No matter how well a business prevents cost inflation, it will still have to cut costs. This is because businesses are like people, and people can get sick no matter how carefully they exercise and control their diet. So, a time always comes when there is need for cost cutting. And when that time eventually comes, management usually asks, “How can we make this operation more efficient?” It is the wrong question. The question should be, “Would the roof cave in if we stopped doing this operation altogether?” And if the answer is “Probably not”, the operation should just get eliminated. It is always amazing how many of the things we do will never be missed. But businesses that actually succeed tremendously in cost containment don’t wait until they have to cut costs. They build cost management into their normal operations.
PETER DRUCKER - Corpedia Online