The Merger & Acquisition Leader's Playbook

CHAPTER 8Cost Optimization: To Free Up Resources to Fuel Commercial Growth

The operational playbook has three components: cost optimization, operational excellence, and technology. This chapter gets at cost optimization to free up resources to fuel commercial growth.

As the French philosopher and mathematician Blaise Pascal taught us a few centuries ago, while in theory there's no difference between theory and practice, in practice, there's a great deal of difference. Don't underestimate the importance of your operational, executional, and financial practices in terms of putting all your value-creating theories into practice and in freeing up the resources you need to fuel them.

You'll need:

• Resource allocation practices
• Rules of engagement
• Action plans and processes
• Performance management plans and processes: operating and financial performance standards and measures

Resource Allocation

In theory, strategy is about the creation and allocation of resources to the right place in the right way at the right time over time. You thought that through or will think that through per the guidance in Chapter 3.

Now drop the other shoe. If there's a right place and a right way and a right time, there's a wrong place, a wrong way, and a wrong time when it comes to allocating resources. To allocate resources to something, you have to pull resources away from something.

A simple example: ...