Should a CEO implement cost-cutting as a part of business transformation in 2021?

2 Minute Read

Share Post:

Business transformation is that one word that plays a crucial role in the life of a CEO. They would have to face both internal and external commitments. All that matters is their ability to deliver the results to the core. Even though the need for transformation would be extremely different, but the focus and commitment from the CEO would mean a lot to the team. To deliver business sustainability, one has to go back and enquire their ethos.

At the brink of competitive pressures which every company faces at present, there are businesses seeking to cut costs with an intention to improve their margins. But, we need to remember that cost-cutting with no boundaries on organizational change would never lead to everlasting cost advantage. If you want to avail yourself of traditional efforts like you do when there is a recession, then there is an external force threatening you of the upcoming profits. When there is no more threat, you need to pay double the costs since there haven’t been any changes regarding the resource-allocation policies.

Instead of this, the right approach should bring in plenty of capabilities-oriented strategies. You cannot achieve strategic cost management without a broad-minded approach. This continuous process of driving resources to achieve high returns is warmly accepted in the industry. Adjusting every organizational aspect, right from formal processes and structures to the mindset of every team member is a must.

Learn more about Business transformation

What can CEOs do about Business Transformation?

CEOs should avoid developing a pessimistic mindset. Companies should position themselves to focus solely on growth and innovation. They should address their concerns regarding skills, regulation, geopolitical uncertainty, taxes, and exchange rate volatility so that they are placed in the right political and economic conditions before they choose a cost-cutting strategy. Cost-cutting can lower the overall cost structure, but it won’t get any cheaper.
Many forward-looking companies leverage cost-cutting to align their business costs with the right strategy. Strategic cost-cutting is all about focusing on the controllable aspects of a business while you can free up resources in order to fund the transformation and constant growth.

Good, bad, and the best

All you need to understand is the type of cost-cutting you are dealing with in case of digital transformation.
• Bad costs- These costs do less to no good with the growth strategy your company is dealing with. Good companies focus on cutting waste and directing their resources.
• Good costs- All these costs would drive strategies and initiatives supporting a company’s preference. This would match well with the operations of an organization.
• Best costs- A few best costs would expand any company’s differentiated capabilities. These can make any company unique and lead to value-driven efforts. These are the differentiating factors you need to take action on.

Once you classify the cost of the company, you minimize the bad costs and maximize your best investment. This practice can help you out in creating the right growth model during uncertain times.
As of 2020, around 79% of CEOs in the UK were planning to implement operational efficiencies. 65% were of the idea to launch a new service or product. 42% are keen on exploring a completely new market.
During these testing pandemic times, we need to assess where we can cut costs to defend ourselves. Operational efficiencies and cost-cutting are linked thoroughly to an organization’s ability to capitalize on business opportunities. You can free up resources and focus your energy and investment in the places you should.
Every business should chase opportunities with no eye on efficiency and cost across their business. This is how they can achieve their goals through top-notch management skills and resource allocation.
Businesses thrive by adapting to changes. They get transformed by the political, economic, and emerging technologies while customer demands and behaviors are often impacted. Being agile would change the way businesses operate. With agility, you can invest quickly in new ideas and working strategies.
Companies are anticipating higher profits in 2021
due to cost-cutting
Many companies are suffering from the impact of COVID by cutting expenses and jobs. They are now anticipating higher margins and profits in 2021. All these would involve railroads, casinos, restaurants, and so on. These businesses have been organized substantially in 2020. Hence investors would be surprised to see the upside. All these businesses should understand cost-oriented transformation.

Need to know more about Business transformation? Contact us.



A Digital Transformation Strategy can be described as an action plan laid out by a company to reclaim its position in the digital economy.

The three major components of a digital transformation include:

  • Process overhaul
  • Operation overhaul
  • Customer-relationship overhaul

digital transformation framework is a clear plan on when and how a company would strategically upgrade to core processes and systems. 

When you bring artificial intelligence (AI) into service organizations, it is one major example of the power of digital transformation.

Share Post:

Get The Latest Updates

Subscribe to our Blog Posts

Notifications only about new new blog post updates.

Similar Topics

More Blogs