Fit for Growth: A Guide to Strategic Cost Cutting, Restructuring, and Renewal

Vinay Couto, John Plansky, Deniz Caglar



A practical approach to business transformation

Fit for Growth is a unique approach to business transformation that explicitly connects growth strategy with cost management and organization restructuring. Drawing on 70-plus years of strategy consulting experience and in-depth research, the experts at PwC’s Strategy& lay out a winning framework that helps CEOs and senior executives transform their organizations for sustainable, profitable growth. This approach gives structure to strategy while promoting lasting change. Examples from Strategy&’s hundreds of clients illustrate successful transformation on the ground, and illuminate how senior and middle managers are able to take ownership and even thrive during difficult periods of transition. Throughout the Fit for Growth process, the focus is on maintaining consistent high-value performance while enabling fundamental change.

Strategy& has helped major clients around the globe achieve significant and sustained results with its research-backed approach to restructuring and cost reduction. This book provides practical guidance for leveraging that expertise to make the choices that allow companies to:

• Achieve growth while reducing costs
• Manage transformation and transition productively
• Create lasting competitive advantage
• Deliver reliable, high-value performance

Sustainable success is founded on efficiency and high performance. Companies are always looking to do more with less, but their efforts often work against them in the long run. Total business transformation requires total buy-in, and it entails a series of decisions that must not be made lightly. The Fit for Growth approach provides a clear strategy and practical framework for growth-oriented change, with expert guidance on getting it right.

Table of Contents

Preface

Chapter 1 Do You Need to Cut to Grow?

Circuit City: The Ostrich Approach
IKEA: Elevating Cost Optimization to an Art Form
The Fit for Growth Index

Chapter 2 Becoming Fit for Growth: The Restructuring and Renewal Journey

Focus on differentiating capabilities
Reorganize for growth
I. The Operating Model
III. Talent
Enable Change and Cultural Evolution
Continuous Cost Fitness Renewal

Chapter 3 The Leader’s Role: Aligning Costs with Strategy

How Do You Know When It’s Time?
THE THREE CORE QUESTIONS LEADERS ASK

Chapter 4 Levers of Cost Reduction: What, Where & How

Setting the objective
Identifying differentiating capabilities
Selecting the cost-reduction levers

Chapter 5 Portfolio Rationalization: Decide What Business You Should Be In

What is Portfolio Rationalization?
When to Use Portfolio Rationalization
How to Rationalize the Portfolio
Portfolio Rationalization Best Practices

Chapter 6 Zero Basing: Justify What to Keep, Not What to Kill

What Is Zero Basing?
A Versatile, Holistic Cost Lever
When Should You Zero Base Your Capabilities?
How to Zero Base Your Capabilities
Zero Basing Best Practices
Pitfalls to Avoid

Chapter 7 Aligning the Operating Model: Redefine Where Critical Work Gets Done

Operating Model Elements and Archetypes
When to Redesign Your Operating Model
How to Redesign Your Operating Model
Operating Model Best Practices
Pitfalls to Avoid

Chapter 8 Outsourcing: Let External Providers Generate Value for You

What is outsourcing?
When to Outsource
The Outsourcing Process: How it works
Outsourcing Best Practices
Pitfalls to Avoid

Chapter 9 Footprint Optimization: Rethink Your Operations and Overhead Locations

What is footprint optimization?
When to Use Footprint Optimization
Footprint Optimization: How it works

Chapter 10 Process Excellence: Simplify Work and Minimize Bureaucracy

What is Process Excellence?
When to use Process Excellence
A guide to Process Excellence
Aligning Process Excellence with other cost levers

Chapter 11 Spans and Layers: Flatten and Empower the Organization

What is a spans and layers restructuring?
When to restructure spans and layers
How to restructure spans and layers: five steps to a leaner organization

Chapter 12 Strategic Supply Management: Extract More Value from Your Purchases

What is strategic supply management?
When should a company use strategic supply management?
Making it happen: a guide to strategic supply management

Chapter 13 Digitization: Make Technology a Game Changer

What is digitization?
When to use digitization
How to digitize

Chapter 14 Running a Cost Transformation: Mobilizing, Scaling, and Sustaining

PHASE 1: DIAGNOSTIC AND CASE FOR CHANGE
PHASE 2: DETAILED DESIGN
PHASE 3: EXECUTION

Chapter 15 Morale, Emotions, and Expectations: Leading During a Restructuring

PHASE 1: OPPORTUNITY, BUT FOR WHOM?
PHASE 2: ANXIETY SURFACES
PHASE 3: TURMOIL BUT ALSO GLIMMERS OF SOMETHING BETTER

Chapter 16 The Human Element: Getting People Ready, Willing, and Able to Change

Elements of a Culture-led Change Management Program
PHASE 1: DIAGNOSTIC AND CASE FOR CHANGE
PHASE 2: DETAILED DESIGN
PHASE 3: EXECUTION

Chapter 17 Staying Fit for Growth

Strategic Levers: Translating Strategy into Performance
Operational Levers: Executing Against the Plan
Organizational Levers: Assign Accountability and Reward Cost Consciousness
Cultural Levers: Unleashing the Individual
Sense and Sustainability: Getting from Here to There

Notes
Acknowledgments
About the Author
Index