Cost performance is central to business success, but managing costs in isolation can end up harming a business’s capability to deliver consistently excellent results.
Here are seven principles to help you shape an effective cost management strategy:
- Look for the right thing in the right place. Recognise the fundamental importance of process quality. Hard-wire the design, management and improvement of business processes and the collective system into the management system and culture
- Prioritise the improvement of sustainable profitability through taking an entrepreneurial attitude toward understanding and meeting current and emerging customer needs and ensuring that the process is aligned with, and capable of, serving them profitably
- Systematically and routinely minimise and eliminate waste as part of everyday management
- Find out what poor process quality is costing, and don’t rely on financial data alone. Develop a fuller understanding of overall process performance and what the key variables and drivers of performance, quality and cost are
- Actively manage performance to bring problems to the surface and address them
- Take a systematic, disciplined and rigorous approach to solving problems and improving process performance
- Optimise the leadership and management systems and behaviours first. Everything in the business is a reflection of leadership quality, so it needs to be the first part of the continuous improvement conversation
Let’s get to work
Is your business facing increasing competitive and cost pressures? Do you want to respond strategically – to build business capability, and a culture that translates into long-term competitive advantage? If so, we can help you develop and implement your strategy. To get in touch, just reply to this newsletter to book a free consultation where we’ll get to work on:
- What excellence looks like for your organisation
- Where you are (current status)
- The highest-leverage possibilities for action
Explore more about what it takes to build an excellent and low-cost culture in our book, Toward Excellence.
