COST MANAGEMENT TECHNIQUES AND TACTICS
? Understand what creates cost.
? And what your key cost trends are.
? And how costs move in relation to decisions and activities, in particular how they move with revenue and headcount.
? Produce management accounts that let you understand, model and manage the true economics of the business.
? Is the presentation as crisp as Elmore Leonard's dialogue?
BANG FOR BUCK
? Focus on where to get the biggest results fastest.
SLICE AND DICE
? Get at difficult costs by slicing and dicing.
? Unbundle activities.
? Map them against different customer segments.
PUSHING WATER DOWNHILL
? Understand natural cost trends.
? Don't fool yourself you are pushing water downhill.
? Don't expect to push water uphill.
FOCUS ON CASH COST NOT P&L COST
? Particularly in a cash crunch.
? Regularly look for best practice across the organization.
? Take opportunities to do experiments and comparisons.
? Check competitors' cost positions and their cost trend. Have they found more cost-effective ways of working?
? Make sure you distinguish structural cost differences from operational execution.
COST MANAGER'S TOOLKIT
DELIVER VALUE VIA ACQUISITIONS
? Most acquisitions don't add value, but a strong cost manager has a much better chance of doing so.
? Cost-based synergies are better than revenue- or scope-based ones.
UNDERPIN PRICING STRATEGIES
? In price wars - for market leaders and market attackers.
? In new product introductions - pricing down the experience curve.
? In long-term customer contracts - making profitable commitments.
DISCOVER MORE NEW GROWTH OPPORTUNITIES
? Drive down the cost of discovery.
? Retain more equity value.
CREATE AN EFFECTIVE CENTER IN A LARGE CORPORATION
? Make decentralization the default position
? Establish a clear supplier-customer relationship between the center and the business units.
? Be particularly hard on center cost creep.
? Establish and track hard metrics around center efficiency.
? Do annual private equity-type reviews that challenge the center.