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Four Impediments to Strategic Cost Cutting and How to Overcome Them

IN THEORY, CUTTING costs with an eye to capabilities shouldn’t be that difficult. In practice, however, plenty gets in the way. A company might have an erroneous assumption about what represents a natural extension of its business—for example, the beauty company that thinks being good at skin care products also makes it good at hair products. Internal politics may naturally play a role; people are reluctant to cut divisions which they think might further their goals within the company. Or the company could have poorly aligned accountabilities, leading key decision makers to keep the wrong capabilities because they think that’s what they are supposed to do.

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