Powering a Cost-Focused Culture

Onetime cost cuts are seldom enough to truly change an organization. Instead, an energy company embedded new behaviors and mind-sets for sustainable gains.

A large energy company asked BCG to help reduce costs in a key division and—more important—build and deploy a strong cost culture. (The company had undergone cost-cutting exercises in the past, but these efforts did not address the corporate culture, and thus had not led to sustainable change.) Among other aspects, the new effort would lead to cost ownership, stronger accountability, and greater adherence to budgets. 

BCG took a bottom-up approach to assess the current culture and determine how employees felt about the initiative. It surveyed 15,000+ employees to evaluate the degree to which they were ready, willing, and able to change. By analyzing the results, BCG was able to identify the five biggest strengths and weaknesses of the current cost culture, which shaped the case for change and overall design of the change program.

A Three-Year Effort

The company rolled out a three-year cost reduction plan and a four-step communication and change management plan to revamp its culture. Specific measures included a new performance review cycle (giving employees and managers greater visibility on their progress against targets), greater accountability (making people at all levels directly responsible for costs), and a mind-set of continuous improvement (empowering individuals to identify and implement new cost reduction initiatives). The company also leveraged Smart Simplicity to understand employee behaviors and decisions, and reshaped the context to foster greater cooperation.

BCG rolled out a three-year change management plan to revamp the company’s culture.

Next, BCG implemented Rigorous Program Management to ensure both country business units and headquarters had visibility into the initiative portfolio, allowing for forward-looking course corrections. As a result, the new culture took root, and the company positioned itself for superlative cost performance in its industry.