For executives tasked with managing costs, the pressure has been relentless. Rising inflation, trade tensions, and geopolitical shocks have eroded financial resilience. Two-thirds of global executives say new tariffs are forcing them to accelerate cost cuts and price increases, according to a recent Bain survey.
A zero-based cost management system is a no-regrets move, especially in a volatile economy. It enables leadership teams to rapidly shrink the firm’s cost base as much as 25% and redeploy savings to spur growth and expand operating margins. Cost discipline boosts flexibility and competitiveness. That, in turn, can help companies offset the impact of new tariffs and a potential recession.
Top-performing companies act fast when signs point to a downturn. They work feverishly to get ahead of the risks by targeting costs and productivity. Bain research on 5,000 companies globally shows that today’s sustained value creators—those that consistently delivered both real top-line growth and positive economic value added over the past decade—have significantly outperformed their peers over the long term.
Just 10% of companies achieved this status over the past decade, yet they earned an average total shareholder return (TSR) of 15%—three times that of other firms. These leaders don’t rely on quick wins; they embed profitable growth capabilities that hold up throughout economic cycles, industries, and geographies. These companies excel in cost productivity—growing earnings faster than revenue—underscoring the role of discipline in long-term outperformance.
Cost productivity is a smart downturn play—but it’s also a proven path to long-term shareholder value.
Despite major efforts to streamline and simplify their cost structures, most companies acknowledge that, over time, cost and complexities always seem to come back. A recent Bain study of 470 companies shows only 12% of transformations delivered sustainable performance improvement. Two-thirds of the executives surveyed said they had implemented three or more transformations in the past five years.
Top-performing companies embrace a cost management methodology that allows them to allocate resources with more agility and sustain the results. That helps fuel productivity gains, even in a turbulent economy.
Leadership teams can manage costs on three levels. In our experience, the most effective cost managers operate on all three, building knowledge and insight from each effort.
Embedding a cost management mindset. Leaders ensure long-term savings and flexibility by building a cost-discipline mindset. It’s rooted in company strategy, developed as a capability, and engrained in the company culture. This is what few firms do—and it’s what separates the winners who sustain value over time from the losers.
They treat cost discipline as a strategic priority, investing in systems that align with enterprise goals. They build capabilities in people, processes, and technology to create and sustain impact. And they foster a culture of ownership and continuous improvement.
Read the full article by Jason Heinrich and Andrew Mintz / Bain & Company
