A practical approach to business transformation
Fit for Growth* is a unique approach to business transformation that explicitly connects growth strategy with cost management and organization restructuring. Drawing on 70-plus years of strategy consulting experience and in-depth research, the experts at PwCs Strategy& lay out a winning framework that helps CEOs and senior executives transform their organizations for sustainable, profitable growth. This approach gives structure to strategy while promoting lasting change. Examples from Strategy&s hundreds of clients illustrate successful transformation on the ground, and illuminate how senior and middle managers are able to take ownership and even thrive during difficult periods of transition. Throughout theFit for Growth process, the focus is on maintaining consistent high-value performance while enabling fundamental change.
Strategy& has helped major clients around the globe achieve significant and sustained results with its research-backed approach to restructuring and cost reduction. This book provides practical guidance for leveraging that expertise to make the choices that allow companies to:
Achieve growth while reducing costsManage transformation and transition productivelyCreate lasting competitive advantageDeliver reliable, high-value performance
Sustainable success is founded on efficiency and high performance. Companies are always looking to do more with less, but their efforts often work against them in the long run. Total business transformation requires total buy-in, and it entails a series of decisions that must not be made lightly. TheFit for Growth approach provides a clear strategy and practical framework for growth-oriented change, with expert guidance on getting it right.
*
Fit for Growth is a registered service mark of PwC Strategy& Inc. in the United States
Preface ix
Part I Introduction and Fit for Growth Overview 1
Chapter 1 Do You Need to Cut to Grow? 3
Circuit City: The Ostrich Approach 6
IKEA: Elevating Cost Optimization to an Art Form 9
The Fit for Growth Index 12
Chapter 2 Becoming Fit for Growth: The Restructuring and Renewal Journey 17
Focus on Differentiating Capabilities 19
Align the Cost Structure 21
Reorganize for Growth 24
Enable Change and Cultural Evolution 28
Continuous Cost-Fitness Renewal 29
Chapter 3 The Leaders Role: Aligning Costs with Strategy 31
How Do You Know When Its Time? 32
The Three Core Questions Leaders Ask 34
What Makes the Fit for Growth Approach Different 43
Part II How to Cut Costs and Grow Stronger: A Managers Guide 45
Chapter 4 Levers of Cost Reduction: What, Where, and How 47
Setting the Objective 48
Identifying Differentiating Capabilities 50
Selecting the Cost-Reduction Levers 52
What Do We Do? Business Portfolio and Capability Choices 52
Where Do We Do It? Organization and Location 53
How and How Well Do We Do It? Operational Excellence 55
Chapter 5 Portfolio Rationalization: Decide What Business You Should Be In 57
What Is Portfolio Rationalization? 58
When to Use Portfolio Rationalization 62
How to Rationalize the Portfolio 64
Chapter 6 Zero-Basing: Justify What to Keep, Not What to Kill 70
What Is Zero-Basing? 70
A Versatile, Holistic Cost Lever 73
When Should You Zero-Base Your Capabilities? 76
How to Zero-Base Your Capabilities 76
Chapter 7 Aligning the Operating Model: Redefine Where Critical Work Gets Done 85
Operating Model Elements and Archetypes 86
When to Redesign Your Operating Model 92
How to Redesign Your Operating Model 93
Chapter 8 Outsourcing: Let External Providers Generate Value for You 103
What Is Outsourcing? 103
When to Outsource 107
The Outsourcing Process: How It Works 108
Chapter 9 Footprint Optimization: Rethink Your Operations and Overhead Locations 119
What Is Footprint Optimization? 119
When to Use Footprint Optimization 123
Footprint Optimization: How It Works 126
Chapter 10 Process Excellence: Simplify Work and Minimize Bureaucracy 133
What Is Process Excellence? 134
When to Use Process Excellence 139
A Guide to Process Excellence 140
Aligning Process Excellence with Other Cost Levers 146
Chapter 11 Spans and Layers: Flatten and Empower the Organization 149
What Is a Spans and Layers Restructuring? 149
When to Restructure Spans and Layers 154
How to Restructure Spans and Layers: Five Steps to a Leaner Organization 155
Chapter 12 Strategic Supply Management: Extract More Value from Your Purchases 163
What Is Strategic Supply Management? 163
When Should a Company Use Strategic Supply Management? 167
Making It Happen: A Guide to Strategic Supply Management 169
Chapter 13 Digitization: Make Technology a Game Changer 177
What Is Digitization? 177
When to Use Digitization 179
How to Digitize 182
Part III Coping with Cost Restructuring: How to Manage and Sustain the Change 189
Chapter 14 Running a Cost Transformation: Mobilizing, Scaling, and Sustaining 191
Phase 1: Diagnostic and Case for Change 193
Phase 2: Detailed Design 198
Phase 3: Execution 203
Chapter 15 Morale, Emotions, and Expectations: Leading during a Restructuring 208
Uncertainty and Anxiety 209
Phase 1: Opportunity, but for Whom? 211
Phase 2: Anxiety Surfaces 214
Phase 3: Turmoil, but also Glimmers of Something Better 216
Chapter 16 The Human Element: Getting People Ready, Willing, and Able to Change 224
Elements of a Culture-Led Change Management Program 226
Phase 1: Diagnostic and Case for Change 230
Phase 2: Detailed Design 233
Phase 3: Execution 242
Chapter 17 Staying Fit for Growth 246
Strategic Levers: Translating Strategy into Performance 247
Operational Levers: Executing against the Plan 251
Organizational Levers: Assign Accountability and Reward Cost Consciousness 253
Cultural Levers: Unleashing the Individual 255
Sense and Sustainability: Getting from Here to There 258
Notes 259
Acknowledgments 261
About the Authors 265
Index 267
