“82% said their companies are focused on cost reduction as a way to free up funds to invest in growth initiatives.”
While this sounds like an obvious strategy with easy results, there are a couple of hurdles to overcome. First, cutting costs may be more harmful than helpful if the wrong areas are cut which then hinder the ability to grow sales and revenues.
Secondly, another common problem is the disagreement and misalignment among CEOs and CFOs about the growth strategy. Here are some insight excerpts from the post:
“In many cases, CEOs and CFOs can’t even agree on whether priorities for reinvesting cost savings are in fact aligned to business strategy. While 51% of chief executives participating in the study said they believe such alignment exists, only 34% of finance chiefs said the same.”
“CFOs… see bigger challenges in reinvesting cost savings because they see more detail suggesting what could go wrong.”
“Another problem when it comes to reinvesting cost saving is operating models that aren’t aligned to fuel strategic growth initiatives. Only 17% of CFOs and 31% of CEOs strongly agreed that their operating model is sufficient for this purpose.”
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