Winning companies "Cut Costs and Grow Stronger" while positioning for post-recession upturn
Booz & Company presents action-based prescriptions for positive change through world-class company examples including Frito-Lay, Tata, Pfizer, Google, Lego, and more
London, 20 July 2009: As companies continue to reduce expenses for survival in the economic downturn, they risk making themselves weaker, not leaner. But a new electronic book (“ebook”) from Harvard Business Press, written by senior leaders from the management consulting firm Booz & Company, tackles this problem head-on. Authors Shumeet Banerji, Paul Leinwand, and Cesare Mainardi argue that reducing expenses and building strength for the future are not contradictory. Companies that focus on their differentiating capabilities and prospects, and then apply rigour to their choices about what to keep and what to cut, are likely to thrive, not just survive, in the months ahead.
The ebook, Cut Costs and Grow Stronger, prescribes a strategic capabilities-driven cost-cutting and reinvestment process that enables senior executives to focus on their priorities and future performance potential. The authors illustrate their approach through real-world examples from iconic companies and brands like Frito-Lay, Tata, Pfizer, Google, Lego, and others. It will be released today as the first electronic edition in Harvard Business Press’ well-regarded “Memo to the CEO” series.
“Periods of acute financial stress for companies such as during the current crisis, present a rare opportunity - to pare what is superfluous, privilege what is essential for advantage, and focus on the capabilities that truly drive their right to win,” noted Banerji, the CEO of Booz & Company. “Done strategically, cost reduction can be the catalyst for exactly the change you need, irrespective of the economic climate.”
Capabilities-driven strategies reach beyond typical definitions of competitive distinctions like employees’ skill sets or particular functions such as research and development or supply chain as a means of creating value. “This kind of approach to cost-cutting results in greater and faster cost reduction, less risk to the business, a lower chance of costs returning, and a greater likelihood of growth in recovery,” according to Mainardi, who is the managing director of the firm’s North American business. “It requires an objective analysis of where the company’s advantaged capabilities truly reside.” Companies that have followed the capabilities-driven strategy process have revitalised lagging brands, saved millions of dollars annually, and have created significant value.
“Most companies assign targets or use benchmarks to take out cost - which is essentially matching the choices of competitors, often leaving companies undifferentiated and weaker,” noted Leinwand, a partner with Booz & Company. “Instead, this is an outstanding opportunity to focus the organisation on what matters - the two or three major capabilities that set the company apart.”
Cut Costs and Grow Stronger, the first book published in electronic form from Harvard Business Press, describes:
- How pursuing cost reduction and growth at the same time does not have to be in conflict, but rather, it gives companies a rare opportunity to concentrate on what matters most to them;
- The process behind capabilities-driven cost reduction, and how to get a company’s management team and organisation engaged in the work;
- How companies should think about their most important capabilities, how to select them, and explicitly eliminate or reduce focus on others;
- How to overcome the impediments to thinking that make it difficult to fully implement an effective cost-cutting strategy.