“Beware of Cutting of the Branch on which You Sit”
In an article in the October 2, 2009 issue of The Financial Times, Booz & Company Senior Partner Cesare Mainardi (North America) said that contrary to common wisdom, cost-cutting in a downturn can actually be a strategic opportunity. Recession, argued Mainardi, a co-author of the new e-book, Cut Costs, Grow Stronger, is a chance to identify and focus on a company’s core capabilities. Seen in this way, the cost-cutting process “becomes quite easy, and can be done rapidly,” said Mainardi whose co-authors of the book, published by Harvard Business School Press, are Booz & Company Partner Paul Leinwand (North America) and CEO Shumeet Banerji. The Booz & Company authors argued that managers in a downturn often resort to across-the-board cuts that weaken their businesses—and that benchmarking against competitors following a similar strategy only makes things worse. Also needed is the need for detailed, accurate information when making decisions, which could be especially difficult for many managers. “Sometimes it is easier for an outsider to identify what must be done,” added Mainardi.