Achieving Rapid and Sustainable Cost Reduction
How to accomplish transformational, long-term cost reduction by focusing on agility, analysis, and your stakeholders.
Organizations often concentrate a fair share of their efforts on reducing costs, and with challenging macro-events, there is a heightened need to slash costs quickly. But if you’ve ever been charged with overseeing or creating cost reduction efforts for your organization, you know how frustrating and ineffective traditional cost reduction efforts can be. Many times, efforts fall short; over 81% of organizations are unable to fully meet their cost reduction targets.
Not only that, with the average cost reduction initiatives requiring 12-18 months to plan and implement, it often just takes too long for organizations to see the benefits of their work.
Additionally, even if they do realize those benefits, 75% of organizations see their cost savings disappear within two years. They simply can’t sustain the effort.
A Different Perspective
How do we drive savings in a measurable and actionable way, as well as keep things achievable and sustainable while we do so?
The key is moving fast and knowing where to look. We use our proprietary accelerator assessment to identify the most significant opportunities rapidly, and kick off quick sprints to implement any immediate wins right away. While we bring a wealth of experience and best practices to our engagements, we aren’t interested in power point platitudes or cookie-cutter approaches: We work hand in hand with you to identify meaningful and actionable savings opportunities that translate to sustainable cost reduction.
We also understand not all costs are created equal, so we help quantify your savings targets. As your efforts continue, we also help you understand how much you’ve actually achieved and ensure those successes are long-lasting and sustainable.
A Two-Fold Analysis Approach for Quick and Sustainable Success
In order to see savings, we first take a holistic view of the situation, examining factors like data management, technology architecture, process flows, role clarity, organizational alignment and physical space. It’s through this broad and human perspective that we are able fully examine your organization and know what needs to be done.
One of the reasons our approach is so successful is that we utilize a top-down analytical approach for quick wins. We assess the biggest opportunities and develop rapid hypotheses for what could save you the most, the fastest. These quick wins are where we see speed-to-value as they can be implemented in as little as a few days.
As these initial hypotheses are identified, we transition to a bottom-up approach to test and refine the hypotheses. This is where we glean knowledge from the details through a variety of methods including interviews, financial performance reviews, spend analysis, organizational design review and process analysis. We estimate the financial opportunities and risks for your organization, and recommend ideas we can then test and learn from, revising and adjusting as needed.
We know that not everything will be a quick fix, so for longer-term initiatives, we develop an implementation roadmap. We continue to work every angle to increase efficiency and decrease costs, starting with change management and exploring approaches like process optimization, intelligent automation or robotic process automation (RPA), operating model redesign, or space efficiency. Point B’s multi-prong approach enables us to continue getting quick wins as we implement those longer-term roadmaps and change efforts. This way, you see the benefits of cost reduction efforts all around.
Putting People First
We make sure to focus on the most important component of any program – the people.
One common reason cost reduction initiatives often fail is that they focus on the cold, mathematical aspect of rapid cost takeout. That’s a mistake: your employees drive and sustain these types of organizational endeavors. As such, their concerns need to be adequately addressed.
What does change mean to your employees, partners and customers? How will it affect them?
Any time you’re attempting cost reduction initiatives, people in your organization are affected. Communicating change to your employees and listening to feedback needs to be a part of the plan from the outset. You don’t want to have your costs lessened at the expense of employee disengagement or lowered morale.
Making Your Savings Real
Today’s business environment requires all resources, processes and costs be optimized so companies can retain employees and meet customer demand through this economic storm. Measurement systems and visual management tools provide the essential insights leaders need in order to make data-informed decisions on the reallocation of resources or the reassignment of staff. Making these decisions on projected, versus actual, savings introduces risk and burden to an already strained system. Leveraging these data-driven decision instruments is what transforms your cost reduction efforts into realized savings.
How We Can Help
We can help to reduce costs quickly and effectively. We focus on the most impactful and achievable opportunities. By taking a holistic view of your organization – one that emphasizes respect for people – we have the know-how to help your company achieve meaningful speed-to-value.
Ultimately though, cost saving strategies shouldn’t be utilized to simply realize quick wins. They should be used as a means of developing ongoing ways to achieve sustainable cost savings on a regular basis. The better a company does this, the more it will succeed.
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