Key Messages
Save Smart And Streamline Your Business For Growth: A Guide To Cost-Cutting And Restructuring
Grow your business by making smart cuts and effective organizational restructuring.
That’s the message behind Fit for Growth, a powerful book that breaks down how businesses can cut costs without cutting into their growth potential.
It shows us that in order to reduce costs, we have to make the right cuts in the correct places – not just across-the-board or arbitrary reductions – so that our organizations can truly be “fit for growth.”
The book covers everything from identifying differentiating capabilities and restructuring your business to communicating with stakeholders and minimizing employee anxiety through middle managers.
With this important advice, you’ll be able to determine where to best invest resources, allowing you to reinvigorate profitability while continuing to maintain a healthy rate of growth.
So if you’re looking for ways grow your business without breaking the bank, then follow the Fit for Growth’s strategy of smart cost cutting and structural reorganization — it may just be the key to success you’re looking for.
What’S The Answer To Growing Your Business? Cut Costs And Focus On What Makes You Unique
As a company, focusing on the areas of business where you already excel will lead to greater success than attempting to be excellent in all your operations.
This means that understanding what your differentiating capabilities are – those processes, tools and knowledge that makes your company better than its competition – is essential.
You should then prioritize them with the lion’s share of your financial resources devoted to them.
At the same time, you need to cut costs everywhere else in order to focus on these priorities.
Companies who don’t take this approach often attempt to be “best in class” in every department from Human Resources to Logistics and allocate generous amounts of resources accordingly.
A great example of a successful business that follows this logic is Swedish home-furniture company IKEA:they know they’re loved for their product design, stores and low prices, so they relentlessly search for opportunities to save costs elsewhere as long as it doesn’t effect product quality, customer experience or pricing.
Make Strategic Cost Cuts Before Crisis Hits For Long-Term Success
Too often, businesses wait until a crisis hits to begin cutting costs and streamlining their organization.
But this is not the best approach.
Any drastic measures taken at times of crisis are more likely to be ill-informed and cause long-term damage, especially if they cut away at the differentiating capabilities that help set one business apart from its competitors.
To ensure long-term success, Fit for Growth encourages companies to get ‘fit’ before the crisis hits – that is, start focusing on cost cutting and streamlining your organization now instead of waiting for an emergency situation.
In physical fitness, you don’t get results just by dieting – it’s the regular exercise and healthy eating habits that matter.
Similarly, achieving successful cost-cutting in business takes consistent management, not just one-off drastic measures in times of panic.
That’s why it’s important to build a sustainable organizational model in your company that promotes strategic cost cutting.
This could involve restructuring departments so that fewer managers are needed or lowering the levels of hierarchy between decision makers and implementers.
By doing this now (when there is no crisis) you have time to review, analyse and develop strategies carefully so that all decisions are informed ones which lead to optimal outcomes.
The Keys To Successful Cost-Cutting Programs: Let Your Team Help Shape The Change
For cost-cutting efforts to be successful, CEOs need to take on the role of being passionate champions for change.
To begin spreading their cost-cutting message and evoke enthusiasm within their senior-executive team, CEOs should give a presentation that assesses the economic environment in which the company operates, highlights customer needs and competitor strengths and provides a clear, compelling vision for the future – one that can be achieved if cost-cutting measures are successfully implemented.
It’s important for CEOs not to focus too heavily on details when articulating this vision, as this could prevent them from taking advantage of ideas proposed by their teams and make it more difficult for employees to feel committed to the change program.
Instead they should strive to create an environment of open dialogue and collaboration that encourages employees to explore every possible opportunity.
By setting forth a vision with broad strokes but illustrating why it is necessary through data and examples, not only will executives have an easier time seeing the goal ahead but they will also be more likely to support it.
That’s why having a CEO strongly advocating transformation is key in successfully implementing any type of change
Outsourcing: A Cost-Cutting Solution That Benefits Companies Of All Sizes
Outsourcing work to an external provider often has numerous cost-saving benefits for companies of all sizes, especially over the course of a long-term contract.
Research shows that by outsourcing key business activities such as sales and marketing, IT help desks and even your company’s back office, significant reductions in costs can be achieved.
For larger businesses, this is evident through high-volume services such as travel processing and order entry being outsourced; economies of scale are leveraged to make incremental savings.
Meanwhile, smaller firms can benefit from outsourcing research and development, data analytics and product design – areas where external service providers typically have specialised resources.
Ultimately these companies gain access to the expertise they would be unable to acquire in-house.
Ultimately then, no matter how large or small your business is there are clear cost-saving benefits to be had through outsourcing work to an external provider.
Optimizing Your Company’S Footprint To Cut Costs: Analyze, Improve And Consider Infrastructure And Local Talent
Relocating to a low-wage country is a great way for businesses to cut costs, but it’s important to make sure that the country you choose also has suitable talent and infrastructure.
The authors of the book ‘Fit for Growth’ believe that in order for relocation to be successful, companies not only need access to cheaper labor rates, but also need a skilled workforce and reliable infrastructure.
Additionally, they need access to good roads, port facilities or airports in order to transport physical goods, as well as high-speed internet access and reliable electricity if they are relocating back-office activities such as finance or IT.
Essentially, when it comes time for your business to relocate operations to an LCC (low-cost countries), it’s important think beyond just the cost of labor in that region.
You’ll want ensure that the local talent and infrastructure is suitable before making any decisions.
How Middle Managers Can Help Their Teams During A Restructuring Process
Middle managers face unique challenges during the restructuring process.
One such challenge is limited information from executives about the reasons and methods behind the changes, leaving middle managers to cope with nerves and confusion of their subordinates who fear for their jobs.
In spite of the challenging situation, restructuring also presents opportunities for mid-level managers to learn new management skills, or even drop underperforming employees, putting them into a position of both challenge and opportunity.
Given this difficult and varied situation, it’s essential for mid-level managers to try to keep their team focused on their day-to-day work.
To do this they must reinforce organizational values and expectations; measures like setting up customer satisfaction surveys in customer service teams to instill pride in employees’ roles can help keep morale high while providing focus on the job at hand.
By creating an atmosphere like this, middle managers can remain in control despite the changes going on around them.
Wrap Up
The main takeaway from Fit for Growth Book is clear: sustainable growth comes from focusing on cost-cutting throughout your organization, while reinvesting in those areas that represent your businesses’ unique strengths.
It can be a stressful process, but it’s the key to securing a prosperous future.
As for actionable advice, when it comes to outsourcing tasks to external service providers, the best bet is to outsource standardized processes which are well-documented and have clearly defined inputs and measurable outputs.
Tempting though it may be, you should avoid outsourcing highly complex processes that require judgment calls by experienced front-line workers.
This book provides valuable guidance on how companies can become leaner and more efficient in order to maximize their growth potential for long-term success.
It’s a great resource for anyone wanting to secure their business’ future prosperity.
