Ashish KothariMake flourishing your competitive edge

Is AI really making companies more efficient, or are we confusing cost cutting with progress

8 Jul 2026 · 1 min

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Ashish Kothari examines whether corporate layoffs actually improve efficiency. Most companies cut 10-15% of staff, but productivity typically drops 10-20% among those who stay. Even a 1% productivity decline erases the savings from a 10% layoff, and research shows gains take over four years to appear.

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let's assume you take 10% out, 20% out, right? Of course, there are some brave souls like Block who decide to take 40% out, but, you know, most people are like 10%. Facebook has 10%, 15%, right? When you look at that 10% number, for the 90% that are left, Adam Grant validated this, highlighted it, the lag of a layoff is 4+ years. And all it takes for the 90% is to drop 1% in productivity to more than make up for the 9% that you let go, right? Anybody who's listening, all— that's all it takes, 1% drop. And I think usually it is 10, 15, 20% drop. And so when you're looking at that level, you know, less— yeah, you lost, uh, you gained 10% productivity, you lost 20% from the people who are left. So net-net, you're worse off.