Most agile lean enterprises often choose to cut costs strategically to make their respective business models fit for growth.
Daphne Basel

2020-10-27 07:43:00 Tue ET

Most agile lean enterprises often choose to cut costs strategically to make their respective business models fit for growth.

Vinay Couto, John Plansky, and Deniz Caglar (2017)

 

Fit for growth: a guide to strategic cost management, reorganization, and renewal

 

There are many external threats, obstacles, and challenges in the wider business context. Both business leaders and senior managers must often look for disruptive innovations to cut costs from a strategic perspective. All team members must strive to make most agile lean enterprises fit for growth so that these enterprises succeed in most competitive markets. From time to time, these agile lean enterprises focus on a unique set of distinctive capabilities. This focus can help agile lean enterprises identify team efforts in a few high-skill niche areas as these teams perform specific jobs and tasks in radically better ways. Most agile lean enterprises often invest in their distinctive capabilities and iterative continuous improvements with respect to the current cost structure. By aligning most essential costs with competitive moats and first-mover advantages, agile lean enterprises help ensure continual corporate value creation and sustainable profitability to outperform most rivals in the long run. The core team efforts sustain cost reductions with better business growth models, processes, systems, and operations. In effect, these core business operations and team endeavors can help boost business agility and resilience in the modern age of global disruption.

From a fundamental viewpoint, both business leaders and senior managers direct their rare resources and key investments toward core competences and distinctive capabilities, cut costs strategically to support business strengths, and so minimize operational risks, external threats, and other competitive forces etc. Both business leaders and senior managers renew and restructure the broader business growth models to challenge the status quo with better cost management. Most agile lean enterprises often tend to drive organic business growth and sustainable profitability. In time, this new fit-for-growth model can help transform agile lean enterprises into cost-effective and operationally sound business organizations.

  

Agile lean enterprises can choose to cut costs strategically to make their respective business models fit for growth.

Many business organizations are not fit for growth. These organizations drain their rare resources such as internal funds and people by chasing too many investment projects. In this unique fashion, these business organizations cannot invest in their own distinctive capabilities and competitive advantages over most external rivals. As a result, organizational inefficiencies often stifle both sustainable and disruptive innovations. In this negative light, both business leaders and senior managers tend to make most major decisions amid substantive economic uncertainty. From time to time, most business partners reduce costs to remain competitive across the key business landscape, but this arduous journey often results in many difficult choices and trade-offs. Most business leaders, co-founders, and executive managers may struggle to make wise decisions due to myopia, groupthink, or analysis paralysis. At any rate, effective business partners challenge the status quo, think outside the black box, and strive to design disruptive innovations to enrich the lives of others. This dual transformation requires a wiser approach to cutting costs strategically to help make agile lean enterprises fit for growth.

With the fit-for-growth mindset, both business leaders and senior managers should radically reduce the corporate cost structure by shifting its singular focus from cost minimization to organic business growth. Prescient business leaders strive to align their short-term tactical cost reductions with clear longer-run strategic solutions for proprietary assets, high-tech advances, competitive moats, disruptive innovations, and first-mover advantages. Both business leaders and senior managers focus on at least 5 to 7 distinctive capabilities in terms of both product feature improvements and service innovations. These distinctive capabilities empower several agile lean enterprises to outperform their closest rivals, peers, and other competitors. At any rate, the top management teams often learn to fully fund the distinctive capabilities that disproportionately contribute to both business sales and net profits (whereas, most other costs should be subject to greater scrutiny).

It is both important and essential for most business leaders to better align the cost structure with the core competences and distinctive capabilities. When the key cost structure funds the major distinctive capabilities, competitive moats, and strategic advantages, this better cost management can help free up funds that result in the next design of both proprietary assets and iterative continuous improvements over time. The revolutionary product design and service innovation can strengthen the main focus on distinctive capabilities and proprietary assets etc in a cost-effective manner. As a consequence, both business leaders and senior managers organize the business models, talents, systems, processes, and core operations for steady growth. Business agility often arises from gradual cost reductions, core capabilities, and competitive strategies for longer-term gains. 

The new fit-for-growth mindset helps reduce business costs by shifting core focus from cost reductions to competitive moats, proprietary assets, high-skill talents, or distinctive capabilities. This paradigm shift helps discover fresh sources of income streams due to better monetization and customer engagement. In this unique way, high-skill talent retention is often as important as cost minimization. Costs become strategic choices, and near-term business expenditures can be viewed as long-run investments in developing new distinctive capabilities for agile lean enterprises to secure customer value creation and sustainable profitability. From time to time, the radical shift in perspective requires both business leaders and senior managers to assess the business methods and organizational systems for cost-effective culture change operations. In the long run, these new methods, systems, and operations consistently deliver value to current customers, differentiate agile lean enterprises from their rivals and other competitors, and help better support the next design and development of both distinctive capabilities and disruptive innovations etc for new customers. This recursive design becomes a positive feedback loop over time.

 

Both business leaders and senior managers strive to align their rare resources and distinctive capabilities with cost-effective and seamless systems and operations.

For most agile lean enterprises, both core competences and distinctive capabilities often define the main business objectives and key results (OKR). From a strategic viewpoint, business partners often carry out effective cost reductions by focusing on at least 3 key elements: portfolio optimization, business process standardization, and operational efficiency. First, both business leaders and senior managers must evaluate the net margin contribution and strategic alignment of both business costs and specific core business operations, the latter of which can help attract new and current customers in clear and coherent market niche areas. In essence, business partners can choose to dial back costs in most other non-niche and non-core areas and business operations. Sometimes it can be effective for agile lean enterprises to outsource these non-niche and non-core business operations to external third-party service providers. In terms of cost-effective asset portfolio optimization, both business leaders and senior managers work with most team members and subject-matter experts to help ensure coherent value creation and steady business growth over time.

Second, most founders and partners often centralize and standardize the business models in order to better support core proprietary assets, systems, and operations. This corporate nexus regulates the central global value chains, service innovations, and cost control levers in different geographic locations. In time, business process standardization breeds team camaraderie and operational efficiency. Longer-term gains can outweigh short-term pains. This standardization often helps connect the dots between lean consumption and the continuous flow of lean production. From this perspective, iterative continuous improvements become vital and essential.

Third, core business process standardization often reduces organizational layers, improves most global value chains, and cuts costs in non-core non-niche areas. In essence, both business leaders and senior managers focus on this standardization for better technical efficiency gains through agile lean startup methods and iterative continuous improvements. Sometimes senior managers deploy technological tools to automate core business operations. This automation minimizes human risks and errors, and so often results in better accuracy, precision, and efficiency etc. In this positive light, business process standardization can help transform cost reductions into higher sales and net profits at least in the medium term.

Fit-for-growth transformations can only succeed when all team members embrace the fundamental changes for diagnosis, design, and execution. All team members must agree with the best course of actionable business insights through the main transformative changes. Both business leaders and senior managers should share with their team members the longer-term business vision (macro worldview) in light of both the near-term tactics and strategies. These business partners often strive to accelerate the dual transformation by enacting culture change management so that all team members commit to the prescriptive changes. The law of inadvertent consequences counsels caution when push comes to shove. There can be several different ways for most team members to skin the cat, and all roads eventually lead to Rome. One size cannot fit all. Iterative continuous improvements become both vital and essential for agile lean enterprises in this broader business context.

  

Both business leaders and senior managers can help accelerate the fit-for-growth transformation by helping all core team members commit to the prescriptive culture changes.

In American business history, most business transformations are rare events from global disruptive technological advances to burdensome cost changes or scandals. In the new age of global disruptive innovations, change has become the universal constant. Many business leaders and senior managers acknowledge the vital need for multiple transformations. Every caterpillar has to break the cocoon to transform into a beautiful butterfly. However, few business partners are capable of achieving the bold and audacious objectives and key results (OKR). These business partners often strive to seize fresh business opportunities, cut costs strategically to support proprietary assets and core business operations, and sustain key business results in terms of both organic revenue growth and prompt risk management in response to external competitive forces.

Both business leaders and senior managers must synchronize rare resources and budgets with the wider competitive strategies and advantages. This synchronicity helps ensure the seamless integration of both proprietary assets and high-growth high-priority business opportunities. Through core business operations, business partners help team members draw a distinction between good and bad costs. The former focus on supporting both proprietary assets and core business operations with sustainable cash flows, whereas, the latter often tend to diverge from the wider competitive strategies and advantages. Agile lean enterprises often help all team members build their own edge mindset for iterative continuous improvements over time. It is imperative for both middle managers, subject matter experts, specialists, and other team members to ensure the positive work results that the core business operations deliver competitive advantages in due course. 

From time to time, business partners and founders serve as mentors and coaches for better mutual team support and accountability. This team accountability design helps reinforce the continuous flow from meticulous strategy to practical execution. These business mentors and coaches often promote culture changes and memes such as cost-conscious behaviors, frugal lifestyles, continuous improvements, and lean design patterns. These strategic levers help transform agile lean enterprises into sustainable cash cows that remain fit for growth through the business lifecycle. These corporate culture changes and memes further help enrich the lives of others over time.

 

There are many external threats, obstacles, and challenges in the wider business context. Both business leaders and senior managers must often look for disruptive innovations to cut costs from a strategic perspective. All team members must strive to make most agile lean enterprises fit for growth so that these enterprises succeed in most competitive markets. From time to time, these agile lean enterprises focus on a unique set of distinctive capabilities. This focus can help agile lean enterprises identify team efforts in a few high-skill niche areas as these teams perform specific jobs and tasks in radically better ways. Most agile lean enterprises often invest in their distinctive capabilities and iterative continuous improvements with respect to the current cost structure. By aligning most essential costs with competitive moats and first-mover advantages, agile lean enterprises help ensure continual corporate value creation and sustainable profitability to outperform most rivals in the long run. The core team efforts sustain cost reductions with better business growth models, processes, systems, and operations. In effect, these core business operations and team endeavors can help boost business agility and resilience in the modern age of global disruption.

From a fundamental viewpoint, both business leaders and senior managers direct their rare resources and key investments toward core competences and distinctive capabilities, cut costs strategically to support business strengths, and so minimize operational risks, external threats, and other competitive forces etc. Both business leaders and senior managers renew and restructure the broader business growth models to challenge the status quo with better cost management. Most agile lean enterprises often tend to drive organic business growth and sustainable profitability. In time, this new fit-for-growth model can help transform agile lean enterprises into cost-effective and operationally sound business organizations.

 

 

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