"Monty Python and the Holy Grail" is one of funniest movies I’ve seen. One of my favorite scenes is the Black Knight skit. For those who haven’t seen the movie, you can watch the five-minute scene here (although I recommend you watch the whole thing). In the scene, King Arthur tries to cross a bridge, but the Black Knight refuses to let him pass. They enter into a sword fight and King Arthur cuts off the Black Knight’s limbs one by one. The Black Knight responds:
After his left arm, “'Tis but a scratch.”
After his right arm, “Just a flesh wound.”
After his first leg, “I’m invincible!”
After the second leg as King Arthur crosses the bridge, “Oh I see, running away then... Come back here and take what's coming to you. I'll bite your legs off!”
I’ve always thought of cost cutting to be like a surgical procedure where a doctor wants to remove diseased tissue and ensure the patient stays alive and gets better. However, it seems that cost cutting in energy companies looks more like the Black Knight in Monty Python and the Holy Grail, with companies continuing the fight although they’re missing arms and legs.
I admire the gumption of the Black Knight, but this is no way to go about executing cost cutting measures in your business. Here’s why:
In the movie, King Arthur does the cutting and the Black Knight has no say. When executing cost cutting measures, it's best if management decides what to cut. Letting analysts, board members, and other external parties make these decisions won’t work because they don’t have the insight into your long-term strategy and/or the full understanding of your current position.
There's no way for the Black Knight to fully recover after losing his arms and legs. Likewise, overzealous and under planned cost cutting can leave your organization critically wounded. Instead, use a deep understanding of your current state and long-term strategy to eliminate costs today that don’t impair your future. Try to make these cuts scalable so they can be reversed when the up cycle returns. Use a scalpel, not a sword.
In the end, even as courageously as the limbless Black Knight fights, King Arthur crosses the bridge. When making cuts, understand what elements of your business are critical to the bottom line and competitive position, and begin cutting elsewhere. Otherwise, you might be opening a door for your competition to pass you.
Trenegy's three-step methodology clearly confirms what needs to be cut, maps out how the trimming can be done in a scalable way (which allows for future growth), and ensures you stay ahead of your competition.
Survey: Clarify your strategy, the levers that drive your bottom line, and your current processes, organizations, and systems.
Target: Develop a clear vision of what your organization, processes, and systems should be to achieve your strategy while lowering costs.
Roadmap: Prepare a detailed step-by-step plan to achieve your cost reductions rapidly (while maintaining a healthy organization) that provides quick wins.
When times are tough, cost restructuring is necessary, but bravery alone will not get you through it. To paraphrase King Arthur, although you may be indeed brave, don’t be a loony.
