Scaling by Subtraction: How Reducing Complexity Can Fuel Growth

As companies expand, they often face a paradox: growth brings new resources and opportunities but also introduces complexity that can ultimately slow progress and erode efficiency. This phenomenon, often referred to as the growth paradox, presents leaders with a critical challenge: how to scale without drowning in complexity. The solution may lie in the counter intuitive approach of scaling by subtraction, which involves removing non-essential complexities to fuel growth and streamline operations.

The Growth-Complexity Paradox

In their book "Growth in the Age of Complexity", Stephen Wilson and Andrei Perumal emphasize that excessive complexity often comes from unchecked growth in products, processes, and organizational layers. They argue that companies experiencing rapid growth frequently add new layers of complexity, which drives up costs and distracts from core activities. The authors suggest that reducing this “bad complexity” can free resources, improve efficiency, and ultimately benefit customer satisfaction​.

Robert Sutton and Huggy Rao, in "Scaling Up Excellence", further elaborate on this challenge, pointing out that scaling should not merely mean expanding the organization. Instead, they advocate spreading excellence by removing redundant or non-value-adding tasks, a process they describe as eliminating "bad complexity." Sutton and Rao provide a framework to help leaders identify unnecessary complexities, allowing the organization to maintain clarity and efficiency even as it grows​.

Why Simplification Matters for Sustainable Growth

Reducing complexity isn’t about cutting corners—it’s about focusing on the essentials. In "Waging War on Complexity Costs", Wilson and Perumal outline the financial toll of complexity and suggest strategies for minimizing it to improve overall business agility. For companies seeking sustainable growth, this means regularly auditing their operations, product lines, and workflows to identify and eliminate redundant elements. This "subtraction" approach leads to faster decision-making, reduced overhead, and a more streamlined customer experience​.

Ron Ashkenas, author of "Simply Effective", argues that companies must adopt “streamlined management” practices, which focus on eliminating unnecessary layers of bureaucracy and enhancing direct communication. Ashkenas provides tools for leaders to simplify management structures and reduce decision-making bottlenecks, allowing their teams to act more autonomously and responsively. This aligns with a critical insight from scaling experts: as companies grow, the ability to maintain operational clarity becomes paramount​.

Practical Steps to Scale by Subtraction

1. Identify Non-Essential Complexity
   Not all complexity is bad—certain complexities, like regulatory compliance, are essential. The key is to differentiate between “good” and “bad” complexity. Wilson and Perumal recommend conducting regular audits to pinpoint areas where complexity adds no value. By focusing on the essentials, leaders can remove tasks and processes that don’t contribute directly to growth or customer satisfaction.

2. Streamline Product Offerings
   Scaling by subtraction often involves reducing the range of products or services. For example, Bain & Company’s “Simplify to Grow” framework advises companies to consolidate their product offerings to focus on what resonates most with customers. This approach reduces operational strain and inventory costs while strengthening brand identity by delivering what customers truly value​.

3. Remove Bureaucratic Layers
   Yves Morieux and Peter Tollman, in "Six Simple Rules", emphasize the importance of reducing unnecessary bureaucracy by creating clear accountability and fostering collaboration. As companies scale, they tend to add layers of management to control complexity, which ironically makes the organization slower and less adaptable. Simplified management structures empower teams to make quicker, customer-focused decisions​.

4. Focus on Core Competencies
   Scaling doesn’t mean diversifying at every turn; instead, it’s about building upon core strengths. Sutton and Rao suggest that organizations should avoid the temptation to over-expand into unrelated areas and instead focus on what they do best. This approach reduces complexity and allows the organization to scale up its core strengths without stretching resources thin​.

Case Examples of Scaling by Subtraction

Many companies have successfully implemented scaling by subtraction:

• Consumer Goods Companies: Bain & Company observed that consumer goods companies often succeed by simplifying their Stock Keeping Units (SKU) to focus on high-demand products, thereby reducing complexity and operational costs while better aligning with consumer needs​.

• Tech Startups: Many tech companies have adopted lean methodologies to streamline product development, cutting out features that don’t add value and focusing on high-impact improvements. This practice has allowed companies to remain agile and responsive as they grow.

The Benefits of Scaling by Subtraction

Simplifying operations and reducing complexity can offer several benefits:

• Improved Efficiency: By removing redundant tasks and layers, organizations can operate more smoothly, reducing bottlenecks and enhancing productivity.

• Increased Agility: Streamlined processes allow companies to respond more quickly to market changes and customer needs.

• Cost Savings: Eliminating non-essential complexities reduces overhead and reallocates resources to high-impact areas, which supports profitability.

• Enhanced Customer Satisfaction: Simplifying offerings and improving service workflows create a better experience for customers, which drives loyalty and growth.

Final Thoughts

Scaling by subtraction might seem counter intuitive, especially in a business world that often equates growth with expansion. However, as experts like Wilson, Perumal, Sutton, and Ashkenas emphasize, sustainable scaling depends on focusing on what truly matters. By adopting a “less is more” approach, leaders can fuel growth that is not only robust but also resilient, ultimately positioning their organizations for long-term success in an increasingly complex world.