Editorial: Costs versus value
'They know the cost of everything and the value of nothing' is an accusation regularly hurled by agency folk at finance directors and their henchmen, procurement officers. Certainly, costing the worth of creative work is an extremely difficult task and agencies are often entitled to be frustrated. Nevertheless, we mostly all assume that driving waste out of the business is generally a good thing. But there is an important distinction between costs and waste that is rarely as self-evident as FDs often assume. The phrase 'we can't afford x or y' is never a statement of fact, simply a judgment on relative priorities.
So we are proud to publish as our lead article in this issue the prize-winning article by Jules Goddard of the London Business School that challenges and successfully refutes the obsession with squeezing costs out of business. Goddard draws from an impressive array of studies and concludes that the preoccupation with driving down costs by such actions as outsourcing and offshoring is a toxic strategy, despite its support by eminent business gurus such as Michael Porter.