They concentrate on only those segments of their businesses that appear to offer the largest rewards and are rarely able to operate at the most efficient frontier on all fronts simultaneously. When costs rise, the attention of management presumably becomes focused more sharply on investments to limit the effects of rising costs.
But if cost-cutting at will is, in fact, currently available, it suggests that a backlog of unexploited capital projects has been built up in recent years, which, if true, implies the potential for continued gains in productivity close to the elevated rates of the last couple of years.