Across industries, a familiar mandate is echoing through executive teams: Cut costs. Protect margins. And while you’re at it … grow.
It feels like a contradiction. And yet, for many leaders, this is the strategic moment of truth. Because the challenge isn’t just whether you can do both, it’s whether you know how to do both intentionally and in alignment with your strategy.
For organizations facing pressure from investors, boards, or market realities, this moment demands more than reactive cuts. It calls for design thinking, bold trade-offs, and a re-centering of resources around what makes your business competitive, not just operational.
Let’s break it down.
The Myth of Fairness in Cost Cutting
When the call for cuts comes in, many organizations start with the “peanut butter” method: spread cuts evenly across functions or geographies, maybe 10% here, 15% there. It feels logical. It feels fair.
But strategy isn’t fair. Strategy is about choices.
Cutting all areas equally, regardless of their impact, risks weakening the very capabilities that differentiate your business. It punishes the bold while protecting the familiar. And it almost always results in dilution instead of focus.
Why Traditional Cost Cutting Fails
Three traps consistently undermine smart cost-cutting efforts:
- Over-indexing on structure instead of understanding the work
Yes, SG&A costs matter and structure changes are often necessary. But structure alone won’t deliver sustainable savings or better performance. Without understanding what work is strategic, transactional or redundant, even well-intentioned structure changes can shift costs around instead of removing them. - Treating all work as equal
Not every task, role or process contributes equally to your competitive advantage. Failing to distinguish between strategic and non-strategic work leads to blunt cuts that weaken the wrong areas. - Solving internal complexity instead of delivering external value
Too often, organizations focus on optimizing internal processes or reducing noise without tying those efforts to what customers care about. Efficiency doesn’t equal impact, especially if the work being made more efficient isn’t moving the needle.
A Better Approach: Strategic Resource Allocation
The answer isn’t more cuts, it’s smarter cuts. The principle is simple:
Resource what differentiates. Reduce what doesn’t.
Competitive work—the capabilities, roles, and workflows that make your business stand out, deserve protection, even investment. Non-competitive work—supporting but not strategic, should be streamlined, consolidated, or even automated.
This is how you cut with a scalpel, not a sledgehammer. And it’s how you grow in the same breath as you shrink.
Real Example: Making the Tough Calls to Avoid the Worst Ones
One CEO I worked with recently faced this head-on. Recently taking over leadership of a legacy manufacturing company under intense scrutiny from its board, he took over knowing the numbers weren’t trending in the right direction. Private equity was circling. Selloffs were being discussed. Several plant closures were on the table.
This was the company’s last clear chance to make the tough choices before they would be made for them.
We worked closely with him and his team to take a hard look at the organization’s strategic spine. What truly set them apart? Where was the work that customers would pay for? And which parts, while essential, could be done leaner or differently?
They made the painful but necessary decision to reduce headcount in select non-strategic areas. But that decision preserved capacity in engineering, customer delivery, and operations leadership—areas directly tied to plant performance and customer retention.
The CEO stood up in front of his team and said it plainly:
“We are cutting a few today to protect the many. If we don’t make this call now, someone else will make it for us … and they won’t be nearly as careful. Many plants, and maybe over half of our workforce, will be out of jobs. That’s why it’s critical for us to do this right.”
That speech reframed the cuts as an act of leadership, not desperation. And that’s exactly what cost cutting, when done well, truly is.
Even iconic leaders have faced this dilemma: hold onto everything and dilute focus or make the hard call and protect what matters most.
When Steve Jobs returned to Apple in the late 1990s, the company was bloated with product lines, computers, accessories, devices, each with loyal engineering teams, sunk investment, and emotional attachment. But Jobs knew that keeping them all would mean mediocrity. So, he cut 70% of Apple’s product roadmap, laying off thousands and killing years of engineering work.
This cost cutting wasn’t about ruthlessness. It was about strategy. As Jobs put it:
“Deciding what not to do is as important as deciding what to do.”
He went further. At Apple’s annual “Top 100” retreat, he’d ask his most senior leaders to brainstorm the ten most important things Apple should focus on next. After some back and forth, Jobs would take the list, cross out the bottom seven, and declare:
“We can only do three.”
Jobs wasn’t just reallocating headcount, he was realigning the company to win, not survive.
Don’t Gold Plate What Doesn’t Need to Shine
In a moment where every dollar counts, leaders must ask:
Where are we spending A+ effort on areas where a B+ would do just fine?
Many organizations inadvertently over-engineer internal work. Not out of wastefulness, but out of pride, professional standards, or legacy expectations. It’s the instinct to pursue best-in-class performance in everything, even when the marketplace doesn’t demand it.
This is where strategy must step in.
The core idea is simple: spending a dollar here means you can’t spend a dollar elsewhere. And if “here” is an internal process or function that only needs to be reliable, not exceptional, you may be draining capacity from the very things that make your business stand out.
Being aligned doesn’t mean being excellent at everything. It means being brilliant at what matters, and good enough at what doesn’t.
This isn’t about compromising standards, it’s about choosing where excellence actually pays off.
Lead the Trade-Offs—Don’t Delegate Them
Cost cutting in spreadsheets rarely reflect reality. Spans and layers benchmarks, role caps, or SG&A ratios are tempting tools, but they won’t tell you what your customers value.
Only leaders can.
Being an alignment leader means stepping into the discomfort of trade-offs and guiding your teams through them. It means naming what matters most and having the courage to protect it.
You’re not just reducing. You’re designing. And that’s what makes all the difference.
Closing Thought: Alignment Is a Growth Strategy
Done poorly, cost cutting erodes capability, morale, and trust. Done well, it clarifies focus, energizes teams, and creates the very conditions for growth.
Alignment isn’t a soft skill. It’s a survival strategy. In fact, it’s often the difference between cost cutting to survive this year—and designing to compete for the next ten.
Now is the time to look beyond the org chart and into the work.
Decide what really matters.
Invest there.
And have the courage to let go of the rest.
