Nearly one-third of executives have already launched contingency plans to mitigate potential disruptions from expected tariff and regulatory changes. What’s more, one-third of corporate leaders list cost management as their most critical priority in the year ahead, according to Boston Consulting Group (BCG)’s BCG’s Guide to Cost and Growth: Strategic Insights for Navigating Economic Uncertainty.
“We remain in a challenging and dynamic business landscape. As a result, we see executives prioritizing cost management, and there is no one-size-fits-all approach. It must be tailored to focus on areas that strengthen the company’s competitive advantage,” says Paul Goydan, managing director and senior partner at BCG. “In a complex and challenging environment, global executives are zeroing in on effective cost management as the primary tool for growing margins.”
Key takeaways:
- Cost management remains a primary goal for the third consecutive year across regions and industries, ranking ahead of growth/expansion and revenue management, and up eight percentage points over 2024.
- The survey also reveals that—despite years of navigating major disruptions ranging from COVID-19 to supply chain upheaval to the rise of AI—40% of corporate leaders feel unprepared for market shocks in 2025. Nevertheless, some leaders are expressing cautious optimism, searching for opportunities to innovate and grow, despite possible turbulence. Given recent inflation and rising interest rates, cost management will be central to this effort.
- The survey respondents achieved only an average of 48% of their cost-saving targets in 2024, and most say their companies struggle to maintain cost efficiencies. Still, many of those surveyed plan to implement and sustain cost savings in 2025.
- In fact, BCG research shows that companies falling short of their cost targets tend to underperform on total shareholder returns by an average 9 percentage points, compared to the average total shareholder return of peers that meet their targets.
- Executives are still focused on growth and expansion for 2025, including innovation programs, with 70% believing they have enough visibility into the medium-term future to make informed investment decisions and 67% planning to reinvest savings from cost-reduction efforts in these areas. Others plan to use their savings to support strategic investments in areas such as talent advancement, sustainability, and operational excellence. And 86% plan to invest in AI and advanced analytics for cost reductions in customer service, sales and marketing, and supply chains.
- According to the survey, the Top 5 cost drivers executives are prioritizing in 2025 are supply chain optimization; product portfolio simplification; operating model and workforce productivity; customer service operations; and sales and marketing.
