You Won't Change The World By Cutting Costs

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Strategy is an interesting topic.

You and I can be working in similar areas of management. We can have gone through the same set of experiences in our time at our organization. We can even have a similar view of what defines success in our chosen markets. Yet we can have markedly different perspectives as to what approach it will take to get there. And that’s perfectly normal - in fact, it’s almost always a good thing.

Because there isn’t any single path to success. There are different approaches, different resource sets to work with. And reasonable minds can reasonably differ as to how those resources should be deployed to get to “success”.

But one thing that isn’t subject to debate (at least in my mind) is that cost cutting won’t do it.

Because businesses need to be about something, not the absence of it.

You win customers, loyalty and share by delivering something material, something substantial at least in the mind of the consumer. You don’t do it but appealing to those who simply want the cheapest option, because there is no loyalty in the ‘cost-focused customer’. They’ll drop you like a hot potato the minute something cheaper comes along. The Dollar in their pocket is paramount, more important than any value, experience or impact you can deliver.

Strategies and incentives that center around cost management - driving the organization to the lowest possible cost base or the cheapest delivery capability - will ultimately get caught up in themselves, no matter how well intentioned the emphasis may be in the first place.

Because ultimately, little nips and tucks here and there will eventually go beyond the fat - they’ll inevitably cut away at employee satisfaction and customer satisfaction.

Yes, cost cutting has it’s place. There are many corporate situations where the fat has been allowed to build, for better or for worse. And as such, they need treatment. By all means, undertake it. But do so thoughtfully, mindfully, with the emphasis always being on maintaining or improving customer satisfaction.

But when cost cutting becomes the central element of strategy, then you’ve set yourself on the path to failure. You’ve turned your focus away from building something to reducing it. From adding value to your customers in material, long lasting ways to simply being minimally acceptable. From delivering a game changing experience to just “being there”.

Once you’ve set yourself down that path, it’s very, very difficult to claw your way back. Any cost cutting that does so at the long term expense of employees or customers is destined to do damage, and destined to fail.

At the end of the day, businesses must always be about becoming something.