Accenture Strategy research indicates that 82 percent of executives agree that their business is focused on cost reduction to free up funds to reinvest into growth initiatives. Yet more than half (54 percent) struggle with where to “place their bets.”
Challenges, such as lack of alignment between senior and junior management and competing priorities, impede progress. What are the winners doing to get ahead?
Leading companies are precisely cutting costs and purposefully reinvesting, they are aligning cost reduction efforts with growth strategy and they are implementing techniques, such as zero-based budgeting, to accelerate the path to growth.
Businesses struggle with strategic cost reduction:
Only 23 percent say they have optimized their process for identifying and removing business activities and investments that do not add value.
Only 36 percent strongly agree their business sustains the benefit of cost reduction programs.
Zero-based budgeting can help:
Accenture compared those using zero-based budgeting techniques to industry peers. Revenues increased by 28 percent for the zero-based budgeting group, compared to 22 percent in the peer group. EBITDA also increased by 50 percent, compared to 39 percent among the peer group.