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Hernan Saenz: Why Cost Productivity Matters

Higher productivity can improve shareholder returns if companies take a few guidelines into consideration.


Hernan Saenz: Why Cost Productivity Matters

While all industries are focused on improving productivity, only about 5% of companies deliver productivity gains year after year. Hernan Saenz, who leads Bain's Global Performance Improvement practice, describes the four methods companies can use to achieve better outcomes. 

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Read the transcript below.

HERNAN SAENZ: Across industries, we are observing a renewed focus on cost productivity. That should not come as a surprise. We know that companies that deliver sustained productivity improvements year after year also deliver better shareholder results. That said, only 5% of companies deliver sustained productivity year after year.

What do these companies do differently? The first thing is they align productivity efforts with the strategy. They asked a question, where do I have to be best in class, where do I have to be best in cost? Second, they set explicit and clear productivity targets in the right places. Third, they deploy some of the most important game changers out there—zero-basing your operations, zero-basing your budgets, and complexity reduction.

And fourth, they deploy digital tools faster and in the right places versus their peers. They target digital tools for their key processes. So if you want to be in the top 5%, you want to align your productivity efforts with the strategy, set those productivity targets, deploy those game changers, and make sure that they're supported by the digital tools.

Read the Article

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