as I do, that the time to act is now, you know what you have to do…
