Your culture can make cost savings last
What's the fix?
There are three key area consumer products companies can focus on to drive cost savings that last:
Apply a cultural lens to strategic decision-making.
- Know your operations. At a tactical level, your company needs to have a depth of insight into its operations to be able to make the right cost-cutting decisions at a detailed, program-by-program level. It’s about knowing which cost reduction opportunities will provide the most value.
- Align decisions to the business strategy. In addition to using insights to make program-by-program decisions, companies should be taking more strategic measures.
- Link cost reduction efforts to the broader business strategy and to the operating model so that you can be deliberate about where to invest in cost savings.
- Use tools such as driver analytics to structure decision-making.
- Understand your culture’s ability to embrace change. What degree of culture change are you trying to drive? Is it a minor cleaning or a complete overhaul? How will your people react in each of these situations?
- Determine which kind of enterprise cost reduction efforts would best align to the culture. Know which cost reduction efforts add value and which don’t.
- If you need to shift the culture, be deliberate about how best to do it. Make sure the cost reduction program you need to implement is supported by an equally robust organizational change management program that incorporates ample communication.
- Link the culture shift back to strategy. Make sure decisions make sense to the strategy of the business and the employees.
Consumer products companies will also want to introduce a cross-enterprise program management initiative to provide a level of rigor. This will allow companies to make driver-based decisions market-by-market, leader-by-leader and function-by-function to avoid losing value.
By implementing a people and organizational change management program at the same time, companies will strengthen their cost reduction messaging in a way that sustains employee engagement.