"It is no great surprise that changing business operations to realize cost efficiencies is the highest-ranking priority for respondents. This reflects where we are in the economic cycle. Despite glimmers of growth, top-line opportunities remain uncertain and so management latches onto the one thing they can control - costs within their operations.
Top of their concerns is "aligning the cost base to the future strategy of the organization". In the market, we see companies seeking to create flexibility in their cost-base structures. Instead of simply slashing ten percent from each function, they are thinking intelligently about restructuring and changing the "fixed-cost mindset" so that they can move to a more variable cost platform.
Respondents agree that "embedding cost management into employee performance and encouraging a cost-conscious culture" is their second biggest priority.
Evidence proves that all too often the shed costs re-emerge once the company returns to growth and that profitability is not optimized - this is often a capability issue.
Cost management is about lifestyle changes and not simply dieting. This enables companies to keep down costs by educating and rewarding their people for helping them to become lower-cost providers.
Today, the ethos that previously wasted cash can be reinvested into new products and new markets is becoming entrenched in the business.
However, it takes time and leadership should take the initiative and create the right environment in which to think positively about cost efficiency.
Looking ahead, companies need to increase their focus on cost efficiency rather than just cost reduction to achieve more bang for the buck.
When the good times return, there is a tendency to aggregate and only count the profit rather than identify where it comes from and how much more an organization could achieve.
The lean and most nimble companies that adopt a portfolio mindset will be the ones best equipped to outperform their markets."
