When cutting costs destroys value and what to do instead

When a business is under financial pressure, the instinct to cut costs is natural and often necessary. But cost cutting without strategic clarity can destroy more value than it creates. We have seen companies slash their way to short-term survival only to find themselves unable to compete, unable to serve customers, and unable to retain the talent they need to recover.

The distinction between productive cost reduction and destructive cost cutting lies in one question: does this change make the business stronger or weaker over the next twelve to twenty-four months? Productive cost reduction eliminates waste, simplifies processes, and focuses resources on what matters most. Destructive cost cutting reduces the company's ability to generate revenue, serve customers, or attract talent.