Fat vs. Muscle Diagnostic
A framework for determining whether cuts are eliminating waste (fat) or essential capacity (muscle).
A framework for determining whether cuts are eliminating waste (fat) or essential capacity (muscle). Perfect efficiency is fatal - 10-20% waste provides necessary slack for adaptation and experimentation.
When to Use Fat vs. Muscle Diagnostic
Use during cost-cutting exercises, layoffs, or any resource reduction to ensure you're cutting waste rather than essential capacity. Critical for avoiding the starvation failure mode.
How to Apply
Measure Current Waste Level
Calculate what percentage of resources produce zero direct value: failed projects, unused features, idle capacity.
Questions to Ask
- What % of projects shipped nothing in 90 days?
- What features have <5% usage?
- What tools have <10% adoption?
Assess Against Optimal Range
Compare to optimal waste level of 10-20%. Below 10% means over-optimized (fragile). Above 30% means wasteful.
Questions to Ask
- Is waste <10%? (over-optimized)
- Is waste 10-20%? (optimal)
- Is waste >30%? (cut aggressively)
Identify Fat vs. Muscle
Fat: meetings without decisions, tools nobody uses, features with <5% usage. Muscle: core engineers, customer support, ROI-positive sales/marketing.
Outputs
- List of fat (safe to cut)
- List of muscle (protect at all costs)
Cut in Phases
Phase 1: Low-hanging fruit (10-15% savings). Phase 2: Strategic cuts (10-20% more). Never cut muscle. Stop if failure indicators appear.
Questions to Ask
- Are shipping velocities maintained?
- Is customer churn stable?
- Are top performers staying?