Download the Flash plug-in to see the Flash-based content on this site.

Cost Cutting

For most companies, cost cutting in a down economy means across-the-board slashing that "spreads the pain" of budget reductions across many departments. Although that may sound like the best approach for getting critical results fast and for limiting political infighting, it is a mistake — one that will leave your company not just smaller, but weaker.

Instead, companies that need to reduce costs should treat the challenge as an opportunity to identify and reinforce their key capabilities, while divesting those activities that do not truly reflect the business’s strengths or long-term goals. This more strategic approach will make your company more resilient as tough times continue and more robust as recovery begins.

Capabilities-Driven Strategy provides executives with the tools they need to rapidly and sustainably implement cost reduction. First identify and clearly articulate your company’s key capabilities — not just core competencies or skill sets, but those very few strengths that, in combination, define how your organization competes. Then use this information to create your company’s unique blueprint for effective and efficient cost reduction.

How to Cut Costs – Strategically Booz & Company Senior Partner and North American Managing Director Cesare Mainardi sat down with Paul Michelman of Harvard Business Publishing to discuss how executives should use a strategic approach to cutting costs — but often don't. His thoughts are based on the ebook Cut Costs and Grow Stronger, detailing how cost cutting is and should be a strategic act, linked to a capabilities-driven strategy.watch the video >

Cut Costs and Grow Stronger Cutting costs without thinking of strategy is a bad decision. In this video, Booz & Company's leaders from around the world discuss the concepts behind capabilities-driven cost cutting: Cut costs in superfluous areas and invest in those that will strengthen your differentiating capabilities.watch the video >

Key Publications on Capabilities-Driven Strategy

Cut Costs and Grow Stronger by Shumeet Banerji, Paul Leinwand, and Cesare Mainardi For most companies, cost cutting in a down economy means across-the-board slashing that "spreads the pain" of budget reductions across many departments. While that may sound like the best approach for getting critical results fast and for limiting political infighting, it is a mistake — one that will leave your company weaker, not just smaller.read more >

Cut Costs, Grow Stronger by Shumeet Banerji, Paul Leinwand, and Cesare Mainardi If you are a corporate leader, you have probably been spending a lot of time lately thinking about costs. In the aftermath of the global economic crisis of 2008-09, the pressure to cut costs — whether driven by cash flow, shareholders, uncertainly, or investment needs — has been extraordinary.download from strategy-business.com (639kb, PDF) >