The big idea
Very few organizations manage their costs for sustainable success. They spend their money on the wrong things or they cut the wrong things for the wrong reasons, ultimately leaving them weaker and unfit to compete. Instead, organizations need to think about their costs strategically, as investments that will fuel their growth, so they put their money where their strategy is. They need to continuously cut bad costs and redirect resources towards good costs that build or strengthen differentiating capabilities.
We developed the Fit for Growth* framework based on research into hundreds of companies across various sectors. What we found: Those who best follow the Fit for Growth principles achieve higher total shareholder returns than those that do not. Their secret? They tightly link their growth and cost agendas to fuel growth.
The situation
Whether you’re trying to jumpstart flattening revenues or racing imminent bankruptcy, companies are realizing that the only way to unleash profitable growth is to cut costs, often dramatically.
In the globally interconnected, digitally disintermediated market full of activist investors in which enterprises operate today, there is no safe harbor when it comes to the bottom line. Companies need to focus on managing costs as rigorously as they concentrate on increasing revenues. As with any living organism, there is no profitable growth without equally robust pruning.
The solution
We’ve devoted 70 years of collective experience to helping dozens of companies answer affirmatively: Are you fit for growth? Companies that are fit for growth do three things consistently and continuously:
- Focus on a few differentiating capabilities
- Align their cost structure to these capabilities
- Organize for growth
About the book
Fit for growth companies enjoy higher shareholder returns and sustained growth. Why? Because they put their money where their strategy is. Through constructive cutting, fit for growth companies connect their costs with their strategy so they can invest resources in what truly differentiates them from the competition. They cut costs at the right time, from the right spots, in the right way to stay lean, fit, and ready to pursue growth.
Fit for Growth lays out the framework managing costs in a strategic way using detailed, real-world examples so that leaders across all industries can get their companies into shape — the right way.
Here’s what’s inside each section of the book:
Introduction and Fit for Growth overview
Cost cutting seems like a basic business concept. Yet it is one of the most misused — if not abused — areas of management. Too often, companies disconnect strategy and cost management. The result: Those capabilities that make a company truly competitive are starved, while cost centers that add little value grow unchecked. Companies that manage their costs right do it from a position of strength so they are ready to grow; they maintain the roof while the sun is shining.
In this section, we explore:
- How to determine if your company is fit for growth
- Why you need to change your mindset from cutting to optimizing costs
- Best practices for structuring and leading transformational change
Download chapter 1
How to cut costs and grow stronger: A manager’s guide
Whether a company wants to survive or thrive, executives need to know where, how, and why to cut constructively to set up future success. Companies that focus too much on shrinking their costs lose sight of the need to invest in their differentiating capabilities. In short, they use an axe when what is really needed is a strategic pruning of unhealthy growth. The Fit for Growth approach takes the guesswork out of applying the right way to manage costs.
In this section, we explore:
- How to set the framework for a Fit for Growth transformation
- How to use the nine levers, or tools, to make constructive cuts
- Best practices and pitfalls to avoid when using each lever
Sustain the change
There’s a reason most transformation efforts fail: It’s easy to revert to past behaviors. Becoming fit for growth is about building a cost-conscious mindset by aligning costs with strategy. But to make it sustainable, you must embed new behaviors and spending habits into your organization. That’s why the Fit for Growth framework is predicated on a foundation of cultural change. By changing how their companies look at, think about, and manage cost, executives can break the repeated cycle of bad cuts and focus instead on sustainable cost management strategies.
In this section, we explore:
- How to mobilize, scale, and run a successful Fit for Growth transformation
- How to enlist culture to enable change
- Tools and techniques for making constructive cutting an ingrained habit — even a prized value — in your organization
Endorsements for Fit for Growth
“Building a company for growth requires efficiency, confidence and innovation. What I love about this book is how accurately it captures the business world in which we live. Based on their vast experience, the authors offer valuable perspective on how to ensure your organization’s competitive fitness for the future.”
“Growth-oriented companies have the foresight, courage and discipline to focus on what truly brings distinctive value to their customers, making tough tradeoffs to invest in and execute only those ideas with the greatest impact for their customers. Fit for Growth expertly and succinctly details how organizations need to work, think and act differently to align their growth agendas with their cost agendas and to ensure profitable and sustainable growth.”
“Fit for Growth is a comprehensive guide for any organization that is searching for accelerated growth, especially in a low-growth environment. With its practical examples, the book provides clarity on how efficiency, cost consciousness, and strategic clarity can be combined in a stimulating way.”
“Fit for Growth reminds us that strategic clarity and coherence set companies apart, but that choices on efficiency and focus are required to drive investments in strategy and maximize shareholder returns.”
“Fit for Growth provides excellent insights on how to strike the right balance of driving a growth agenda while staying cost competitive, including not only a conceptual framework but also hands-on, practical and highly relevant implementation guidance.”
“Having lived in the trenches with the authors, I came to know the full price of clutter and complexity. Fit for Growth is a blueprint for reigniting growth and unlocking value that has been tested in many of the deepest trenches — a real reminder that growth is about purpose, simplicity and discipline!”
“Fit for Growth provides excellent guidance to executives who want to drive profitable growth and align winning strategies with a sound cost structure and operating model. Tangible examples and practical techniques show how to provide the leadership required in a forward-thinking, cost-effective and operationally sound organization.”
Our book on Fit for Growth
A practical approach to business transformation.
Get to know the authors
The authors bring more than 70 years of combined strategy and business transformation consulting experience and the unrivaled industry and functional capabilities of the PwC network to solve companies’ toughest problems and help them capture their greatest opportunities.
More by the authors
strategy+business magazine articles
Building Trust while Cutting Costs
Is Your Company Fit for Growth?
Videos
An interview with the author Deniz Caglar
Align costs with business strategy
