While the price of crude oil dropped by more than half in 2014, many oil & gas executives found the need to cut costs. As occurs in almost any industry downturn, capital budgets were slashed; projects and assets abandoned, and massive layoffs ensued.
Many executives view such crises as an opportunity to transform their company by taking out large chunks of non-value added costs and overhead that quietly crept into the company during better times. Executives also wonder how they can sustain this reduction in waste. They don’t want to this to be a one-time purge.
For that reason, many executives are wondering how they can address their “cost culture” or “spend culture” with the belief that if they can get people to be more conscious about what they spend, they can avoid such dramatic cuts during the next downturn. So how do you change the “cost culture”? That’s the million-dollar question (or more often $100 million dollar question). Following, are five steps to take now if you want to sustain the benefits of your most recent cost cutting cycle.
Do companies actually do this? As a matter of fact, they do! Companies like Koch Industries have used the concept of decision rights to create a culture of entrepreneurship and value creation (see Chapter 6 in Charles Koch’s book The Science of Success). If you would like to talk more about how you can apply these principles in your company, don’t hesitate to email me at: [email protected].