Rewriting the Organization’s DNA
BCG helped a global biotech firm achieve $1B in savings and reduce its structural costs by 20%. Here’s how.
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Zero-Based Budgeting
Zero-based budgeting supports large-scale transformation by freeing up resources to drive growth and innovation. BCG’s zero-based budgeting consultants help clients anchor this approach in a culture of cost-consciousness, delivering clear benefits.
Zero-based budgeting is about more than deploying one-time cost-reduction strategies. It’s about using facts to decide how to liberate resources and make smart choices about where to allocate them. Zero-based operations deliver maximum value when they are tailored to an organization’s unique circumstances and embraced by people throughout the business.
Zero-Based Budgeting has Evolved to Enable Lasting Organizational Transformation
Our Approach to Zero-Based Budgeting
- Vision. Articulate why you’re initiating a zero-based budgeting program and what you want to achieve with it. Link the program to your company’s strategy, and design the program specifically for the strategy.
- Governance. Introduce dual-cost accountability to support decision making and enable employees to own, manage, and drive the program.
- Ambition. Lock in business model choices, prioritize saving areas, and establish smart targets.
- Zero-Based Budget. Create a granular and holistic view from the bottom up, challenge the budget rigorously, and integrate targets.
- Performance Monitoring. Set clear mechanisms for tracking costs, including how to address variances and reallocate funds.
- Execution. Devise action plans and milestones. Implement and follow a process for variance and reallocation.
- Reinvestment. Reinvest savings in a way that best drives growth for your company.
- Organizational Culture. Foster a culture of cost ownership by implementing strong performance management policies and effectively communicating about, and managing, the changes that zero-based budgeting requires.
- Transparency. Create full transparency with a detailed baseline, known value drivers, and rigorous analysis of cost and activities. Our proprietary SpendAI engine supports this transparency. The engine combines advanced analytics with machine learning to map transactions to specific cost categories so companies can identify spend by activity and owner. Decision makers can see—in detail—what’s being spent across the organization and can flag opportunities for improvement.
Our Zero-Based Budgeting Client Success
Cutting Costs and Catalyzing Growth with Zero-Based Budgeting
A powerful cost transformation saved a global beverage giant $310M and unlocked $1.1B for future opportunities. Here's how.
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A large oil and gas company wanted to instill cost discipline into its organizational culture as part of a broader transformation. By helping the client apply zero-based budgeting across multiple business lines, we enabled the company to identify up to $300 million in total value unlocked through new ways of working.
Meet BCG’s Zero-Based Budgeting Consulting Team
BCG’s zero-based budgeting consultants and industry experts partner with leading companies to uncover inefficient spending and develop solutions for accelerating growth and transformation. Here are some of our leaders on this topic.
Our Insights on Zero-Based Budgeting
Article
Why Your Zero-Based Transformation Should Start Now
ZBT can do much more than inject cost discipline—it can help companies maintain their strategic momentum even amid difficult economic conditions.
Article
The CFO as the Architect of Zero-Based Transformation
The best approach to zero-based transformation comes from treating all spending as investment and making the CFO a key strategist for generating value.