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Editor's Note: Take a look at our featured best practice, Cost Reduction Opportunities (across Value Chain) (24-slide PowerPoint presentation). Though there are multiple levers to maximizing an organization's profitability, costs are the most directly controllable by any organization. Profitability is being challenged by increased costs, stagnated revenue growth, and increased capital costs in today's economic climate. Therefore, a [read more]
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Cost pressure never takes a day off. Service expectations only climb. Quality cannot wobble. The framework here solves for all three by making Cost Productivity a management system, not a one quarter exercise. Zero Based Redesign, or ZBR, starts by deciding what work deserves to exist and only then designs how it should run. That order matters. Leaders use it to lower unit cost while protecting service, quality, and future growth capacity—without blunt cuts that break the machine.
Research points in the same direction. Organizations that sustain productivity over multiple years post materially higher TSR. Five-year streaks lined up with about 22 percent TSR versus an 8 percent sample average. Few sustain the discipline, which is exactly the point—durability compounds value.
GenAI pilots are exploding. Dashboards, copilots, and automated workflows pop up in every function. Costs follow. ZBR gives the spine to sort real value from enthusiasm. Leaders set an explicit ambition, reset the work catalog for each function, and define service levels that reflect actual need. Teams then design a future state that bakes in automation, data, and decision rights so AI pilots scale without ballooning spend or erosion of control.
Cloud programs face similar chaos. ZBR shifts the conversation from line item trimming to structural choices. What reports or environments are truly essential. What cadence is right. What standard can be global. That reset paves the way for automation and shared services at scale, while a wave plan banks early wins and then hard wires bigger bets over 18 to 36 months.
Cost Productivity means the sustained ability to lower unit cost while keeping service, quality, and growth intact. It works when leaders redesign what work exists and how it runs—never as a blunt across the board cut. The method brings a today forward and future back posture, uses technology early, and aligns culture and incentives to hold gains.
ZBR is the clean slate approach that decides which activities earn their place at the right service levels, then designs the most effective way to perform them. Programs have cut up to a quarter of overhead and support spend while improving service. The work starts with a three-to-five-year horizon, looks across all spend, and redesigns via standardization, automation, sourcing choices, and role clarity. Use cases include post-merger overhead, profit compression, rising complexity, slow decisions, or weak cost resilience.
As defined by the framework, the ZBR Cost Transformation runs through three phases with 8 actions:
Most cost efforts start with the budget. ZBR starts with work. The difference is night and day. Leaders first answer a hard question: which activities truly earn a place, at what service levels and frequency, and why they matter to customers. Teams then design processes, roles, decision rights, and enabling tech that can deliver those essential activities at scale and at the right unit cost. The work catalog and target SLAs become the anchor for every downstream choice—structure, spans and layers, cost envelopes, and controls.
Durability shows up by design. The approach pairs today forward move with a future back view, sets explicit guardrails, and links incentives to holding gains. That combination is how organizations avoid the bounce back of costs after go live. Teams run with a cadence that tracks value, service, and risk in one narrative, with escalation paths that actually move blockages. The governance is not a poster. It is a weekly decision rhythm with clear decision rights and owners.
Speed is designed in as well. ZBR uses a sequenced wave plan to bank early wins in months, then scale no regret moves, then hard wire larger bets. Deployments run with dated waves, gates, KPIs, and a single command center. Scale teams use repeatable packages and standard SOPs. Results show up as visible, banked savings with service held or improved. That is how cost programs build credibility fast and keep it.
Proof points matter to hard-nosed operators. Streaks of sustained productivity linked to double digit TSR suggest this is not just process theater. Long story short, multi-year discipline pays. Leaders should measure streaks and talk about them in earnings language. That framing gets attention and budget.
Align Leadership around a Bold Ambition
Senior leaders make ZBR real by linking it directly to strategy and standing up governance that accelerates decisions. One visible sponsor. One core team. One escalation path. The group translates two-to-three-year strategic objectives into ZBR outcomes and guardrails in plain language. Scope can be enterprise wide or targeted. Pace must match absorption capacity. Value, service, and risk get tracked as equals in a weekly decision rhythm. Sounds simple. Works when done rigorously.
Identify Sources of Value and Set Direction
Facts beat opinions. Teams build a cost map by activity and function, benchmark externally, score complexity and digital readiness, then reset each function mission to current objectives. Leaders set design principles and cost targets and align on the first portfolio of opportunities with clear criteria for value, service, and risk. That is the backbone for mobilization and a shared language to make trade-offs without drama.
Cost Productivity is the discipline to lower unit cost while protecting service, quality, and growth capacity. It works when leaders redesign what work exists and how it runs, not through across the board cuts. ZBR is the clean slate approach that first decides the “what” then designs the “how,” often delivering up to a quarter reduction in overhead and support spend with better service. The program runs through three phases across eight actions and is best launched with a readiness diagnostic that probes mergers, profit pressure, complexity, speed of decisions, and cost resilience.
A global organization ran fragmented finance processes in 20 plus markets. Costs climbed. Cycle times lagged. Leaders used ZBR to reset. The team defined essential finance services and stopped low usage ad hoc report packs. Forecast cadence got reduced where variance was minimal. Target SLAs were set for the remaining services. That move alone removed non value work and pointed the effort toward activities that matter.
Designers built one global order to cash template with single point ownership. SLAs and controls were standardized across regions. Structure changes reduced handoffs and clarified decisions. Cost envelopes and performance standards were defined before teams touched deployment. Data, tech, and governance were aligned to operate reliably at scale. That bundle improved speed and service together.
Pilots in 2 markets reduced manual touchpoints by about 60% and shortened cycle times. The team packaged SOPs, SLAs, and training and moved into a wave plan that expanded from 2 to 15 markets, with a weekly dashboard tracking run rate savings and SLA performance. A Results Delivery office cleared exceptions in the same week. Savings were banked and visible, not theoretical.
Start with a two-week diagnostic if several readiness questions hit yes. Probe overhead from acquisitions, profit pressure, rising complexity, slow decisions, service levels set above need, and weak visibility by activity and service level. If that profile is real, launch ZBR with clear ambition, scope, and governance, then run the eight actions in sequence with a visible tracker. Keep value, service, and risk on the same page—literally the same dashboard.
How is this different from classic zero-based budgeting?
ZBR does not start from accounts. ZBR starts from a clean slate of activities and service levels, then designs processes, roles, and tech to deliver the work. Budgets follow the operating design, not the other way around. Teams use a today forward and future back posture and embed technology early.
What speed should leaders expect?
Programs often run across 18 to 36 months with waves that bank early wins in months and scale in follow on waves. Wave 1 in six to nine months, Wave 2 in nine to eighteen months. The cadence is visible and tracked to value and service.
Where do the savings come from without breaking service?
Savings come from stopping low value activities, resetting service levels, and redesigning end to end processes through standardization, automation, and role clarity—all while protecting what matters. Better by design, not just cheaper by decree.
What governance prevents backsliding?
A Results Delivery office tracks adoption, value, and exceptions with one narrative. Incentives and role clarity align to the future state. Teams refresh the blueprint as strategy evolves. Discipline after go live protects value, speed, and credibility.
Where should we start if we can only do one thing this quarter?
Start with a cost map by activity and function and a short list of service level resets. Publish it. Use it to pick one function where complexity is highest and digital readiness is decent. That creates momentum and teaches the cadence you need for scaling.
Clarity beats activity. ZBR makes leaders explicit about the work that earns a place, the standards that define good, and the design that will deliver it every day. That clarity travels. Finance, HR, Operations, Tech—each function gets the same language and cadence. One tracker, not fifteen. That is how an organization escapes endless one offs and slides into a coherent run model that compounds value quarter after quarter.
Executives get a second benefit. Transparency becomes the default. When value, service, and risk share one dashboard, people make better trade-offs. Leaders stop arguing about history and start deciding on outcomes. A shared fact base resets tired arguments over pet projects. The net is a more adult conversation about cost that unlocks capacity for growth initiatives without starving the core.
Strategy is simple to say and hard to operationalize. ZBR closes that gap. The method translates strategy into a catalog of essential activities, into target service levels, into operating design choices, into deployable packages, into banked savings and better service. That chain is the real strategy execution. The consulting world has plenty of templates. This one earns a place because it binds ambition to design to delivery with a cadence that sticks.
Leaders who want results that last should ask three blunt questions. What work are we willing to stop. What service levels are non-negotiable. What governance will keep score every week. Clear answers set the tone. The rest is disciplined follow through, powered by a framework that is designed to be repeated and tracked in the open.
Interested in learning more about the steps of the approach to Zero-Based Redesign (ZBR) Cost Transformation? You can download an editable PowerPoint presentation on Zero-Based Redesign (ZBR) Cost Transformation here on the Flevy documents marketplace.
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
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