Germany’s mid-sized businesses are cutting away their own future.

Germany’s mid-sized businesses are cutting away their own future.

A blanket cost-cutting target quickly identifies costs. It does not automatically identify the costs with the least strategic value.

What I keep noticing in strategy and transformation projects: Savings targets are often discussed in very concrete terms. The harder question is which capabilities the company will still urgently need tomorrow. Blanket cuts can damage precisely those capabilities.

For me, the sequence is therefore crucial: First clarify how the company intends to win in the future. Then decide where costs can be removed — and where deliberate investment is needed.

Anyone who makes blanket cuts first and asks about strategy afterwards risks dismantling their ability to compete in the future at the same time.

Before any major round of cuts, I would therefore ask three questions:

1. Which three capabilities will determine whether we win in the future?
2. Which costs actually contribute to those capabilities?
3. Where might we be cutting away today exactly what we will urgently need tomorrow?

Those who cut evenly everywhere treat strategic differences like rounding errors.

Which capability in your company must be protected despite the pressure to cut costs?

#Mittelstand #Transformation #Strategie