You've got to cut spending, and you want to replace across-the-board cuts with a rational, strategy-driven approach.

Challenge

Traditional approaches to cost cutting - across-the-board budget cuts, slashing expense codes like travel and training, or eliminating entire groups - can damage an enterprise's ability to deliver anything, even the important things.

The truth is, staff cannot magically "do more with less" on command. Your enterprise will do less with less. The key question is, how is that "less" decided?

Traditional approaches leave it to individual managers to decide independently what will fall through the cracks. The result:

• A patchwork quilt of failures not linked to strategy

• Collapse of teamwork as one manager's highest priority becomes a team-mate's lowest

• Critical sustenance activities are cut, and productivity deteriorates

• Staff won't take on anything new, even if it's highly strategic

The bottom line: widespread ineffectiveness, and deteriorating enterprise capabilities.

How can you cut spending without undermining the enterprise's ability to deliver anything well?

Solution

Instead of cutting just the inputs (expenditures), cut the outputs and then let costs fall in line.

Strategic cost cutting begins with a deliberate look at each department's deliverables, trimming what's expected of them.

Then, the full cost of eliminated deliverables can be removed, while the few things the enterprise must do well remain fully funded.

Comprehensive solution....

Other Resources

Case Study: Cost Transparency Enables Strategic Cost Cutting
Riverside County IT cut costs without risking the whole business (2009)

Video: Interview of Dean Meyer on strategic cost cutting (27 min)

Monograph: Downsizing Without Destroying....

Speech abstract: Strategic Cost Cutting
how to trim what your organization does rather than destroy its ability to do anything at all