Strategic & Operational Cost Management (SOCM)

With the change in the economic climate many enterprises - small, medium and large; will be faced with financing challenges – both strategic (debt financing) and operational (cashflow). But these challenges have been faced by enterprises in Ireland and overseas over many years and, based on proven experience of strategic and operational cost management. Taking from my corporate and consulting experience over the past 20 years, I have developed an accelerated approach to identifying and prioritise cost management opportunities. This “hypothesis-led” approach complements the other Enterprise Healthcheck tools and allows an enterprise to action the optimum cost management (reduction) opportunities based on both strategic and operational priorities. For want of a better name I will efer to this approach as SOCM.

Strategic (tomorrow) AND Operational (today) approach
The SOCM is an accelerated approach to cost management – where “best practices” have been embedded in the project methodology and tools. Then, using a hypothesis-led approach (identifying the most likely 20% of the enterprise where 80% of the costs/savings will lie), accelerates the review – ensuring speed of delivery and minimum project costs. The proven cornerstones for successful cost management reviews:
+ Creation of an integrated, hypothesis-led programme
+ Focus on realising benefits early
+ Achieving buy-in and sustaining the savings

Because “best practice” and past experience of cost management are directly incorporated into the project methodology, organization and tools (see the graphics), project quality is equally embedded, supported by proven project management techniques plus the experience of the consultants that will work with the enterprise.

Applying Best Practices
A critical element of any cost management review is to understand where costs are actually incurred during the ongoing operations of the enterprise. Based on “best practice” and past experience I have developed the SOCM Cost (Value) Chain – a way of looking at an enterprise from the five areas that both incur costs and generate value.


Hypothesis-led approach
Hypothesis-led approach involves working with senior management in the initial stage of the SOCM project, identifying priority areas – based on enterprise-specific insight & experience; where managers believe cost saving opportunities exist.

An SOCM question-based “ready-reckoner” has been developed, incorporating “best practice” & past experience, to facilitate hypothesis generation. Once identified, this approach ensures that the review focuses on areas that are known to be costly or where senior managers believe that costs could (or should) be managed better.


In addition to analyzing costs (as part of an SOCM review) there are also sound cost management disciplines and principles that are incorporated into an SOCM review:

SOCM Principles:
 Strategy
 Incentives & Controls
 Business Design
 Cost Management
 Continuous Improvement

SOCM Disciplines
 Strategic cost management
 Cost transparency
 Management tools
 Cost culture
 Continuous improvement

Business Mentoring – a group (peer) based approach

Drawing on my experience of business mentoring to a group of as part of the PLATO mentoring programme I identified seven phases of the mentoring process during the programme. The challenge for the mentor throughout the programme is to broaden the scope of issues to accommodate all participants, without losing the focus in specific issues that may benefit individuals.

The Mentoring Process incorporates the key aspects of proven mentoring programmes and also looks to incorporate a structure that allows for risks to be reduced and to successfully manage the learning transition from group to individual.

1.Meet, as PLATO engage in the participant selection in advance the first real encounter between participants and mentor is the first meeting.
2.Plan, brain-storming the types of issues and challenges that face the participants.
3.Credibility, continuously & consciously building credibility between the group leaders & the group and between the participants.
4.Share, the peer-to-peer dialogue around the issues, challenges and potential solutions - drawing on facilitation skills & guest speakers.
5.Accompany, encouraging participants to "take-away" things from each meeting that may help them in their personal &/or enterprise development.
6.Action, where commitment to the group and to each other is demonstrated over the course of the programme.
7.Network, encouraging the participants to continue the relationships that they have built with each other and to share potential contacts with each other beyond the programme.



Establish, build and maintain credibility:
Credibility is built during the initial stages of the mentoring process – when the participants first meet at the launch and the sponsor companies (Mazars in my case) are introduced as large, credible organisation whose staff (credible by association) have volunteered to support the programme. First impressions may or may not have a part to play, given the context (hotel, drinks, etc.) but the message from PLATO of matching & mentoring does set an expectation that establishes an initial level of credibility.

Planning the overall content of the programme at the launch and initial group meetings further builds credibility as it shows the group that their priorities are the focus of the programme. The difficulty is to ensure that the topics selected are broad enough for all participants so that none are left out (or behind).

And the peer-2-peer nature of the programme and the meetings, where individuals share their concerns and experiences with the other group members builds a degree of consolidation within the group – where they are confident to discuss topics and give advice to each other. The best example of this related to merchant payment services, where the group discusses the pros & cons of creditcard payments and how to approach merchant service providers to obtain the best rates.

Engagement, participation and progress of the group:
Drawing on the programme plan, the sharing of experience plus accompaniment of the individual group members together, through the PLATO meetings did allow for individuals to progress. Again, best explained by an example where Irish recruitment Partners, drawing on some of the insights and general personal support that he received from the group, progressed with his franchise plans – not as originally anticipated (where he would franchise his operations to others) but by becoming a franchisee for an international online recruitment service – where his Irish business remained, but was complemented by an international element.

Personal development (of the individual group members):
The engagement, participation and progress of the group, linked to the individual successes of participants within the group, reinforced for me the need to incorporate “action-planning” into the overall programme. Not what you must do for next month, but rather what must you do if you want to progress this idea, this initiative, resolve this problem – giving a tangible output to the meetings for those participants who needed to translate sharing & accompaniment into action.

Following on from this was also the opportunity to support the individuals in building their networks – bringing the programme beyond the monthly meetings (and the end of the programme). There were some opportunities for networking with the group, but more interesting was learning from some of the members about techniques such as “Contact Spheres”.

Encouraging the participants to engage in the various PLATO training programmes, so as to learn new things but also meet new people (potential clients or contacts) is a natural extension of the PLATO mentoring programme into the network (future) phase of my mentoring diagram above.