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Pens 6-0. ORDER HAS BEEN RESTORED
Chief
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Cost transformation is NOT glorified staff reduction. In fact, when done correctly, it is far from it and in some cases it could result in net zero staff loss.
Long illustration.
Situation: A person eats out all the time and exclusively uses ubereats. They always exceed their monthly budget and never meet their savings goal.
Lazy cost cutting - regardless of context, recommend not to eat out, buy cheap groceries and cook at home, visit friends and family at meal times, go food tasting at Sam's club/Costco,etc. Lol. This is similar to just cutting employees and hoping for a new sustained cost baseline. Most times it is a BAD IDEA for most people.
Typical cost transformation - stop using ubereats, order your food through the phone or restaurant website and drive yourself to pick it up. Feels logical and possibly helps, but requires that the constraints that exist don't contradict the recommendation
True cost transformation - will require you understand why the cost base is what it is, the strategic implication of each cost component both internally and externally, the sensitivity of each component to the client's and their competitor's strategy/products, etc. Once you understand the cost structure deeply, defining an operations strategy to deliver the best cost base to fulfill the business/corp/product strategy becomes more apparent. This is how strategy fit in. After all, strategy is simply choosing what to do/not to do and how to do it. Easier said than done.
For the same example above - the context could be the person has a diet restriction and works a crazy job that only allows take-out as a viable option for most meals. They don't have uberpass and the restaurants that meets their diet restrictions are far out and require a substantial premium + they are an overly generous tipper regardless of experience (25-30%).
The solution could be
1. Move apartments when your lease ends toward the areas concentrated with restaurants that meet your diet restrictions because delivery is cheaper, apartments are cheaper, it is closer to work and just as nice as your current area/place.
2. Sign up for doordash, postmates, other apps, and direct restaurant delivery + get their delivery pass because the payback is 160 ordered meals (you order 500meals/yr)
3. Sign up for deal alerts across all those restaurants and compare pricing across apps before ordering.
4. Reduce tips to 15-20% max and tip based on actual experience
This will allow you maintain the same diet while still utilizing delivery services to save time and result in meeting/potentially exceed savings goal.
Hope this helps.
K1. Very generous. Unfortunately, we don't have any open position at this time.
Peloton considering scaling back and closing stores?! I didn’t expect my bike to be giving up 3 weeks into January -> heard that on Fallon Tonight
Chief
Strategy is a blurred line. But to your point, yes, it goes hand in hand.
That is why Strategy and Operations, Fit for Growth, etc. exist.
Yes, Headcount Reduction is part of it, but it’s also reassessing vendors, marketing budgets, compensation plans, geographic footprints, etc.
Which firm is doing only strat works nowadays?
Chief
Companies have two buckets of costs, labor and non-labor. HC reduction is just one lever that can be pulled in the labor category.
True cost transformation: Single ply toilet paper and slapping generators on treadmill desks to power the lights.
Rising Star
Strat houses do waaaay more cost reduction than they admit. They brag so much about the growth and innovation projects because they are so rare.
Cost cutting is the easiest thing to justify when you are pitching to a client. It sells itself: “I will save you $100,000,000 run rate costs by the end of the year and you will pay be 15% of that.
As opposed to some BS 5 year growth plan which never happens but the consultants are long gone.
Just resurfacing this after Peloton let go 2,800 of their workforce today. Did their investments into the quick uptick in demand during the pandemic exacerbate their cost structure once demand levels came back to normal...