Strategic vs. Non-Strategic Costs
Too many managers view too many costs as immutable laws of nature, and not the discretionary expenditures that they truly are. To encourage a change in mindset, we help our clients evaluate which costs truly add value to customers and bring new revenue in the door (“strategic costs”), and distinguish those from all the other “necessary but evil” costs of the company (“non-strategic costs”). This distinction is critical, as the two categories of cost need to be managed entirely differently:
Directing Strategic Costs Successfully
To grow, companies need to outspend competitors when it comes to strategic costs, provided that the money is spent wisely and skillfully. We help our clients rigorously evaluate their various strategic costs, and tie them to the needs and behaviors of the targeted market segments and customers. The result is a sales, marketing and/or R&D spend with dramatically improved bang-for-the-buck.
Minimizing Non-Strategic Costs
Non-strategic costs are those with no direct link to satisfying customers or producing new revenue. At all companies, these costs become victim over time to inertia, cost creep, and group-think. By asking rigorous, hard-hitting questions, we help you reduce or eliminate costs that have outlived their usefulness. Our approach yields cost reduction more quickly and with greater impact than most other approaches. In fact, the limiting factor on profitability is inevitably not the identification of wasteful costs — there are many within every organization, including yours — but rather your resolve as a leader to eliminate them; and we will help you strengthen your resolve and sell the benefits of cost reduction to the rest of the organization.