Monday, February 03, 2014

I chose the leadership category since this must
be driven top down
A Better Way to Cut Costs
An organizational approach will reduce spending and—more important—reinforce your strategy.
Published: January 7, 2014
Josh Peters

Driving organic growth is not only accomplished by driving profitable revenue but also by smart cost reductions that not only bring immediate results but set the organization up for future revenue growth.

"Given the competitive pressures that companies face today, many are seeking to cut costs and improve margins. Unfortunately, cost-cutting without organizational change won’t create a lasting cost advantage. Standard, across-the-board efforts—the kind typically applied when a recession or some other external force threatens profits—affect only the amount you spend, not what you spend it on. Costs almost always creep up again after the threat passes, because resource-allocation policies haven’t changed.
Instead, the right approach should reinforce a capabilities-driven strategy, which entails shifting resources toward activities that support your differentiating capabilities and away from others that don’t. 
Key points are:

1. Information. Implementing a capabilities-driven strategy requires clear choices about which capabilities should get more resources and which should get less...Once those decisions are made, leaders must make them clear to everyone at the company. A few pronouncements from on high won’t do the trick.
2. Structure. Traditional organizational structures can thwart the cross-functional collaboration needed to focus resources on differentiating capabilities. Departmental silos breed redundancy, duplicated efforts, and low-value activities. Each group pursues its own agenda, often to the detriment of broader corporate goals.
3. Mind-sets. Throughout your organization, employees make thousands of decisions every day about how to spend time, attention, and money. Collectively, these decisions will determine whether your key capabilities get enough resources to become real competitive differentiators. Longstanding assumptions, biases, habits, and unwritten expectations have at least as much influence as C-suite edicts on these choices. If you don’t align mind-sets with strategic priorities, people will keep making resource choices that don’t prioritize differentiating capabilities. (THE DECISION CRITERIA APPROACH WE DISCUSS IN OUR DRIVING ORGANIC GROWTH CLASS THROUGH INNOVATION CAN HELP DRIVE THIS MIND-SET FOCUS)
4. Decision rights. A capabilities-driven strategy depends on timely, well-informed decision making. The right choices will strengthen your capabilities and advance your strategy. The wrong ones can undermine the strengths you’re trying to build. The odds of making good choices will improve if the right people have authority to allocate resources. In general, decision rights should reside as close as possible to your differentiating capabilities"

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