Outspend on Strategic Costs and Cut Non-Strategic Costs

By | Execution

(Extracted from Double Your Profits: In Six Months Or Less by Bob Fifer)

[A]ll costs are divided into two categories:

  1. Strategic costs are defined as all those things that clearly bring in business and improve the bottom line. Typical items in this category are the cost of salespeople (but not sales managers), advertising (if it’s working), and commercializable R&D.
  2. Non-strategic costs are all other costs, i.e., the costs necessary to run the business, but that don’t clearly bring in more business. Administrative costs of all kinds fall in this category: managers, clerical support, rent or real estate cost, consultants, lawyers, accountants, computers, office supplies, and so forth. Often, this category also includes the costs of your manufacturing or service operations.

My (or your) role as leader is to ensure that:

  1. We will outspend our competition for strategic costs, and spend this money in good times as well as bad.
  2. We will ruthlessly cut non-strategic costs to the bone.

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