Fit for Growth: A Guide to Strategic Cost Cutting, Restructuring, and Renewal

289 Pages·2017·26.19 MB·English

by  Vinay Couto

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FIT
for
GROWTH
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FIT
for
GROWTH
A GUIDE TO STRATEGIC
COST CUTTING,
RESTRUCTURING,
AND RENEWAL
VINAY COUTO | JOHN PLANSKY | DENIZ CAGLAR
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Coverimage:PaulMcCarthy
Coverdesign:Wiley
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Contents
Preface ix
PARTI IntroductionandFitforGrowthOverview 1
Chapter1 DoYouNeedtoCuttoGrow? 3
CircuitCity:TheOstrichApproach 6
IKEA:ElevatingCostOptimizationtoanArtForm 9
TheFitforGrowthIndex 12
Chapter2 BecomingFitforGrowth:TheRestructuring
andRenewalJourney 17
FocusonDifferentiatingCapabilities 19
AligntheCostStructure 21
ReorganizeforGrowth 24
EnableChangeandCulturalEvolution 28
ContinuousCost-FitnessRenewal 29
Chapter3 TheLeader’sRole:AligningCostswithStrategy 31
HowDoYouKnowWhenIt’sTime? 32
TheThreeCoreQuestionsLeadersAsk 34
WhatMakestheFitforGrowthApproachDifferent 43
PARTII HowtoCutCostsandGrowStronger:
AManager’sGuide 45
Chapter4 LeversofCostReduction:What,Where,andHow 47
SettingtheObjective 48
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vi Contents
IdentifyingDifferentiatingCapabilities 50
SelectingtheCost-ReductionLevers 52
“What”DoWeDo?BusinessPortfolioandCapabilityChoices 52
“Where”DoWeDoIt?OrganizationandLocation 53
“How”and“HowWell”DoWeDoIt?OperationalExcellence 55
Chapter5 PortfolioRationalization:DecideWhatBusiness
YouShouldBeIn 57
WhatIsPortfolioRationalization? 58
WhentoUsePortfolioRationalization 62
HowtoRationalizethePortfolio 64
Chapter6 Zero-Basing:JustifyWhattoKeep,NotWhattoKill 70
WhatIsZero-Basing? 70
AVersatile,HolisticCostLever 73
WhenShouldYouZero-BaseYourCapabilities? 76
HowtoZero-BaseYourCapabilities 76
Chapter7 AligningtheOperatingModel:RedefineWhereCritical
WorkGetsDone 85
OperatingModelElementsandArchetypes 86
WhentoRedesignYourOperatingModel 92
HowtoRedesignYourOperatingModel 93
Chapter8 Outsourcing:LetExternalProvidersGenerate
ValueforYou 103
WhatIsOutsourcing? 103
WhentoOutsource 107
TheOutsourcingProcess:HowItWorks 108
Chapter9 FootprintOptimization:RethinkYourOperationsand
OverheadLocations 119
WhatIsFootprintOptimization? 119
WhentoUseFootprintOptimization 123
FootprintOptimization:HowItWorks 126
Chapter10 ProcessExcellence:SimplifyWorkandMinimize
Bureaucracy 133
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Contents vii
WhatIsProcessExcellence? 134
WhentoUseProcessExcellence 139
AGuidetoProcessExcellence 140
AligningProcessExcellencewithOtherCostLevers 146
Chapter11 SpansandLayers:FlattenandEmpowertheOrganization 149
WhatIsaSpansandLayersRestructuring? 149
WhentoRestructureSpansandLayers 154
HowtoRestructureSpansandLayers:FiveStepstoaLeaner
Organization 155
Chapter12 StrategicSupplyManagement:ExtractMoreValue
fromYourPurchases 163
WhatIsStrategicSupplyManagement? 163
WhenShouldaCompanyUseStrategicSupplyManagement? 167
MakingItHappen:AGuidetoStrategicSupplyManagement 169
Chapter13 Digitization:MakeTechnologyaGameChanger 177
WhatIsDigitization? 177
WhentoUseDigitization 179
HowtoDigitize 182
PARTIII CopingwithCostRestructuring:Howto
ManageandSustaintheChange 189
Chapter14 RunningaCostTransformation:Mobilizing,Scaling,
andSustaining 191
Phase1:DiagnosticandCaseforChange 193
Phase2:DetailedDesign 198
Phase3:Execution 203
Chapter15 Morale,Emotions,andExpectations:Leadingduringa
Restructuring 208
UncertaintyandAnxiety 209
Phase1:Opportunity,butforWhom? 211
Phase2:AnxietySurfaces 214
Phase3:Turmoil,butalsoGlimmersofSomethingBetter 216
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viii Contents
Chapter16 TheHumanElement:GettingPeopleReady,Willing,
andAbletoChange 224
ElementsofaCulture-LedChangeManagementProgram 226
Phase1:DiagnosticandCaseforChange 230
Phase2:DetailedDesign 233
Phase3:Execution 242
Chapter17 StayingFitforGrowth 246
StrategicLevers:TranslatingStrategyintoPerformance 247
OperationalLevers:ExecutingagainstthePlan 251
OrganizationalLevers:AssignAccountabilityandRewardCost
Consciousness 253
CulturalLevers:UnleashingtheIndividual 255
SenseandSustainability:GettingfromHeretoThere 258
Notes 259
Acknowledgments 261
AbouttheAuthors 265
Index 267
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Preface
Many companies today are trying to jump-start flattening revenues and
deliver higher returns to investors. Some are fighting off efforts by activist
investors to gain control of their company. Others are simply trying to
survive and regroup. A few are racing to fend off bankruptcy. More and
more, enterprises of all kinds are realizing that the only way to unleash
profitable growth is to cut costs—often dramatically. In the globally inter­
connected,digitallydisintermediated,hypercompetitivemarketsoftheearly
twenty-first century, there is no safe harbor when it comes to the bottom
line. Companies need to focus on managing costs as rigorously as they
concentrate on growing revenues. As with any living organism, there is no
profitable growth without equally robust pruning.
Wehave70yearsofcollectiveexperienceinhelpingcompaniessucceed
in challenging markets. The surest path to success, we have found, is for
companiestobecomeFitforGrowth.CompaniesthatareFitforGrowthdo
three things consistently and continuously:
1. They focus on a few differentiating capabilities—the things they do
better than any other company.
2. They align their cost structure to these capabilities.
3. They organize for growth.
Our research and client experiences—based on lessons learned at
hundreds of companies across all business sectors worldwide—show that
companies that follow this Fit for Growth formula generate the highest
growth and financial returns.
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