For most companies, cutting costs is simply a fact of life—a recurring drill that can sap employee morale and undercut new initiatives when handled the wrong way. Cost reduction, after all, is a resource allocation exercise in reverse—a systematic review of where and how the company will invest or divest scarce resources to ensure the success of its strategy.
It’s about doing more with less to generate major productivity gains. By identifying poorly deployed resources, leadership teams can reallocate them to activities that can strengthen or reposition the company. It works in part by empowering staff at many levels to contribute their ideas and energy. Cross-functional teams traverse beyond incremental improvements to deliver breakthrough gains, evaluating where to optimize while selecting areas of strength to reinforce performance improvement.