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

Meet the Exago Innovation Guru prize-winners

The challenge was set, the votes counted and the champions announced. And now, Exago has delivered the prizes to the Innovation Guru Award winners of 2017. We were proud to present the trophies to Via Varejo, Ageas and CTT, the clients who especially stood out for their solid focus and resilience to innovate over the past year.

After announcing the winners of the second edition of the Exago Innovation Guru Awards, the Exago team delivered the trophies to the three winning teams:

Welcomed by the Inov+ team, the name the company has given to its Exago innovation platform, Exago presented the Innovation Farmer trophy to the Portuguese postal service CTT for continuously sowing the seeds of its innovation programme. In keeping with this commitment, Exago will plant and care for 50 trees in the company’s name for five years, through the Plant a Tree project.

Insurance group Ageas received the Innovation Hunter trophy in recognition of its team’s performance through Ding, the successful innovation programme they have developed using the Exago idea management software. In recognition of its creative and highly original approaches to participation and innovation, the Ding hunters now have a new prize in their sights, with an Escape Game for their innovation team.

Along with the Innovation Bookkeeper trophy, the Brazilian retailer Via Varejo received another prize to complement its informed, balanced approach to innovation: the chance to pick one of three Innovation Services offered by Exago, to further bolster the already successful results of its innovation programme.

Congratulations to all the winners!

Step 5: Be resilient to create a cost-conscious culture in your innovation agenda

If you are introducing cost-cutting in your innovation agenda, your ultimate drive is to create a cost culture that sustains itself over time and is not forgotten three months after being announced by the leadership.

Your final goal is that your workforce feels that the organisation’s investments are personal investments, which can benefit all.

Still, organisations are living creatures in changing contexts. So, strategic cost-reduction priorities should be regularly reviewed and updated in the same way as business opportunities are.

And so we find ourselves where we started: needing to map out intervention areas at micro and macro level, both good and bad costs, and clearly define and (re)align everyone with your cost strategy over time. Ensure that you have the best methods in place to address each area in an efficient way, using top-down yet privileging bottom-up approaches in your innovation agenda.

For bottom-up approaches, also review the communication plan at hand to help your employees understand the tweaks and turns. Let them have an active role in the process of building the company’s future together.

It will take time and some effort, since resistance is normal under less favourable circumstances. It will take people’s commitment.

Yet, with strong leadership, a clear and well-defined strategic cost-cutting programme and the awareness of shared responsibilities, an organisation can reinvent itself and learn how to do so continuously, as models are challenged and new opportunities arise.

 

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

Access the Five-step Guide to make cost-cutting work within your innovation initiative here

And the Exago 2017 Innovation Gurus are…

Whether it is for their considered, value-oriented innovation approach, for the creative ways found to bring everyone aboard their innovation challenge, or for their sustained corporate culture of innovation, we are proud to announce the champions of the second edition of the Exago Innovation Guru Awards.

 

Our 2017 Innovation Guru winners who truly stood out for their performances in the past year are:

The Innovation Bookkeeper: Via Varejo

Few companies weigh up the deciding factors of every idea as carefully as Brazilian retail leader Via Varejo – with an informed, balanced approach to innovation, an eye for detail and a clear concern for the numbers.

With an impressive 2,000 ideas shared in just two months, mostly in best practices and finding the right product for the customer, the Via Varejo team is results-focused, invites participants to understand their ideas from different angles, seeks to balance the tangible and intangible benefits, and looks at the cost advantage of each and every suggestion.

The Innovation Hunter: Ageas

Leading international insurance group Ageas picks up our Innovation Hunter prize for its creative and highly original approaches to encouraging participation and innovation within the company.

From staging the kidnappings of the CEOs with bright ideas as the currency, to offering cakes in return for ideas at a pre-launch phase, Ageas is forever on the hunt for a stronger and more engaging innovation programme: in the 13 challenges launched in the first 9 months, the company engaged almost all business units in the innovation process, with a 42% participation rate and gathering 397 ideas with solid implementation potential.

The Innovation Farmer: CTT

With almost half of Exago platform visitors already participating in the platform throughout 2017, close to 1.5 ideas per active user and thousands of comments shared, the Portuguese national postal service CTT has been sowing the seeds of its innovation programme, strengthened with the use of the Exago innovation software since early 2016.

Along with a dedicated Innovation Day, effective communication initiatives and a solid incentives package comprising excellent prizes, including gadgets, vouchers, festival tickets and experiences, CTT also encourages a global culture of innovation by tying in special events and workshops with participation on the Exago platform.

Congratulations to all Innovation Guru Award winners and to all those who inspire our work at Exago every day!