Zero basing is an intrinsically radical approach involving new and challenging ways of rethinking the cost base. But how can companies manage the attendant risks while avoiding blocking good ideas?
In this, the second in a series of articles, we discuss how to balance risk and value. Through our zero basing experience across multiple industries, we have observed three key risk management challenges and recommend appropriate responses.
By its nature, a zero basing project raises many opportunities to optimize costs and investments. Leaders need a standard way of assessing risks associated with identified opportunities, and need to routinely challenge employees to debate the scale of benefit versus the associated risk.
This involves embedding a data-led methodology to directly compare risks with potential benefits, taking into account the specific commercial and operational needs of each asset and/or business unit.
A successful zero basing program builds ownership throughout the organization, by putting people at the heart of the process and empowering them to take key decisions wherever practical. This involves separating accountability for generation and selection of options.
A successful zero based program tackles difficult risk issues head-on with a simple, consistent and transparent approach, taking emotion out of the discussion.