Brian Joiner in Fourth Generation Management
Most leaders don’t understand this difference. In the quest for quick results, they often opt for the latter when it is infinitely better and more efficient to opt for the earlier.
Reducing cost is all about
- Finding activities that don’t add value and removing them (waste) or automate and delegate processes so that we increase our efficiencies.
- Being intentional and engaging with everyone around to either add more value or reduce waste and mostly do both at the same time.
- Long term thinking and is almost permanent. With cost cutting measures, most organisations are likely to add the very same costs as soon as it becomes possible whereas cost reduced through intentional effort by making processes effective, typically stays off the balance sheet.
- An ongoing all-year-round effort. Cost cutting happens when there is pressure on the business to perform.
In Conclusion
Cutting cost is like going for a crash diet. More often than not, you are likely to put on the weight that you lost when on the crash diet. While reducing cost is like eating healthy and exercising in the first place.
Be smart and reduce cost all the time. If done well, you will never need to cut cost ever.
