Capabilities-Driven Cost Cutting in Practice

IN THE FIRST TWO CHAPTERS, we defined capabilities and argued that understanding capabilities is the key to figuring out where you should invest—and where you can cut. Now we’re ready to walk you through a process for reducing costs in a way that gets past these obstacles and thus builds your strength instead of diminishing it. Figure 3-1 shows the process as a whole.

Of course, some of the elements of your approach will be specific to the situation: they will vary according to your industry, the size of your organization, and your chosen strategy. But the pieces of the process fit all companies and circumstances. The capacity for strategic cost cutting is a capability itself, requiring ...

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