Bain & Company’s latest cost-management analysis, The New Case for Zero-Based Cost Management, explains how a clean-sheet approach to cost discipline helps companies offset rising costs, free up funds to reinvest in growth and resilience, and widen their lead on competitors, even in turbulent times.
Zero-based cost management enables leadership teams to rapidly shrink the firm’s cost base as much as 25 percent and redeploy savings to spur growth, expand operating margins, and boost flexibility and competitiveness. Bain’s 2025 Operations Reinvention COO Survey finds that two-thirds of global executives say new tariffs are forcing them to accelerate cost cuts and price increases.
Bain’s analysis of 5,000 companies globally shows that sustained value creators, those delivering both real top-line growth and positive economic value added over the past decade, have outperformed peers by 150 percent in total shareholder return. These leaders embed profitable-growth capabilities that hold up throughout economic cycles, industries, and geographies, underscoring the role of cost discipline in long-term outperformance.
The brief describes three levels of cost management:
Benchmarking and setting targets – the brute-force approach most companies use, with cost reductions that typically last only one or two years before creeping back.
Redesigning the work – some firms deploy zero-based redesign (ZBR) to reset how work is done, strengthen capabilities that provide competitive differentiation while streamlining functions that are less critical, and tap generative AI for larger productivity gains.
Embedding a cost-management mindset – the few winners that sustain gains treat cost discipline as a strategic priority, build capabilities in people, processes, and technology to create and sustain impact, foster a culture of ownership and continuous improvement, and use zero-based budgeting to reallocate scarce resources to their most productive uses.
The most effective companies share a distinguishing feature when retooling costs: CEO and CFO engagement in a full change management effort. These leaders acknowledge at the outset that cost management requires new skills and a new mindset. They play a major role in shaping the goal and ambition, and design programs that address the potential barriers to change. Finally, they build the strategic case for change, instead of just implementing it. In doing so, they bring the organization with them.
Businesses face an increasingly unpredictable future as costs mount and risks multiply. Those that embrace all three levels of cost management will be able to navigate near-term market shifts, even as they gain a competitive edge for the long term.