The 5 steps for strategic cost-cutting in your innovation agenda

In times of uncertainty, when business models are challenged, managers and financial directors are bound to cut costs to make organisations more agile, robust and adaptable to change. Leaders with a clear vision then tend to use cost-cutting and improvement to align costs with business strategy, to lower costs, focus on the aspects of the business that are controllable and free up resources to fund transformation and future growth.

However, aggressive cost-cutting tactics will not salvage companies under pressure. The change must go deeper, reaching a strategic and cultural level. This means that a company’s most valuable assets – people and their talents – must be mobilised to innovate and to find new ways of working that do not require high investments in new product research and development. Together you can save substantial amounts of time and money.

We show you how to add strategic cost-cutting and improvement to your innovation agenda, and how the development of an innovation culture is a powerful tool to align people’s focus, change behaviours, save costs and deliver continuous and effective results. To make it work, we guide you through the following five steps:

 

1. Define your strategic cost-cutting goals, which can be incorporated in your innovation agenda.

You need to have a clear view of your company’s strategy and map out good and bad costs for programme intervention, at macro and micro levels. On the one hand, bad costs should be seen as those that do not align with the growth strategy. On the other hand, good costs are those that support business capabilities to achieve growth and may be worthy of more investment.

2. Guarantee C-Suite engagement from the beginning and have a clear direction for your cost strategy.

You should deliver cost optimisation with the support of the CEO and top managers, defining areas of improvement from the beginning, as well as how to address each of these areas.

3. Invest more in bottom-up approaches, engaging and having your people contributing.

Simply externalising tasks and reducing headcount are often ways to overshadow a complex problem. You need to call on people’s knowledge and experience to help you separate the wheat from the chaff and find concrete and innovative solutions.

4. Be resilient in creating a cost-conscious culture for continuous optimisation of resource use.

Over time, as you seek new ways to rationalise and optimise costs, a new culture of strategic cost-cutting will be embedded.

5. Explain to your workforce your shared mission and remove fears,

ensuring that both needs and strategy are consistently understood across the organisation. Your employees must feel they have a role to play and can have an active voice in the decision-making process, being welcomed into the discussion about the best ways to reach the proposed goals.

 

A well-structured innovation management programme for strategic cost-cutting and improvement can be particularly useful to get employees identifying ground-level enhancements, with several additional advantages:

  • allowing you to develop a cost-conscious culture
  • easily uncover bad costs and inefficiencies
  • assure more dialogue and engagement
  • build up an ongoing, resilient process

Strategic cost-cutting is never blind cutting. It is, in fact, a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, challenging you to look at the larger picture, to seek the root cause of the problem. It should be seen as a way of questioning how we do things, even why we do them, exploring new innovative routes and building the foundations of tomorrow’s growth.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

Why your idea management programme is so helpful for strategic cost-cutting

As business models are being challenged, organisations need to be more adaptable and resilient, naturally also by becoming more efficient and cutting inadequate costs. This change must happen from the bottom up, with the right leadership and sponsorship, to define the areas of improvement clearly and separate the good costs from the bad at both micro and macro levels. Innovation managers can, and should, lend a hand to address this shared challenge.

A well-structured innovation management programme for strategic cost-cutting and improvement is useful to get employees identifying ground-level enhancements, with several additional advantages:

BUILD A COST-CONSCIOUS CULTURE
Involving employees and challenging the organisation’s cost and waste culture will help you develop a cost-conscious culture for a more sustainable business approach. Keep cost optimisation as a strategic priority, even when there is no immediate pressure on costs;

AN ONGOING AND RESILIENT PROCESS
Having your cost-cutting and improvement strategy embedded in your innovation management programme will bring you continuous results, building a sustainable process and putting more robust and flexible foundations in place before introducing transformational initiatives.

EASILY UNCOVER BAD COSTS AND INEFFICIENCIES
Engaging and empowering everyone in the organisation, from shop floor to top management, will expose inefficiencies that would not usually be identified in a typical consulting diagnosis project. Your employees know more about your everyday business than anyone else, so tapping into their knowledge and efficiently getting everyone involved in signalling cost improvements will deliver interesting results for your strategy;

MORE DIALOGUE AND ENGAGEMENT
With effective and transparent communication regarding cost cuts and improvements, companies can face less resistance from employees and more easily ensure business management support. It can also bring higher employee engagement, as more frequent interactions are needed between finance and the operating managers and between managers and teams to keep costs aligned with business and to track results.

Strategic cost-cutting is, however, never blind cutting. It is in fact a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, which is even more relevant in difficult times. On the whole, it should be seen as a way of questioning how we do things – even why we do them – , exploring new innovative routes and building the foundations of tomorrow’s growth.

 

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

Transforming cost-cutting into growth in your innovation programme

In times of uncertainty, when business models are challenged, companies are bound to cut costs to become more agile, robust and adaptable to change. Managers can support these efforts, namely within the corporate innovation programme.

Indeed, books do not set out which costs are good or bad for a specific company, or how they impact business strategy and operational reality. No measure fits all.

A successful strategic innovation programme thus implies the definition of specific priorities and mapping out what can be potentially bad and good costs, at different organisational levels:

  • On the one hand, bad costs should be seen as those that do not align with the growth strategy. They are waste and an outcome of inefficiencies that can and should be reduced;
  • On the other, good costs are those that support business capabilities to achieve growth goals, and may be worthy of more investment – so that in the mid to long term you end up saving more or increasing return.

In this process, it may seem easier to make centralised decisions at the board level, at a more macro level, with potentially higher impacts. Yet, simply externalising tasks and reducing headcount are often ways to overshadow a complex problem. Strategic cost-cutting challenges you to look at the bigger picture, to seek the root cause of the problem and to transform the system and its architecture.

In other words, the change must also happen from the bottom up, always with the right leadership and sponsorship, to define the areas of improvement clearly.

The employee community has to understand what’s happening, and to share and collaborate with the company’s challenges. They must be aligned with the business strategy, and feel they have a role to play and can have an active voice in the decision-making process. As an interested party, they must be welcomed into the discussion about the best ways to reach the proposed goals.

 

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

Launching your own innovation programme has never been this easy

Do you feel that your innovation programme is becoming too complex? That you are spending too much time picking the right software to support your initiative, instead of focusing on what your company really needs?

Exago Start, our new cloud-based idea management software edition, is here to simplify your job and change the way innovation is done.

Built to empower your teams with the tools to innovate, you can easily deploy it in one day to start solving your business challenges. Exago Start offers you:

 

SWIFT IMPLEMENTATION
Inspired by industry best practices, the new innovation software accelerates and facilitates the launch of your idea management programme, with:

  • Ready-to-go and field-tested configurations
  • Brand-framing options
  • Practical back-office
  • Quick Start Guide to launch your initiative

 

FAST ENGAGEMENT
Have your people share ideas and collaboratively improve colleagues’ ideas in a healthy competition environment, with:

  • Time-bound and/or permanent challenges
  • Call to action notifications and automated email updates
  • Social feeds and actions to engage the community
  • Idea co-creation and discussion forums to refine and develop ideas
  • Multi-level rankings to recognise participants for their valuable content creation, based on the quality and quantity of contributions

 

QUICK AND RELEVANT RESULTS
Effectively assess ideas along the funnel and gauge results with no additional effort, thanks to:

  • Field-tested idea workflow with different evaluation mechanisms per challenge (likes or voting based on single or multidimensional idea rating)
  • Decision panels to monitor and support idea evaluation (with pre-allocation of ideas to specific evaluators per challenge)
  • Complete reporting engine with exportable reports in different formats
  • News panel to share relevant information and celebrate results with your community

 

Launching your own innovation programme has never been this easy. Learn more about Exago Start to understand why.

 

Ask to see Exago Start Live

TRANSFORM calls on social enterprises to apply to the open call

To help scale bold ideas to tackle the world’s big social, environmental and economic issues, TRANSFORM, the joint initiative between Unilever and the UK’s Department for International Development (DFID), is now calling on social enterprises to apply. To invite ideas and promote collaboration to further catalyse impact, TRANSFORM uses Exago’s open innovation software.

TRANSFORM was founded in 2015 to support social enterprises that meet low-income household needs in developing countries. The partnership is currently supporting 19 projects across nine countries, which have so far benefited over 400,000 people.

TRANSFORM’s aim is to enable 100 million people in sub-Saharan Africa and South Asia to gain access to products and services that have been shown to improve health, livelihoods, the environment or wellbeing by 2025. To achieve this, earlier this year, the partnership announced the expansion of the joint commitment from £10 million to £40 million and is now welcoming new ideas and projects.

Do you have an idea TRANSFORM can help scale?

TRANSFORM is looking for social entrepreneurs and innovators with ideas for market-based solutions in three areas:

  • Delivering products in hard-to-reach rural locations, with a particular interest in Nigeria, Ethiopia, India, Bangladesh and Myanmar.
  • Providing sanitation to low-income urban and rural communities in sub-Saharan Africa and South Asia.
  • Raising awareness and demand for safe, affordable drinking water in highly dispersed rural households across South Asia, with a particular interest in Bangladesh and India.

Projects must demonstrate the potential to be financially sustainable, target low-income household needs in an innovative way and focus on one of DFID’s priority countries. TRANSFORM offers grant funding up to £300,000 and bespoke business support to take ideas to scale.

For more information and to share your ideas, visit www.transform.global.