Cut Costs Without Losing Competitiveness

Ninety percent of business leaders say they have paid more attention to costs since the financial crisis took hold. Some have asked every department for an across-the-board 10 percent cut in costs. Others have laid off one person in each department, regardless of its size or how important its projects were to the company's competitiveness. But as IESE professors Alberto Fernández and Manuel Velilla explain, such strategies lump all costs into the same basket so as to reduce them together, jeopardizing the firm's ability to compete.