A penny saved is a penny of profit!

Sometimes people say to me "not another cost cutting project!". This attitude needs to be stamped out of the organisation. The easiest way to increase profits, or to free up money for investment and innovation is to attack cost. The change manager must create a sense of fun and passion about cost reduction, as this will always be a key part of the job.

Never believe that operational costs cannot be reduced. Whenever I have heard this, it has been subsequently proven wrong. Sometimes it may be correct to increase operational expenditure, but only when this is clearly delivering improved business performance.

I know you are thinking this is just consultancy speak and the real world is different. Well I am sorry, but my bitter experience is that I am right. I like to think of my operational processes and costs as the "goldmine in my garden". Every time I dig deeper, there is another nugget of savings, or improved performance. It just gets tougher, and requires more ingenuity each time. Think of it as a challenge!

Here is my standard recipe... Look at each operational process in turn, drill down, walk through it and talk to the people doing it. Ask them some simple questions like:

* who is making money here?
* what is the market for the products/services involved telling me?
* how do people feel when they are working here, and why?
* where and how is the time / labour used?
* what are my competitors doing?
* how do people in different industries do this or similar?
* how do I benchmark my performance here?
* what is the nature and scale of value being created?
* how is quality defined and measured here?
* what are customers experiences of this?
* how could different people or technology change this activity?
* what are the real barriers to entry / exit / change in this area?
* how do we optimise space and power in this activity?
* could I engineer out this activity, or embed it within another?
* what do my current contracts say, and what commercial options have I got?

There are many more questions. The trick is to keep looking with fresh eyes, challenging the status quo, and to create a culture where this is seen as positive and not another scraping of the barrel.

Sometimes savings can result simply from changing behaviours. One of the most successful initiatives I remember was called "think before you print". Using nor more than a snappy catch phrase, some carefully positioned posters and very small IT changes we reduced print costs by 45% in one large organisation. Always remind people that a penny saved is a penny of profit.