Sách Building Competitive Advantage Through Strategic Cost Reduction

Executive Summary
Financial services institutions need to adopt a strategic approach
to cost reduction that generates near-term cost savings while at
the same time builds a more efficient operating model over the
long term. Firms that use cost reduction to create a leaner, more
efficient organization will not only survive the current difficult
economic conditions, but will also prosper throughout all phases
of the business cycle.
The economic downturn that hit the United States and other
countries in 2001 has made cost reduction the management topic
of the day. Financial services firms have moved aggressively to
cut expenses, including widespread layoffs. But while reduced
business volumes require fewer employees, too often firms fail to
take steps to permanently increase their operating efficiency.
Yet in both good economic times and bad, firms that
successfully increase their operating efficiency are rewarded by
investors. For example, during the period of strong economic
growth from 1997 to 2000, the large banks with the best efficiency
ratios saw their share prices rise by an average annual rate of
13.6 percent, compared to an average annual share price increase
of 9.6 percent for the 100 largest banks. However, the large banks
that showed the greatest improvement in efficiency fared even
better, with an average annual share price increase of 19.2 percent
over the period. Firms that continue to improve their efficiency
are rewarded by investors with higher share prices.
A Strategic Approach Required. To reap these benefits,
financial services firms need to take a strategic approach to cost
reduction with the following five characteristics:
1. Linked to Strategic Goals. The first step is to reexamine a firm’s
business strategy to ensure that it remains relevant to changing
market conditions. A strategic approach then carefully aligns
cost reduction initiatives with the reconfirmed strategy, rather
than relying on across-the-board reductions that could
undermine business objectives.
2. Comprehensive. Instead of focusing only on staff reductions,
strategic cost reduction analyzes the entire organization for
cost-cutting opportunities.
3. Sustainable Cost Savings. A strategic approach increases
efficiency by rethinking both what the firm does and how it
does it.
4. Phased Implementation. Initiatives include both quick wins
and longer-term measures that are more difficult to implement
but offer greater cost savings.
5. Senior Management Commitment. An essential ingredient is
the full commitment of senior management, which can best
be demonstrated by appointing a prominent senior executive
to lead the effort.