For some companies it's about survival,
for others it's about advantage,
but everyone should vigorously look at their cost base.
BCG's study found that cost delivers
35% of total shareholder returns
during the first year of transformation,
and even more than 50% during the first three years.
Short term, cost transformation is about funding the journey
with quick-to-implement actions.
But also it's about rethinking
where value will come from by linking revenue and cost,
how much you need to take out and where,
and where you need to invest to support the transformation.
Long-term priority shift to sustaining the results
and designing for the future.
Tools like Zero-based Budgeting,
built the need in transparency,
and combined with the new ways of working
drives the required culture change for sustained results.
Designing for the future
means taking a more strategic lens on costs.
How do we gain agility and flexibility
to support the future growth?
And how do we build a cost structure
that is resilient for future changes?
Implementing cost transformation,
companies need to avoid the temptation
of just issuing cost targets in silos,
but think cross-functional and centrally managed program
to truly challenge the status quo.
Based on our experience in hundreds of transformations
a three phase approach needs to be orchestrated.
First, in rapid assessment.
It's about identifying and prioritizing cost leavers
according to which yield the most value
and can be implemented quickly.
Second, it's about achieving the quick wins,
designing and executing the pilots
to see the tangible impact on P&L,
but also based on these learnings
iterating on the future solutions.
Last, it's about scaling,
applying the most effective cost leavers,
to new geographies, segments, and products.