Another good post in the Harvard Business Publishing site: Rita McGrath writes about better ways of cutting costs. In A Better Way to Cut Costs, Rita reports some findings from a workshop she attended about that topic.
Here is what emerged:
- Beware the hidden dependencies: you might cut in areas that are related in a hidden way to real (perceived) value or to your main value proposition for end customers!
- Speed is good: ‘The more quickly you can identify cost-out opportunities, the more likely you are to gain credibility and the more good news drops to the bottom line’
- Out, out, complexity: KISS
- Not all customers are good customer: ‘firing’ customers is sometimes better ten firing employees
- Strategy first, cost-cutting after: think more as an entrepreneur, you need to reach small term results AND you want to reach even long term results. So have a strategy!
- Costs may be saved where the budget isn’t: ‘My dad used to tell the tale of a guy in the chemistry lab whose major responsibility was to make sure that all the glassware was clean and ready for use. In a cost-cutting spree, that job was eliminated. And guess what happened? Yup. High-priced Ph.D. chemists spent their time hunting for clean glassware, doing the job themselves or not doing certain activities because they couldn’t find the right supplies’
Which are your strategies / tactics? How are you approaching the cost cutting problem? Share them with us!