A CFO client and I were discussing a question he was exploring with his team: What does the optimal corporate structure look like for the business? Not surprisingly, it was prompted in part by the swift and severe impact of Covid on his company, and as a result, they were exploring options to take out more cost during the second half of the year.
Let’s set aside for a moment the fact that I passed Managerial Accounting in business school by the skin of my teeth because there’s nothing I like more than a good discussion about cost. What I’ve found from advising senior leaders over the years is that a discussion about cost is never just about cost. Done right, it’s an opportunity to be bold, to think big, to imagine a different way, to determine what is actually essential and important to running your business. It’s also a time to look differently at the past and explore what is worth retaining from your culture or company legacy to carry into the future. And, it can inspire companies to examine what they’re already doing in a new way, to evaluate even the simple, obvious things that can unwittingly slow them down and create waste that we may become blind to over time.
Simply put: A conversation about cost is a conversation about how to be better as leaders and as organizations, and many of the companies I work with are using this time to ask this question, so that when they do emerge from the current situation, they’ll be in a strong position to move forward, invest, and drive growth. Here are some things leaders are doing to take action:
They radically reinvent. Consider the case of one global industrial client who was in the throes of developing a Return to Work policy. It was a daunting task for all the reasons you might imagine and leaders at the company worked tirelessly revising a plan that would safely allow employees to return to company headquarters.
After dozens of meetings on the topic, the CEO asked, “What if we just blow up this idea?” and asked the team to consider whether a corporate headquarters was even needed anymore. His paradigm-shifting question pushed his leaders to consider different options and it wasn’t long before they rallied around a new idea. They decided to reimagine the purpose of the company headquarters as it exists today, and instead, transform it into something closer to a special events center, a place to showcase new products and the brand, a space that could also serve as a cultural hub where employees could come together for key conferences or meetings as needed. It was not lost on anyone that this new model was far more cost effective than maintaining their traditional corporate offices, and you could feel the positive energy rise as leaders and teams began to develop plans to create a new space for the future.
They look beyond the ‘usual suspects’ to create new efficiencies. When it comes to taking cost out of a business, I’ve seen my clients implement a wide range of strategies over the years – from major restructuring efforts to divestitures, to a complete overhaul of product mix or creating a new tax strategy. The list goes on and no doubt, all can produce meaningful results under the right set of conditions.
What I hear less about are the other levers that can be pulled to also deliver a big impact when it comes to productivity, efficiency, and lowering cost. For instance, consider meetings. A powerful example of this comes from a 2014 study from consulting firm Bain & Company that gathered data about how employees spent time at one large company. The analysis was astonishing, revealing that one weekly executive team meeting cost the company 300,000 hours annually in employee time to support it. As incredible as this example is, what’s equally noteworthy is the fact that we have an example to study in the first place. I can’t think of a single company I work with that tracks the number of hours its employees spend in meetings, yet the cost of this in time and dollars is astronomical and often squandered, and during Covid, many companies are experiencing a proliferation of meetings in the absence of informal, ‘hallway’ conversation.
The good news is that unlike many of the uncertainties that the pandemic has created, meetings are one area that an organization can fully control. Don’t assume that because you have always had them, that you still always need them. I often suggest leaders and teams engage in a meeting “car wash” activity – in other words, clean up your existing meetings by making them more productive, efficient, and insightful, and eliminating the ones that aren’t.
There are plenty of areas that may be creating drag inside your organizations and costing you time and money. Companies may be surprised to learn how tackling seemingly small things head-on (from email to reporting) can produce powerful results and meaningful ROI, and more importantly, strengthen their performance in the future.
As leaders and teams continue to understand the significant impact of Covid on their organizations, many reject the notion of returning to a “new normal” in a post-pandemic world. Instead, they’ll share how the idea of a new normal is really just a way of saying that we want the future to return to the way things were, but that time has passed. Instead, a new future is ahead, and there’s plenty that companies can do right now to be even better when it arrives.
