When costs need to come down, the quickest method is to ask every department to cut the same percentage. It looks fair. It is easy to explain. It avoids difficult conversations about which parts of the organisation matter more.
It is also one of the most reliable ways to weaken an organisation. Equal cuts treat a team that is central to future growth the same as an activity that has lingered for years out of habit. The result is often an organisation that costs a little less and performs noticeably worse.
There is a more careful way to approach cost reduction. It takes a little more work at the start and tends to leave the organisation in better shape.
Start with what creates value
Before looking at where to cut, be clear about what must be protected. Ask the leadership team to name the capabilities that make customers choose you and that would be hard to rebuild if lost. These might be a skilled engineering team, long customer relationships held by a few account managers, a reputation for reliable delivery, or specialist knowledge built over many years.
Write this list down and agree on it. It becomes the reference point for every cost decision that follows. If a proposed cut damages something on the list, it needs a very strong case.
This step sounds obvious, but it is often skipped under time pressure. Without it, cuts tend to fall where they are easiest to make, which is rarely where they do the least harm.
Understand where the money actually goes
Most organisations know their costs by department and by account. Fewer know their costs by activity. Yet that is where useful savings are usually found.
Take a few weeks to map the main activities in the organisation and roughly what each costs. Include the hidden costs, such as time spent in meetings, preparing internal reports, chasing approvals and correcting errors. A typical pattern is that a meaningful share of effort goes into work that nobody would choose to do if starting from scratch.
Once you can see costs by activity, sort them into three broad groups:
- Activities that directly create value for customers
- Activities that are necessary to run the organisation safely and legally
- Activities that are neither, or that cost more than they need to
The third group is where to look first.
Look for waste before looking at people
Staff costs are usually the largest item, so they attract attention first. But reducing headcount without reducing work simply spreads the same tasks across fewer people. Quality slips, good people leave, and the work often comes back later as overtime or consultants.
Start instead with the work itself. Common sources of saving include:
- Reports and meetings that continue out of habit. Stop one for a month and see whether anyone misses it.
- Duplicate systems and tools that do the same job in different departments.
- Supplier contracts that have rolled over without review.
- Approval steps that add delay without reducing real risk.
- Rework caused by unclear handovers between teams.
These savings are less dramatic than a restructuring announcement. Together they can be substantial, and they free up capacity for the work that matters.
Involve the people who do the work
Employees usually know where money is wasted. They see the reports nobody reads and the processes that loop back on themselves. In Nordic workplaces, where people are used to being consulted and speaking openly to managers, this knowledge is often readily available if leaders ask for it.
Ask teams directly what they would stop doing if they could, and what costs them time without adding value. Make it clear that suggestions will be taken seriously and that finding savings is different from volunteering for job cuts. Where staff reductions are necessary, follow the formal consultation processes properly and be honest about what is planned.
This is where nøkternhet matters. Sober, practical judgement means looking at the facts, being realistic about what can be saved and avoiding both panic and wishful thinking.
Protect the future while saving today
Some costs are investments in disguise. Training, maintenance, product development and customer relationships can all be cut with no visible effect for a year or two. The damage shows up later, when it is expensive to repair.
For each proposed cut, ask what the organisation will look like in three years if this is done. If the answer is "less able to compete", reconsider. It may be better to make a deeper cut in one low-value area than to trim a little from something that matters.
The aim is an organisation that costs less to run and is still able to do what makes it worth running.
Closing thought
Cost reduction done well is mostly a question of judgement and discipline. Know what you need to protect, understand where the money goes, start with waste, and involve the people who see the work every day. It is slower than a single percentage cut, but the organisation that comes out the other side is stronger for it.