Is Cost Reduction Just About “Stopping” Something?

When companies aim to cut costs, they often try to reduce expenses by stopping or discontinuing certain services or operations.
Certainly, halting the use of a service or system seems to reduce costs at first glance.

However, there is a crucial pitfall here.

Stopping Also Incurs Costs

When introducing new services or systems, companies naturally incur costs such as implementation fees, training, and labor expenses.
This is widely understood.

However, many companies overlook that stopping or discontinuing something also often requires similar costs.
Procedures for service termination, system shutdowns, and communication or coordination with stakeholders all require time and expenses.

What Does “One Step Forward, Two Steps Back” Mean?

There is a proverb, “one step forward, two steps back,” which originally means that even though you try to make progress, you end up slipping backward.

In this context, it can be explained as follows:

• “One step forward” refers to making progress by introducing a service or system and achieving positive effects.
• “Two steps back” refers to the situation where, in addition to the initial implementation costs, additional costs are incurred when stopping the service—resulting in paying twice over.

In other words, even if you take one step forward to achieve improvements, the added costs to stop the initiative cause you to effectively move backward.

Put simply:

We describe “achieving results” as one step forward, and the double costs incurred when stopping as two steps back.

While these two intentions differ, this phenomenon highlights the possibility that the introduced service or system either did not deliver sufficient value or its operation was not fully established.

Put another way, if systems or services are the first targets for cost reduction,
it may also indicate that their introduction was limited or their effectiveness was not strongly felt.

Toward True Cost Reduction

True cost reduction is not just about stopping something to cut expenses.
It involves revisiting the business processes themselves and pursuing efficiency and productivity improvements.

• Accurately understand current operations and eliminate wasteful steps
• Reduce burdens through appropriate systems and technology
• When deciding to stop something, consider not only short-term costs but also mid- to long-term perspectives

Without such efforts, you face a vicious cycle where initial implementation costs plus stopping costs sum up to a net regression instead of progress.

Summary

• Cost reduction is not just about stopping things but about improving efficiency and increasing value.
• The “one step forward, two steps back” situation refers to costs incurred at both implementation and stopping stages, which must be avoided.
• Aim for sustainable management through creativity and a long-term view.

When undertaking cost reduction, it is essential first to recognize the fact that stopping incurs costs too,
and to maintain a perspective focused on fundamental improvements.