A New Cost Agenda for Growth
Australian and Queensland businesses have now firmly entered a growth cycle. A cautiously rising tide of consumer confidence has businesses dusting off their capital investment plans, ramping up marketing activities, and revising sales targets. However, market and macroeconomic uncertainty has CFOs caveating their expansion plans. There is explicit acknowledgment that consumers remain skittish, cost-of-living concerns are real, and this rising tide will not be sufficient to cover any rocks.
This is creating a strange, almost bipolar focus whereby CFOs are loosening the purse strings on what they see as needle-moving growth initiatives, while simultaneously pulling costs ruthlessly from other areas of the business. Cost transformation in this context is not about austerity; it is about freeing resources to fund the future.
Today’s cost reduction programs are also different in nature. More sophisticated and holistic, they are less about shaving budgets and one-off efficiency drives, and instead focus on structural changes that redefine what work is done and how it is done.
Why cost cutting programs historically fail
Most cost transformations fail not because of flawed intent, but due to fragmented focus and weak execution discipline. Organisations often start with narrow ambition, targeting superficial cost issues rather than structural inefficiencies. This results in short-term savings without lasting impact. At the same time, fragmented efforts spread resources across too many disconnected initiatives, diluting executive attention and momentum.
These structural weaknesses are compounded by a complacent culture where leaders and employees lack accountability for delivery, and by execution uncertainty arising from the absence of clear governance, transparency, and program management frameworks. When these four forces converge, cost programs become activity-heavy but outcome-light—failing to embed cost discipline, sustain behavioural change, or translate reductions into improved enterprise value.
A new approach to cost reduction
Align Costs with Strategy – “Fit to Win”
Bold CFOs recognise that costs and strategy must be tightly linked. An emerging approach, often termed fit to win, encapsulates this principle. Rather than across-the-board cuts, fit-to-win focuses on getting “fit” by removing costs that do not drive growth or competitive advantage, and then “winning” by reallocating those savings into high-impact strategic bets. This ensures that every dollar saved is a dollar reinvested in future momentum—funding new products, digital capabilities, or market expansion. Crucially, cost targets are set in line with strategic ambition, not in isolation.
Research shows that separating cost programs from strategy often leads to short-term fixes that undermine long-term competitiveness. In contrast, a fit-to-win mindset treats cost reduction as a strategic enabler: a way to sharpen the business for the battles ahead.
An example of the fit-to-win approach is ANZ Group’s 2025 transformation programme, which targets approximately A$800 million in savings by cutting around 4,500 roles (primarily in head office, retail, and technology support) and exiting non-core businesses such as the online shopping cashback platform Cashrewards. The bank is streamlining overlapping systems and management layers, and reinvesting the savings into digital banking, upgraded customer platforms, and frontline lending to accelerate growth and sharpen its competitive position.
Fit to Win can be visualized as a virtuous cycle:
- Focus (Cost “Fitness”): Identify and eliminate activities, products, or overheads that do not contribute to the strategy or differentiate the business. This might mean exiting non-core businesses, discontinuing low-value projects, or streamlining bloated functions. The aim is to shed “unfit” cost weight, all those expenses not essential to winning in target markets.
- Fuel (Reinvestment to “Win”): Take the savings and redeploy them into growth engines: funding innovation, strengthening core capabilities, and doubling down on areas that drive competitive advantage. Cost savings thus become an investment source for strategic initiatives (e.g. digital platforms, R&D, customer experience) that propel the top line and future-proof the enterprise.
By coupling cost fitness with strategic fuel, CFOs ensure cost programs deliver more than margin improvement—they finance the business’s next chapter. Every efficiency gained is repurposed to reinforce the company’s strategic position, creating a self-funding mechanism for growth. This alignment of cost and strategy is fundamental to cost transformation success.
Twin Engines: Structural Reset and Operational Excellence
Cost fitness should be considered explicitly through two lenses, simultaneously attacking structural cost drivers and boosting day-to-day efficiency. In practice, leading organisations run twin transformation engines in parallel:
Engine 1 – Reset the Business (Structural Moves):
This is the strategic, structural transformation of the company’s cost base. It involves making bold moves that reconfigure how the company creates value: its portfolio, footprint, and operating model. CFOs might ask: “If we were to design our business from a clean sheet, what would it look like?” The answers can include divesting non-core divisions, consolidating redundant sites, redesigning the organisation, or reinventing delivery models.
These moves often leverage technology (e.g. automation, digital platforms) or business model innovation to remove structural inefficiencies. The key is that these changes fundamentally alter the cost structure—they are not about trimming around the edges, but rethinking what the business should do and how it should do it.
Structural resets take courage (they may temporarily disrupt the business) but they unlock significant, sustainable cost advantage aligned with long-term strategy.
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Cost transformation in this context is not about austerity; it is about freeing resources to fund the future.
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Engine 2 – Best at Basics (Operational Quick Wins):
Alongside bold structural moves, companies pursue rapid efficiency improvements in the here and now. This means being “best at the basics” of running lean operations. CFOs target a series of quick wins and continuous improvements: streamlining processes, tightening spend policies, automating routine tasks, and optimising working capital.
Many of these gains come from smart automation and digital tools deployed in everyday operations. For instance, robotic process automation or AI algorithms can instantly handle invoicing, financial closing, or procurement workflows that used to require dozens of staff-hours, freeing teams for higher-value work. These near-term initiatives create immediate value, often delivering savings within months. Just as importantly, early wins generate momentum and credibility for the broader program.
Running these two engines together ensures balance. The structural engine prevents the program from devolving into short-lived cost cutting; the operational engine ensures that bold plans are grounded in near-term financial gains. Notably, integration is critical—the structural and operational tracks must be linked under a unified execution plan. Too often, companies treat major transformation moves and daily performance management as separate silos, leading to misalignment.
Downer EDI Ltd is a standout Australian example of the “twin-engine” transformation model, combining structural reset with operational excellence to deliver lasting cost reduction. The company restructured its operating model by divesting non-core assets, consolidating business units, and targeting A$175 million in annual savings by FY25, while simultaneously achieving A$130 million in operational efficiencies through workforce optimisation and tighter procurement. This dual approach of strategic redesign and disciplined execution has restored performance, strengthened margins, and positioned Downer for sustainable profitability.
Zero-Based Reinvention: Cost Discipline as a Culture
Many CFOs are turning to zero-based budgeting and design as a powerful methodology to instil cost discipline and challenge entrenched assumptions. Zero-based cost management means starting from a “zero” base each planning cycle—rebuilding budgets and processes from scratch rather than basing them on historical spend. This forces an objective look at what spending is truly needed to create value.
Modern zero-based approaches go beyond the budgeting exercise; they embed a mindset of ownership, transparency, and accountability for every cost. By demanding justification for each expense and activity, organisations surface inefficiencies and hidden waste that would otherwise be accepted as the status quo.
A comprehensive zero-based cost reduction program would typically utilise three key approaches aimed at reducing expense levels.
a) Targets and Controls (Basic Level):
Set aggressive cost targets and enforce spending controls. This is the classic approach—leaders benchmark costs and mandate across-the-board cuts or efficiency targets for business units. While necessary, this alone often yields temporary savings that erode after a year or two as old habits return.
b) Process Redesign (Intermediate Level):
Redesign how work gets done to remove complexity and cost permanently. This involves operating model changes and technology—for example, streamlining workflows, automating manual tasks, and adopting a zero-based redesign of processes from the ground up. By reimagining processes “future-back” (envisioning the optimal end-state and working backwards), companies eliminate unnecessary activities and build more efficient ways of working.
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c) Mindset and Culture (Advanced Level):
Embed cost-conscious thinking into the organisation’s DNA. This highest level is what separates the few companies that sustain savings from the many that see costs creep back. It means training managers to continuously question expenses, tying cost savings to performance incentives, and building cost accountability into planning and review.
Zero-based budgeting plays a key role here as a capability-building tool: it teaches managers to think critically about spending and to constantly seek opportunities to reallocate resources to their most productive uses. Companies with a true cost culture establish routines (e.g. monthly efficiency forums, cost dashboards) to monitor and sustain the gains.
Finance leaders (CFOs in particular) champion this culture by setting the tone at the top, ensuring that cost discipline is rewarded and that it never compromises strategic priorities or compliance standards.
Figure 1 – Company approach to cost reduction
Sources: S&P Capital IQ; Study of 20 companies across industries; survey of more than 100 C-level executives; Bain analysis
By operating on all three levels, CFOs create a self-reinforcing system: policies control costs upfront, process innovation drives out waste, and culture locks in the improvements. This comprehensive approach is why zero-based cost programs, when done right, have evolved into a “no-regrets move” for volatile times. Cost discipline becomes a strategic capability of the organisation (as ingrained as quality or safety) ensuring the company can thrive even as conditions change.
Bega Cheese Limited exemplifies three-level cost management, achieving A$165.1 million EBITDA (up 15%) and reducing net debt by A$41.2 million in FY2024. The company combined strict cost controls and overhead reductions with process redesign (rationalising sites and streamlining supply chains) while embedding a culture of cost discipline through leadership accountability and continuous improvement. This integrated approach turned efficiency into sustained profitability and long-term resilience.
Tech-Enabled Cost Programs for the Digital Era
No strategic cost transformation today is complete without leveraging digital technology and AI. In the past, cost reduction was often about labour cuts or procurement negotiations; now, analytics and automation are unlocking a new wave of efficiency. CFOs are increasingly deploying AI-enabled cost programs that target waste and optimise processes with unprecedented precision. For example, advanced analytics can scan thousands of procurement contracts to identify overspending or suggest more efficient vendor terms. Machine learning models can analyse operational data to detect patterns (such as which activities drive up maintenance costs or where supply chain buffers are excessive) and recommend cost-saving actions.
In the finance function itself, AI “agents” and bots can handle routine accounting, reporting, and compliance tasks around the clock, radically reducing manual effort. One global company recently introduced over 20 AI-driven bots in its procurement process, eliminating tedious manual work and delivering substantial savings in a short time. These digital initiatives illustrate how technology can compress cycle times and remove human error, yielding both cost savings and performance improvements.
However, leading CFOs caution that technology is a means, not an end. The real gains from digital solutions come when they are paired with process redesign and strategic focus. Simply automating a broken process will yield only limited benefit—the process itself must be reimagined.
For instance, using generative AI to accelerate a workflow can save time, but if the workflow’s purpose is unnecessary to begin with, the savings will plateau. Therefore, the best practice is to combine tech enablement with zero-based thinking: first streamline and rethink the work, then apply automation or AI to execute it more efficiently.
The CFO as Transformation Leader
For a strategic cost program to succeed, it requires bold leadership, and CFOs are increasingly at the forefront of these efforts. As the guardian of financial performance and strategic capital allocation, the CFO is uniquely positioned to drive a holistic cost transformation. In practice, this means setting an ambitious cost agenda (grounded in the company’s strategy), mobilising cross-functional teams, and relentlessly focusing on execution and results. CFOs who lead by example often start with their own finance function—streamlining and digitising finance processes to signal commitment and build credibility for broader change.
By achieving early cost wins in finance (through measures like automating reports, consolidating systems, or delayering organisations) CFOs demonstrate what’s possible and gain the moral authority to challenge other functions to do the same.
Critically, CFOs must maintain a balance between efficiency and enterprise health. Cost initiatives should never undermine the company’s capabilities in risk management, compliance, or decision support. The best CFO-led programs apply a scalpel, not a sledgehammer, protecting or even enhancing the core strengths of the organisation while cutting out waste. CFOs also play a key role in ensuring clarity and transparency throughout the transformation. By establishing clear metrics, targets, and communication channels, they keep everyone focused on value creation, not just expense reduction. Finally, a CFO’s strategic influence is essential in positioning cost transformation as a value story to stakeholders. Internally, they cultivate the narrative that “efficiency fuels growth,” aligning teams around the positive vision of a stronger company.
Conclusion: Cost Excellence as a Competitive Advantage
In the coming years, the ability to continuously optimise costs while funding growth will separate the leaders from the laggards. Structural cost reduction, done in a strategic, framework-driven way, equips companies to navigate economic turbulence and emerge stronger. CFOs and senior finance executives are the architects of this evolution. By deploying the right frameworks (from fit-to-win’s strategic alignment to zero-based discipline and phased transformation roadmaps) and fostering a culture of cost-conscious innovation, they turn efficiency into a source of competitive advantage.
The message of today’s best practices is clear: cost transformation is not about cutting to survive, it’s about cutting to win. Savings are not an end, but a means—a means to invest in the capabilities, technologies, and opportunities that propel the business forward.
Luke Ingles
Managing Partner
luke@barcley.com.au
Sanuri Da Silva
Senior Consultant
sanuri@barcley.com.au
About Barcley Consulting
Barcley Consulting is a boutique management consulting firm based on the Gold Coast, focused on helping corporations and government with strategy, innovation and execution. For more information on their other publications, please visit www.barcley.com.au