Cost discipline handbook widely used by buyout and turnaround operators
Fifer ran a consulting firm specialising in cost reduction and wrote this as seventy-eight short rules for raising profit quickly. It is aggressive, prescriptive and deliberately uncomfortable, and it has circulated among private equity operators and founders for decades.
The organising distinction is between strategic and non-strategic costs. Strategic costs are those that directly generate revenue or competitive advantage, and Fifer argues these should be increased, not cut. Non-strategic costs are everything else, and he argues they should be attacked without regard to what is reasonable. His methods for the second category include setting budgets at a fraction of last year's spending and requiring justification for any increase rather than any decrease, refusing to approve any expenditure that does not have a named revenue consequence, demanding that suppliers cut prices immediately with a credible threat to leave, and paying invoices late as a matter of policy.
On revenue he argues for pricing at what the customer will pay rather than at cost plus margin, for firing unprofitable customers, and for concentrating sales effort on the accounts that produce most of the profit.
The management style he recommends is confrontational, and he is explicit that the person doing this will be disliked. Several of the tactics, particularly the supplier payment and negotiation methods, damage relationships in ways that carry costs he does not account for. The book has no evidence base beyond his consulting record, and readers should treat it as one aggressive approach to cost that works in specific situations rather than as general management advice.
Operators taking over an underperforming business who want an aggressive playbook for cost and pricing, used with judgement about the relationship costs.
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