There’s a misconception that companies pursue zero-based programs as an antidote to a crisis. These efforts are perceived to slash costs to meet external pressures—be it industry disruption, private equity activity, activist investors, and/or M&A scenarios.
This is far from the truth. Adopting a zero-based mindset (ZBx) helps companies identify non-working money to reinvest in growth. Leading companies across all industries are proactively embracing ZBx to boost their competitiveness and position themselves for longevity.
Accenture Strategy recently studied leaders in zero-based thinking, and found that only 8 percent of companies say activist investors were a factor for implementing their program. Only 14 percent cited M&A. Fewer than 50 percent were influenced by competition or internal slow growth. The vast majority (96 percent) are instead implementing zero-based programs to improve profitability and prepare for the future,1 perhaps knowing that 75 percent of the S&P 500 will be replaced within 10 years.2 As Jack Welch famously advised, “change before you have to.”
These leaders are not implementing ZBx in response to any imminent threat, as 81 percent of executives from a second Accenture Strategy study are confident they will achieve their projected growth rates for 2020.3 Companies instead have realized they can reap significant benefits (on average $260 million annually, with 91 percent of programs meeting or exceeding targets4) through a willingness to transform the organization’s mindset and challenge their employees to ask themselves “what will we need for the future” versus, “what do we have today?”
If it ain’t broke…. why fix it?
Implementing a zero-based program when there is a lack of a visible burning platform can be a significant challenge for leaders. How do you drive an organizational commitment to change when near-term survival is not the goal?
There are three actions an organization must take to enable successful adoption of proactive zero-based programs:
When implemented correctly, ZBx can help companies make a Wise Pivot to the New by streamlining today’s core operations and reinvesting in tomorrow’s new products and solutions. Creating strong, healthy companies that outperform the competition. Don’t wait until a cure is needed.
1 Accenture Strategy, “Beyond the ZBB buzz," 2018.
2 "Creative Destruction Whips through Corporate America: An Innosight Executive Briefing on Corporate Strategy,” Innosight, June 2017.
3 Accenture Strategy, “Revenue Growth: Perception or reality?”, 2018.
4 Accenture Strategy, “Beyond the ZBB buzz," 2018.