One of the best article on Cost reduction strategy

If you are in a managerial position (even a non-finance one), you should have already encountered the Cost Reduction dilemma.

I recommend you the article of the Harvard Business Review called “When You’ve Got To Cut Costs” which in my opinion will bring you other perspectives and other way to look at the situation.

Here is a quick summary:

Getting to 10%: Incremental Ideas

  1. Consolidate incidentals.
  2. Take overdue personnel actions.
  3. Reduce spending on department management.
  4. Gain control of “miscellaneous” spending.
  5. Hold down pay increases.
  6. Repropose rejected cost-saving ideas.

Getting to 20%: Redesign Ideas

  1. Talk to your counterparties.
  2. Eliminating liaisons and coordinators.
  3. Reducing excessive service levels.
  4. Change the process.
  5. Reduced business requirements.
  6. Manual processes.
  7. Exceptions to the norm.
  8. Timing.
  9. Move away from the belt-and-suspenders mind-set.

Getting to 30% or More: Cross-Department and Program-Elimination Ideas

  1. Coordinate parallel activities.
  2. Shift the burden to the most efficient location.
  3. Eliminate duplicated analysis.
  4. Eliminate low-value meetings and forums.
  5. Restructure or cut cross-department activities.
  6. Eliminate programs.
  7. Reduce the burden you place on others.

Link to the article here: https://hbr.org/2010/05/when-youve-got-to-cut-costs-now

If you liked this post it will mean a lot to me if you share it around. You can also leave a comment below to contribute with your ideas.

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