Rightsizing in uncertain times

The most effective way to keep your company’s vehicle firmly on the road during a crisis is through rightsizing.³ Instead of just trimming fuel or shedding spare parts, rightsizing is a strategic full system tune-up – one that looks at both the engine and transmission, aligning the organisation’s structure and operations with current realities and future ambitions. Unlike simple cost-cutting measures, rightsizing involves a comprehensive analysis to identify inefficiencies and optimise processes – all with the single goal of enhancing operational efficiency and resilience.

To implement rightsizing initiatives effectively in today’s landscape, organisations must tackle several critical questions. These considerations are vital for building a compelling case for change, spotting opportunities for optimisation, and driving cultural and operational transformation. As we explore these strategic areas, some key questions emerge:

• How do organisations identify rightsizing opportunities and design scalable, risk-mitigating, efficient solutions?
• How can businesses build a strong case for change to engage stakeholders and speed up rightsizing adoption?
• How can leadership foster cultural and operational change to create an engaged, resilient organisation?

People – not numbers

At Implement Consulting Group, we offer a comprehensive methodology to fine-tune your company’s vehicle for achieving rightsizing amid geopolitical uncertainty. We analyse data and benchmarks to uncover inefficiencies and potential cost savings, with an emphasis on strategic rightsizing that optimises structures and processes without compromising future growth opportunities. These insights, combined with stakeholder interviews and onsite visits for validation, enable prioritisation and focus on the areas that matter most.

However, successful rightsizing is not just about numbers; it is fundamentally about people. At Implement, we see this journey as guiding your company through change with both compassion and clarity.

This makes the way we communicate about change absolutely crucial. Effective communication should engage and start from a positive core story that resonates deeply. In times of transition, fears often revolve around job security, such as concerns about layoffs and cutbacks. Implement's approach ensures that your workforce sees rightsizing not as a threat, but as an opportunity for growth and resilience in an evolving global landscape.

Case in point

To see these principles in action, consider the example of a leading Nordic electronics retailer that successfully applied strategic rightsizing in response to post-COVID challenges. Facing declining consumer demand, rising inflation, and a weakening Norwegian krone, the retailer conducted a diagnostic to identify cost-saving opportunities and developed a strategic plan encompassing both immediate and long-term initiatives.

In this scenario, the retailer’s rightsizing efforts acted like a tune-up for its organisational engine, smoothing operations and enhancing resilience. Two key initiatives illustrate this approach:

Supplier negotiations: By renegotiating prices and terms with large and medium-sized suppliers, the retailer secured 45 MNOK in savings, focusing on strategic re-evaluation rather than merely reducing supplier numbers or compromising product quality.

Facility services optimisation: By transforming facility services across 440 locations, the retailer achieved 55 MNOK in savings by optimising service levels and consolidating the supplier base, streamlining operations while maintaining efficiency – unlike typical cost-cutting approaches that reduce service frequency.

Through these targeted efforts, the retailer generated over 100 MNOK in bottom-line savings, positioning itself to thrive amid geopolitical uncertainty, with structural improvements supporting both immediate and sustainable growth.

Successful rightsizing through ten design principles

We outline ten design criteria for successful rightsizing. Together, they emphasise the need for a scalable and agile operating model that reduces complexity and lowers costs.

1. Scalability: Ensure solutions enable cost-efficient growth and can adapt to changing geopolitical conditions.
2. Simplicity: Aim to be roughly right rather than precisely wrong, focusing on practical and implementable solutions.
3. Centralisation: Centralise operations where feasible, while maintaining proximity to customers to reduce costs and enhance efficiency.
4. Performance-driven initiatives: Base savings initiatives on facts and performance metrics to ensure tangible results.
5. Clear governance: Establish PMO governance at the CxO level to ensure prioritisation and mandate for decision-making.
6. Cost recognition: Ensure cost benefits are realised immediately in responsible leaders' KPIs and actual P&L.
7. Front-office and back-office separation: Streamline processes without compromising sales, quality, and customer service.
8. Capability building: Enhance essential capabilities for future operations, including collaboration and communication across locations and functions.
9. Focus on big-ticket items: Prioritise significant cost reductions in areas such as FTE reductions and external spend.
10. Change communication: Develop a strategy to support the transition and ensure stakeholder buy-in, emphasising the importance of clear and consistent communication throughout the process.

These ten design criteria form a comprehensive framework for rightsizing that cuts complexity and reduces costs to provide instant impact and benefits realisation.

Blueprint for action

To put these ten principles into action, we recommend kicking off with an agile four-step approach to rightsizing that fast-tracks both the identification and realisation of impact:

1. Setting the baseline: Start by analysing current performance data, including FTE costs and external spend, to establish a solid foundation for identifying savings potential.
2. Designing the target picture: Use workshops and feasibility studies to shape the future state organisation and capability map that align with strategic goals and drive efficiency.
3. Consolidating the savings catalogue: Bring together all identified savings initiatives into a single, prioritised catalogue, and develop a phased implementation plan.
4. Implementing the plan: Kick off initiatives immediately after analysis, track progress and cost savings realisation, and secure sustainable transformation through strong governance and effective change management.

Rightsizing approach

Getting rightsizing on the road

Just as a well-tuned vehicle is essential for navigating rough terrain, rightsizing is critical for businesses facing geopolitical uncertainty. By optimising organisational structures and processes, companies can boost efficiency, reduce risk, and manage costs more effectively. Implement Consulting Group’s methodology and design principles offer a clear roadmap to keep your business running smoothly – even in unpredictable conditions. For small to medium-sized enterprises, applying these principles can deliver meaningful gains in operational performance and better equip them to navigate – and thrive in – today's turbulent geopolitical landscape.

Sources

1. Source: Implement based on the Global Economy Policy Uncertainty index​

2. https://industriensfond.dk/nyhed/flere-virksomheder-skal-komme-styrkede-gennem-fremtidige-kriser/

3. https://www.stellenboschbusiness.ac.za/news/2022-07-30-rightsizing-goldilocks-dilemma-business-under-covid-19-pressure