10. Conclusion: The Role of Leadership

Times are tough and you've got to cut spending. What will you do?

If you cut a function (eliminate a department) or an expense code (travel, training, or headcount), you've probably damaged revenues as much as you've saved costs. The damage may be felt in the short term. It certainly will be felt later when economic conditions improve.

If you cut a whole deliverable in a single organization, you'll at least preserve that organization's ability to produce the rest of its deliverables. However, you may inadvertently cripple an important enterprisewide value chain by cutting one critical element within it.

When you cut an entire value chain (e.g., a product/service or a strategy), you've saved costs in a focused, sensible manner.

There is one "higher plane" of leadership to consider: Instead of doing the cuts yourself, you can establish business processes so that everyone automatically works within available resources and focuses on the right deliverables.

Implementing investment-based budgeting and a market-based internal economy will automatically align deliverables within every value chain, and focus scarce spending power on the most strategic endeavors. It does so, not just once, but on an ongoing basis. The company will never again get "fat" or waste time and money on activities that have little strategic payoff.

Controlling spending is a necessary and an ongoing job of leadership. Beyond this obvious responsibility, executives who implement healthy business processes leave the lasting legacy of a frugal organization that continually rallies all its precious resources around the company's key strategic objectives, now and forevermore.