Why most cost programs fail, and the few that do not

Almost every large company has run a cost program in the last five years. Few have kept the savings. Our research suggests that around two-thirds of announced savings have eroded within three years.

Cuts versus redesign

Programs that rely on across-the-board reductions tend to see cost creep back as soon as attention moves elsewhere. Programs that redesign processes, structures, and decision rights change the underlying demand for spending, and the savings hold.

If the work does not change, the cost will come back.

The most durable programs also make line leaders, not finance, the owners of the savings, and they install a performance cadence that outlasts the program itself.