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Zero-based mentality, the new way to take business profitability into account

May 18, 2020

Developing a zero-base approach gives you a comprehensive view of spending and channel savings to invest in activities that drive growth.

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Zero-based mentality, the new way to take business profitability into account
Zero-based mentality, the new way to take business profitability into account

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Thanks to technology and startups, the speed of change will never be as slow as it is today. To survive, businesses need to focus on the part of the investment that is unprofitable and inconsistent with strategies to achieve future growth goals.

Zero-based thinking is a new, more comprehensive approach than zero-based budgeting. Influences profits, growth, sustainability and trust. Developing a zero-base approach enables full visibility into spending and channel savings to invest in activities that drive growth.

Zero-mindedness is about increasing mobility by performing interventions in four areas:

  1. Zero-based spending Allows companies to identify discretionary consumption of unfulfilled overhead in a single view that provides detailed cost visibility. This enables managers to make appropriate decisions that change corporate culture and free up appropriate resources for growth initiatives, capacity improvements and EBIDTA improvements.
  2. Zero-based organizational designs organizing from scratch so that the talent who does not contribute to achieving the desired results will acquire the skills necessary to achieve top performance in the future.
  3. Zero base management optimized Marketing, sales, customer service and price strategy for optimal profitability in the area of ​​customer relationships.
  4. Zero base supply chain identified Theoretical cost of sales and cost reduction options in three key elements – price, performance and added value – while reducing the complexity of products and services.

For companies looking to gain agility to thrive in the “new normal,” where chaos is the norm and the ability to adapt to new market demands is a requirement, a zero-mindset is a must. As a result, companies promote profitability, growth, trust and sustainability and achieve an unprecedented level of competitiveness.