Six principles of sustainable cost optimisation

Cost improvement work is often the remit of accountants, but we believe that modern organisations require a sustainable, human-centric approach to achieving cost objectives. As Organisation Design experts, we embed this approach into our cost optimisation work, from day one.

Research shows that organisations typically yo-yo through economic cycles from excessive cost through to painful restructuring. Focusing on rapid cost reduction often creates unintended consequences further down the line. Managers who have been starved of resources, overcompensate when there is less pressure, and this causes the cost base to expand back to more than what it was originally, setting up the cycle to start all over again.

We believe that if clients can create a sustainable, permanent approach to cost efficiency then these infrequent, but painful, exercises can potentially be avoided. What separates Q5 is our focus on ensuring a sustainable future for our clients by blending rigorous systematic analysis with deep hands-on expertise in understanding and developing organisational capital.

For over 10 years we have helped our clients adapt their costs and structure to remain relevant and competitive – even if rapidly, often dramatically changing environments. Our first ever client was in the print media business and needed help to adapt to one of the most rapid structural shifts any industry has seen. Our help enabled them to cope with the relentless erosion of their core revenue streams. Since then we have helped clients across all sectors achieve similar success.

We have brought our years of experiences together into a fresh approach – “Sustainable Cost Optimisation” (SCO).

Introducing our global “Sustainable Cost Optimisation” (SCO) Approach:

Any successful cost efficiency exercise must be mindful of six critical SCO principles:

• Strategic: Must be future looking and framed with the context of clear strategic direction
• Sustainable: Must create an organisation that is fit for the future and mitigate risk
• Communications: Have internal and external communications embedded in the process
• Ownership: Must be clearly led from the top but with a shared sense of ownership
• Collaborative: Must be systematic, holistic and methodical, but also collaborative
• Change: Mindful of the capacity of the organisation to change and cross-dependencies

We offer 3 broad approaches to cost reduction, ranging from a Rapid Assessment, through specific Surgical Interventions that focus on problem areas, and on to a full Transformation Programme which creates the right operating model and structure required to do all necessary activity, as efficiently as possible.

Our Rapid Assessment is built on our proprietary “Cost Assessment Framework”, which enables a fast-paced, thorough and comprehensive cost review. We use a number of proprietary analytical tools that we bring to clients to tease out potential opportunities.

Our analysis will create a complete “menu” for clients, classifying all costs into one of the following areas:

• Non-strategic cost: Cost that can be removed without any impact on the business
• Design: Costs that could be reduced with investment or redesign work
• Turn the Dial: Costs that are discretionary, changes to which may affect business outcomes
• Negotiate Down: Cost (or cash) items that can be negotiated, re-sourced or consolidated
• Non-Addressable: Fully aligned with the business, cannot be reduced or removed

 And finally, we prioritise opportunities according to a combination of client-specific criteria.

On prior projects, our experience tells us that we help clients to identify and realise efficiencies in the range of 15-20 times the project cost.