The Agile Cost Advantage

Position your business for success in the post Covid-19 environment

Achieving rapid and sustainable cost reduction is a critical business objective, especially in the current environment. The near-term economic outlook is bleak, with the IMF projecting the world's worst economic downturn since the Great Depression of the 1930s.

At a time when most businesses are likely to see deteriorating market conditions and declining revenue, rebalancing the cost base to reflect the new operating environment could be the difference between riding out the current crisis or becoming another business casualty.

The Agile Cost Advantage is the culmination of 20 years' of working with business leaders on cost reduction.

Agile Cost Advantage Accelerator
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We have developed a 6-week Accelerator Program to support businesses in launching the Agile Cost Advantage in their own organisation.

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Why do cost reduction programs fail so often

Why do cost reduction programs fail so often?

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Cost reduction is a critical business objective

Achieving sustainable cost reduction is a critical business objective, especially in the current environment. The near-term economic outlook is bleak, with the IMF projecting the world's worst economic downturn since the Great Depression of the 1930s. At a time when most businesses are likely to see deteriorating market conditions and declining revenue, rebalancing the cost base to reflect the new operating environment could be the difference between riding out the current crisis or becoming another business casualty.

Even in normal economic conditions, a focus on cost reduction is important and can deliver key, long-term, strategic benefits. A lower cost base is an important source of competitive advantage, allowing a business to undercut competitors, or offer greater value, and gain market share. Alternatively, a lower cost base drives improved margins, increasing capacity to fund new growth initiatives.

A well-executed cost reduction program can also bring internal benefits to the organisation. Benefits often arise from eliminating or simplifying complex processes, reducing bureaucracy and increasing the speed of decision-making. This can transform the internal culture, increase the sense of accountability within the organisation, and improve staff morale.
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Cutting costs sustainably is challenging, with a high failure rate

An agile cost advantage is about changing the way things are done within a business, to remove the hidden costs that are concealed behind overly complex processes or bureaucratic organisatonal structures
Although cost reduction programs can deliver a powerful mix of financial, strategic, and organisational benefits, the failure rates of these types of programs are very high. A recent survey of C-Suite executives for example, found that 75% of cost reduction programs failed to meet their targets.

A cost reduction program needs to be executed thoughtfully. Gone are the days where you could make an across-the-board reduction in  headcount of 20% and bank the cost savings. These days, companies tend to run relatively lean, and simply do not have staff that are surplus to operational requirements on the payroll. An agile cost advantage is therefore more about changing the way things are done within a business, to remove the hidden costs that are concealed behind overly complex processes or bureaucratic organisational structures.
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The Agile Cost Advantage

At Zenith, we have spent the last 20 years helping businesses and private equity funds with performance improvement and turnaround support. A key part of our advisory work has been helping clients to structure and deliver successful cost reduction and performance improvement programs.

Based on this experience, we have distilled our insights into the Agile Cost Advantage. This is a four stage approach to cost reduction, which introduces a systematic approach to the overall delivery of cost reduction programs and eliminates common causes of program failure. The leads to greater and more enduring strategic value creation. This is why our clients typically achieve a return on program investment of 40-100x.
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You can learn more about each stage of our Agile Cost Advantage approach below:
Set Targets
A well-structured cost reduction program starts with setting a target. Having a target is important to define the ambition up-front, establish early momentum, and provide a basis to track to success of the program. We then identify cost opportunities.

Benefits of the Agile Cost Advantage approach

When a cost reduction program is designed well, with a focus on eliminating the hidden costs within the organisation through operational changes and simplification of decision-making processes, the benefits can be significant. A lower cost base improves cash flow and increases the capacity of the business to fund new strategic initiatives or expansions into new markets. Businesses that implement the Agile Cost Advantage benefit from a nimbler, more agile organisation, able to respond rapidly to new opportunities or changes in the market environment.

Greater reduction on overall cost base
Faster delivery of cost savings
Agile, more responsive organisaton
Increased accountability and improved internal culture
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