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INNOVATION

Retooling for the

New Cost Imperative

To accelerate growth
in the crisis,
companies need to act
on five big themes

Simon Henderson and Jason Heinrich,
Bain & Company

o accelerate growth in the crisis, mal of increased margin pressures and the need for
companies need to act on five big greater resilience and agility as market dynamics
themes. shift.
Having taken urgent steps to survi- Our analysis of past global shocks, such as the fi
ve in the early days of the Covid-19 nancial crisis of 2008–2009, shows that recoveries
T pandemic, companies now face the are critical inflection points, either setting up com-
need to retool their costs. panies for a strong bounce back and years of con-
Our executive survey identifi ed five themes that
will drive the new cost imperative: automation and
digitalization, simplicity, new ways of working, ope- Recoveries are critical inflection points, either
rational resilience, and visibility and accountability.
The best companies will prioritize these themes setting up companies for a strong bounce
into one to three bold, focused moves, picking the “back and years of continued market share
elements of cost and cash where retooling can gains, or relegating them to a path
have the biggest impact
of sluggish growth
The pandemic that virtually overnight changed eve-
ry industry demands that all companies take a new
and more strategic look at costs. tinued market share gains, or relegating them to a
Most companies took the immediate steps needed path of sluggish growth. About 20% of companies
to survive in the early days of the crisis, to protect that play offense during downturns through such
the business and ensure continuity. Now they face moves as strategic cost transformation are able to
a more difficult challenge: creating a cost and cash accelerate their growth trajectory, outgrowing their
strategy that will serve them not only during the un- peers by nearly four times, with the biggest advan-
certain recovery—as costs return faster than reve- ces in performance achieved during downturns
nues for many companies—but also for a new nor- (see Figure 1).

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