Unlike mere cost reduction, cost transformation tackles not just immediate issues but considers the organisation identity as a whole. It generates a new way of business life, underpinned by self-regulated leadership, where all tiers of staff embrace a mindset that is commercially cost conscious. The accessibility of robust data ensures that everyone from the CEO to the field force understands the numbers and engenders an environment in which everyone is encouraged to openly challenge waste and inefficiency wherever it lies. This organisation is agile, will dismantle the shadow functions and close the chasms between internal structures as it creates a single enterprise first mindset, enshrining a common cost baseline that projects affordability for the long term. The concept of cost transformation focuses on behavioural change. This can only be truly achieved when a new transformative narrative defining the imperative to act is supplied by management and is accepted and understood by all due to its credibility. Here lies a new simple language that imposes pressure on leaders to plan, prioritise and take tough decisions to ensure that the sacred baseline remains in tack. In this environment, these decision makers are recognised and rewarded for taking these steps, because in this organisation, there are no winners over losers. Cost transformation has no end game.
Cost Transformation should envelope cost reduction mandates if the executive truly demand an enduring and radical reset to the cost baseline, otherwise they will be asking themselves in 2-3 years time – where did our savings disappear?