Monthly Archives: June 2012

Building a Culture of Cost Innovation

Who wants to sign up for cost cutting? If you are trying to rally an organization around cost saving initiatives, you might be going about it the wrong way. It is not about cost savings or cost cutting … that language is often not helpful or do initiatives that are positioned as cost-cutting always work. According to study by the Conference Board, of the 90% of organizations that are cutting costs this year, only a small fraction will likely retain those savings for three years or longer.
Think Cost Innovation!
What we do know is that people will rally around a cause if they know what they are signing up for and feel that they can contribute to making a difference.
Cost Innovation does just that. Cost innovation is not an initiative – it becomes a way of life for successful organizations. Cost innovation is about making good choices on how an organization uses its resources for growth. Outside of work, people do it all the time. It is part of life. Employees in companies who employ cost innovation techniques understand cost savings funds future growth and if done well allows for sustained success in the marketplace. Consider this:
A successful Consumer goods company’s commercial organization had to reduce 42 million dollars from their operating budget. They rallied the organization by creating cost innovation teams focused on costs and capability building. Teams were successful in identifying ways to reinvest a portion of the savings on capability building. Talk about a win – win!
Here are the steps they followed:
1. Executive team met off-site and created a vision for cost innovation
2. Cost and capability “targets” were identified
3. Change management messaging –organizational readiness was assessed
4. Team were with careful consideration of sponsors, leaders and members
5. Team members were trained: financial acumen focusing on costs, analytical thinking, change management, and teaming skills
6. Teams worked and identified cost savings and capabilities needed
7. Teams disbanded and education along with changes were anchored in the culture & management systems of the organization
Ultimately it is all about culture –creating a culture of cost innovation so it becomes a way of life for your organization –no matter what the size!