How to Cut Costs--Strategically

[thesuccessinstitute]

Excellent interview. Thank you.

[StroonsGlen]

The problem companies make is to cut costs across the board. Firms should concentrate on expense around capabilities that make a real difference. At magtalaga ng tao na qualificado.

[katheryncruz24]

That's it?

[60187guy]

Interesting stuff, Chezz. Go Cats! Go!

[pamelbia2011]

Why not cut down on not so important aspects?

[bbeadles]

He nails it when he talks about essential and non-essential functions of a business. Essential items are production, sales and distribution of a product. Everything else is non-essential or support functions that should be kept to a minimum.

[jaigmat]

Cost reduction should never be taken as strategy. Strategy should always be on process improvement which consequently should target Cost cutting.

[jrampue]

nothing new at all

[NilaBranzburg]

Please check out my video - Profitability Analysis via Detailed Variance Analysis.

A complete breakdown of every variable margin item - by cost or revenue driver to identify opportunities for improvements - marketing and operational strategy, cost containment, etc. Actionable and insightful.

[drmoney01]

manual-workers are observed as a cost driver whereas are knowledge workers are seen as a capital asset

[circusboy90210]

@drmoney01 truth being ther are both equally well important.

[rhaneyboy]

even more bored!

[Perfectbreed]

im still bored

[DefCon1990]

so basically the biggest expense to an company is its employees. they can fire the people that make the most money and hire two people in their place to get double the work force.

REVENUE - EXPENSE = PROFITS

its the companys goal is to shrink expense drive profits. its not the companys job to pay employees more money.

[circusboy90210]

@DefCon1990 labor is the one who does the work and has a right to a large share of the profit, without them there is nothing.

[MikeUpstone]

This is far from a rational approach - the focus on cost itself is irrational! The key for a lean business is to optimise every stage of production and to ensure that quality is delivered to the customer. Profits are a function of customer satisfaction, not vice versa!

[sergiocrego]

I believe there are instances where cutting costs are necessary for the company to survive. And, if the company fails to survive, it will not be able to deliver to the customer.

[MikeUpstone]

The prioritisation of cost indicates a short termist mentality, whereas a rational approach is systemic, focused on the customer and on the long term, which produces the most lean / efficient system via reducing process variation.... cont'd

[MikeUpstone]

As Deming said (paraphrased) the role of a company is not just to please but to DELIGHT the customer. This is achieved via a qualitative approach: if the customer comes first, turnover, profits and shareholder value follows naturally... BUT if you reverse the equation it no longer holds true!

[sergiocrego]

I see where you come from. But would you not agree that if a firm looses funding--the market for commercial paper dries up, etc--then there is no alternative but to cut costs in order to survive? I think this may not be the norm, but many companies faced this kind of scenario in the last two years.

[MikeUpstone]

This approach is being touted as something approaching 'best practice' and it would certainly come with that positioning coming from Harvard... however I think you'll find that this kind of cost focused approach has caused massive damage to some of the biggest companies and it has often been imposed by external consultants.

So, NO, bad practice is BAD PRACTICE and you eliminate waste via SYSTEMIC OPTIMISATION, NOT by a cost focus!!

[marcberron21]

net schlecht für heute is aba GeileZone . com mein lieblings fund

[wanabee100]

If this interview had been done in Germany,the "case" in this interview would have been about a company who produced something that the world needs,and not about a Pepsi owned company who markets junkfood to children!

[volis77]

seems like slightly redefined Prioritization, isnt it?

[EyesLikeHoles]

7:50. Excellent question.

[Athenaikos]

make the "that" to "what" and you might have a coherent opinion.

[Athenaikos]

Tactical vs. strategic. Flexibility should be in focus as well, since that is strategic today might become reactionary tomorrow.