The Boring Work That Moves Billions
Cost programs often aren’t exciting - but they can have a bigger impact on your business than most growth strategies
Every leadership team talks about cost. It’s a permanent fixture on board agendas. There are monthly dashboards, quarterly reviews, and the occasional “strategic procurement” initiative. So in that sense, cost isn't ignored - but it's often over-referenced.
However, in practice, real cost transformation is surprisingly rare.
That’s because while cost is often discussed, it’s rarely attacked. True, first-principles cost improvement - where a business reevaluates not just how much it pays, but why it’s buying what it buys - requires something most organisations are reluctant to give: focus, discomfort, and a willingness to challenge the status quo.
But when done right, this work can quietly add hundreds of millions to a company's bottom line - and billions to its valuation.
Let’s walk through why.
Cost Drives Enterprise Value—Far More Than Most Leaders Think
Imagine a company with $1.5 billion in revenue and a healthy EBITDA margin of 20%. That’s $300 million in earnings. At a standard multiple of 12x, its market value sits at around $3.6 billion.
Now picture a successful cost initiative that reduces the company’s operating expenses by just 10%. Given an implied cost base of $1.2 billion, that’s $120 million in savings - most of which flows straight through to EBITDA.
EBITDA grows from $300 million to $420 million. Apply the same 12x multiple, and suddenly the business is worth $5.04 billion.
That’s a 40% increase in market cap (an additional $1.44 billion!) - driven not by a bold new product, not by revenue growth, but by quiet, disciplined, line-by-line cost work.
The Lower the Margin, the Bigger the Explosion
What makes cost transformation even more compelling is that its impact is amplified in low-margin environments. Take two businesses, each with $1.5 billion in revenue:
The first operates at a 10% margin - $150 million EBITDA.
The second at 5% - just $75 million in earnings.
If each cuts their cost base by 10%, the first adds $135 million to EBITDA (raising it to $285M), while the second adds $142.5 million (raising it to $217.5M). The first sees an EBITDA boost of 90% (almost 2x). The second? Nearly 3x the original size.
For businesses operating with tight margins - retailers, logistics operators, manufacturers - this is game-changing. One well-run cost program can double your profit. And the market will reward you accordingly.
So Why Doesn’t It Happen More Often?
Because it’s uncomfortable. Real cost transformation isn’t about shaving 2% off the stationery budget. It’s about challenging long-held assumptions:
Are we specifying materials or services beyond what we need?
Have we locked ourselves into supplier relationships that haven’t been renegotiated in years?
Are our vendors profiting more from our inattention than their performance?
This work requires cross-functional collaboration. Finance, procurement, operations, engineering, legal. It means surfacing unflattering truths. It forces business units to answer difficult questions about historical decisions.
It’s not glamorous. But there is impact—real, quantifiable, high-multiple impact.
What Cost Transformation Actually Involves
At its core, a good cost transformation program follows a simple logic:
You begin by getting visibility - mapping your cost base in detail. You can’t change what you don’t understand. You’d be surprised how often companies lose sight of what they are actually buying.
Then you look for patterns: categories with heavy spend but low scrutiny, specifications that exceed business need, suppliers who’ve grown complacent behind multi-year agreements.
You form hypotheses. Maybe you're overpaying for logistics. Maybe your software contracts are loaded with unused licenses. Maybe your service agencies are charging legacy rates.
Then you test those hypotheses. Benchmark against peers. Rethink specifications. Conduct clean-sheet pricing exercises. Run supplier RFPs. Renegotiate. Re-source.
You operationalise the savings. Construct business cases and convince business leaders to make the changes. Build tracking mechanisms. Hold owners accountable. Make sure the savings flow through to the P&L - and stay there.
This work is part detective, part negotiator, part reformer, part motivator. It’s unglamorous, but it’s foundational.
When to Consider External Help
In many cases, internal teams are more than capable of delivering meaningful cost improvements. They know the suppliers, understand the technical requirements, and have the trust of the business. If given the time and mandate, they can often make significant progress.
But that’s a big “if.” In most organisations, day-to-day responsibilities already fill the calendar. Carving out space for a focused, commercially aggressive cost program - especially one that cuts across functions - can be a real challenge.
That’s where external support can be useful. Not essential, but worth considering.
External teams can bring a few things that accelerate progress: experience from other industries, structured playbooks for sourcing or re-specification, and the ability to focus entirely on the cost program without being pulled into operational firefighting.
They also bring a fresh set of eyes - less tied to legacy decisions, less influenced by internal politics. And because they’re not permanent, they’re often better suited to the “surge” nature of transformation work: come in, help get it done, and roll off.
It’s not about handing over the reins. It’s about being pragmatic - using the right combination of internal knowledge and, where needed, external capacity to get results.
In Closing: The Work That Moves the Needle
In today’s environment, investors are sceptical of narrative-driven growth stories. What they want is discipline. Predictability. Real earnings.
And that’s what cost transformation delivers.
The irony is that the work that drives the greatest enterprise value is often the least celebrated. There’s no TED Talk about it. No ad campaign. Just the quiet confidence that you’re running a tighter, smarter, more valuable business.