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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Listen to the Intro
Fit for Growth summary
Vinay Couto
A Guide to Strategic Cost Cutting, Restructuring, and Renewal
15 mins
Table of Contents
Fit for Growth
summarized in 6 key ideas
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Key idea 1 of 6
Successful companies devote financial resources to the areas where they already excel; everywhere else, they cut costs.
What’s stopping your company from growing? Perhaps it’s your customers’ rising expectations – or maybe you’re struggling with industry-wide economic problems? Fortunately, whatever your difficulties, the solution is the same – you need to cut your costs.
No matter what industry your company is in, you must focus as much on cutting costs as on growing revenue.
But where should you start cutting?
Actually, the more relevant question is, where shouldn’t you? In order to answer this, you first need to pinpoint your company’s differentiating capabilities – the processes, tools or knowledge that makes your company better than its competitors. In other words, what are the things your company does best?
Understanding what your differentiating capabilities are is crucial because these are the areas of your business that you don’t want to cut. And once you’ve identified them, you should start devoting the lion’s share of your financial resources to them.
In practice, this means cutting costs in all other areas of your company so that you can focus on your priorities. Sound like a risky strategy? Well, it’s less risky than attempting to pursue excellence in all your business functions.
Many companies believe that every department, from Human Resources to Logistics, needs to be “best in class.” They then allocate generous amounts of resources to each department accordingly. However, these spend-happy companies rarely ask themselves whether financing each department is actually conducive to overall success. Outshining the competition in every aspect isn’t really necessary, and trying to do so often forces companies to underinvest in the activities unique to their enterprise.
This is a mistake that the most successful companies avoid.
For example, Swedish home-furniture company IKEA focuses only on being the best at what it’s already the best at. IKEA knows that it’s beloved for its elegantly simple product design, inviting stores and low prices. Consequently, the company relentlessly searches for opportunities to save costs in all other areas – such as their supply chain and product packaging – as long as the cuts don’t affect product quality, in-store customer experience and low prices.
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What is Fit for Growth about?
Fit for Growth (2017) explains why cost cutting is crucial to a company’s growth. The authors cover a range of how-tos, from restructuring your organizational model to cutting superfluous business departments and achieving sustainable growth for your company.
Who should read Fit for Growth?
- Managers looking to cut business costs
- Anyone interested in change-management skills
- Students wishing to pursue a career in management consulting
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