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How are cost-cutting measures still a strategy?

Cost-Cutting Measures

I can answer the question in the headline pretty easily: cost-cutting measures have been a preferred way of doing business since about the Egyptians, change is hard, and here we are today. Most guys are taught about business in the following way:

The 1-2 punch is typically “Get profits up and keep costs down.” At that intersection are layoffs, horrible treatment of individuals, shoddy products, and a host of other ethical quagmires. But again, change is hard — and because that’s how we’ve always done business, it’s how we often keep doing business. One of the major reasons why “automation” is getting to scale so quickly is, well, executives love the idea. A robot ain’t ever gonna ask for a raise or a vacation, and a robot will be less emotional than a human being. It’s cost-cutting measures to the extreme! (Executive makes O-face.)

But seriously: how are cost-cutting measures still “a thing” anymore?

Nice pull quote here

This is from a Digital Tonto article called “Technology’s Moral Crisis” — which is a very real thing — and this pull quote is solid:

Yet Josh Sutton, who leads the data and AI practice at Publicis.Sapient believes that many of these concerns are overblown. “I actually think cost is the worst reason to invest in automation, because the companies that are able to thrive 10 or 20 years from now will not be the ones who cut costs but those that transform business models. You have to be looking to bring your organization up a level.”

Now admittedly some of this is a little bit vague. “Bring your organization up a level.” We all kinda sorta know what that means, but if you said that to an executive, he’d probably sneer back: “Did you see my last quarter? Get out of my office!” That’s how a lot of these dudes think. It’s not “transformation” or “bring it up a level.” Rather, it’s “what target can I hit right now in the next week or month to prove how relevant and revenue-centric I am?” Until that aspect of the game changes, cost-cutting measures are here to stay.

“Strategic planning” and cost-cutting measures

If you follow over to another Digital Tonto article about innovating your business model, you’ll find a whole host of executives who abandoned the idea of strategic planning in their organizations. Good! Many “strategic plans” could ultimately be written on toilet paper. It’s because organizations spend so much time in the “planning” part that they don’t actually do anything. You’ve all seen the drill. A CEO sets a strategic planning off-site for May 15th. On January 2nd, 3/4 of the organization is getting slide decks ready for those three days at a Hilton resort. Basically you burn about 60 percent of your people for half the year on something, and then whatever “checking boxes” bullet points come out of it are what they spend the second half of the year on.

Too much planning. Not enough preparation and action.

So what happens when your supposed “strategic plan” doesn’t work and there’s revenue erosion at the end of a fiscal year?




 

Well, you still gotta make your numbers. There’s no way you can miss your numbers.

This is where layoffs often kick in for companies. Cost-cutting measures suddenly become strategic because what was supposed to be strategic, well, was not.

Can we get better at this and see less cost-cutting measures?

Over time, yes. Automation will do a lot of this for us, of course. Some bullet points right now, though?

Cost-cutting measures probably aren’t going anywhere. But over time, business models will have to shift a little bit — so we might as well start putting some changes in place now.

What else would you add on cost-cutting measures?

Ted Bauer

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