How do I implement strategy while cutting costs?

Image reflecting how to improve quality and efficiency with strategy implementation while reducing costs

In tough times, Managers cut budgets. We look for obvious savings. HR leaves vacancies unfilled. We cut travel. The training and conference budget disappears. Property gives up the lease on an office floor.  People lose their jobs. Executives shelve business cases. Now is not the time for bright, new ideas. It is time to tighten belts and get back to basics. It is time to implement strategy on a budget.

Time for Strategy to Take a Back Seat

If strategy is pursuing shiny new things when we have spare time and money, then we should stop when the money runs out. That makes perfect sense. Doesn’t it?

The problem is that strategy is not about shiny new things on top of your core business. Strategy is the choices you make about your core business.  Strategy is where you are going and the actions you are going to take to get there. If you stop implementing your strategy you will not get to where you decided you wanted to be.

The Threat of Recession

As interest rates rise and recession looms, the economy can look like a threat to your strategy. It may not be. A crisis can be the perfect opportunity to double-down on your strategic plan. Now may be the perfect time to refocus your organisation on new ways of working.  Everyone is paying attention now. Make changes and cut costs in ways that align closely to where you want to be.  Allow yourselves to emerge from the economic downturn in a stronger position with the capability and capacity to realise your goals.

Score proposed cuts against strategy

When you are faced with choices about what to cut and what to keep, ask some key questions. Will implementing strategy while cutting costs make it harder or easier? Will retaining this capability bring our strategic goals closer? Does this investment better prepare us for economic recovery? Should we fill this new role to set us up for future success?

Do you score each potential budget cut or new expense for its positive or negative impact on strategy? If not, why not? If you are serious about implementing your organisation’s strategy then you need to consider whether you are enabling or constraining those goals with your actions.

Instinct and rationality

There is a natural human inclination to revert to what we know when we feel threatened. There is a tendency by managers to think what has been done before is safer than something new. It is instinctive to seek financial security by avoiding new expenditures.  Sometimes these instincts are wrong. The purpose of strategy is to set the actions that will take an organisation in the right direction. If you are cutting costs to keep the firm on its feet then make sure you are not cutting off its legs from under it. Sometimes the most instinctive thought is not the most rational one.

Phil Guerin, Consultant/Director, Hague Consulting Ltd. © Hague Consulting Ltd 2023

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