When You Have to Cut Cost
When You’ve Got to Cut Costs
A practical guide to reducing overhead by 10%, 20%, or (wince) 30% by Kevin P. Coyne, Shawn T. Coyne, and Edward J. Coyne, Sr.
74 Harvard Business Review May 2010
HBR.ORG
Kevin P. Coyne (kevin@ thecoynepartnership.com) is a professor at Emory University’s Goizueta Business School and a former senior partner at McKinsey & Company.
Shawn T. Coyne (shawn@ thecoynepartnership.com) is a consultant specializing in innovation, marketing, and organizational leadership. He and Kevin Coyne are the authors of Brainsteering: A Better Approach to Breakthrough Ideas (HarperBusiness, forthcoming in 2011).
Edward J. Coyne, Sr., is a former top-10 executive of a Fortune 500 company. He can be reached at ed@ thecoynepartnership.com.
Y
ou’ve been a good manager of a large department for some time now. You’ve run a tight ship. When possible, you’ve cut costs. But now an order has come down (from high enough above that you don’t have the liberty of debating its wisdom or feasibility) decreeing that you must find an additional 10%, 20%, or even 30% in administrative cost reductions, severance aside. You just don’t see how it can be done. Further complicating your life are the limitations on your choices. Because you don’t report directly to the CEO, you’re not in a position to advocate strategy changes or pursue wholesale shifts like offshoring. Nor do your instructions allow you to push for large investments—in new technology, for example—that would enable you to replace other departments. No, you have to do this the hard way: one item at a time and in short order. You are not alone. Over the past 30 years, we have worked in, led, or provided consulting assistance to numerous organizations in this situation—including manufacturing companies, financial institutions, professional-services firms, high-tech start-ups, utilities, and universities. Our experience shows that administrative cost-reduction opportunities follow similar
A practical guide to reducing overhead by 10%, 20%, or (wince) 30% by Kevin P. Coyne, Shawn T. Coyne, and Edward J. Coyne, Sr.
74 Harvard Business Review May 2010
HBR.ORG
Kevin P. Coyne (kevin@ thecoynepartnership.com) is a professor at Emory University’s Goizueta Business School and a former senior partner at McKinsey & Company.
Shawn T. Coyne (shawn@ thecoynepartnership.com) is a consultant specializing in innovation, marketing, and organizational leadership. He and Kevin Coyne are the authors of Brainsteering: A Better Approach to Breakthrough Ideas (HarperBusiness, forthcoming in 2011).
Edward J. Coyne, Sr., is a former top-10 executive of a Fortune 500 company. He can be reached at ed@ thecoynepartnership.com.
Y
ou’ve been a good manager of a large department for some time now. You’ve run a tight ship. When possible, you’ve cut costs. But now an order has come down (from high enough above that you don’t have the liberty of debating its wisdom or feasibility) decreeing that you must find an additional 10%, 20%, or even 30% in administrative cost reductions, severance aside. You just don’t see how it can be done. Further complicating your life are the limitations on your choices. Because you don’t report directly to the CEO, you’re not in a position to advocate strategy changes or pursue wholesale shifts like offshoring. Nor do your instructions allow you to push for large investments—in new technology, for example—that would enable you to replace other departments. No, you have to do this the hard way: one item at a time and in short order. You are not alone. Over the past 30 years, we have worked in, led, or provided consulting assistance to numerous organizations in this situation—including manufacturing companies, financial institutions, professional-services firms, high-tech start-ups, utilities, and universities. Our experience shows that administrative cost-reduction opportunities follow similar