Eliminating waste and unnecessary cost inside your business is critical to its long term growth, profitability and success. However, primarily focusing on reducing cost will eventually kill your company.
As Gordon Bethune said, “You can make a pizza so cheap, nobody will eat it. You can make an airline so cheap, nobody will fly it.” The king of corporate turnarounds, Greg Brenneman, supported this with his statement “a maniacal focus on trimming cost can lose you more revenue than you gain.”
This was certainly my experience back in 1998 when I was brought in by a client to redo engineering work that another contractor had outsourced overseas. The contractor was looking to reduce their engineering costs by sending the bulk of their engineering to a lower cost country. Unfortunately, they did not control this work close enough. When the engineering was submitted to the customer, not only did it not meet expectations, it caused the client to loose so much confidence in the contractor that the contract for the work was pulled and awarded to another engineering company.
