CEO Ryan Cohen revealed that GameStop went from over 1,400 corporate employees to just 400, yet became more productive. He argues large corporate teams create bloat, perverse incentives, and delegation of work. The radical downsizing improved focus and business results.

In a turnaround, a leader's most critical first step is restructuring their direct reports. McLaren's CEO replaced every key leader—CFO, HR, commercial, etc.—to create a unified group that could then drive cultural change down through their own departments.

Facing a potential shutdown in 2019, Jeremy Allaire made the brutal decision to sell off non-core business units and reduce headcount from 450 to 59. This extreme focus on the core USDC product, despite the pain, saved the company and fueled its subsequent explosive growth.

When faced with total collapse, Harvey Firestone didn't just cut prices. He used the crisis as a filter to identify employees who thrived under pressure and ruthlessly simplified the company, cutting the sales force by 75% and the ad department from 105 to 7.

If a company culture has become bloated and mediocre, laying off 50% of the staff just leaves you with a smaller mediocre company. The 'A' players have likely already left. The only way to truly fix a deeply ingrained mediocre culture is to fire almost everyone and rebuild from the ground up.

Before a major business pivot, first identify what can be let go or scaled back. This creates the necessary space and resources for the new direction, preventing overwhelm and ensuring the pivot is an extension of identity, not just another added task on your plate.

Adam Wathan reframes layoffs not as a last-minute failure but as a responsible, proactive decision. He chose to cut expenses while Tailwind Labs had ample cash to offer a healthy severance, avoiding a scenario where he'd have to let people go without a financial cushion.

The strategy of eliminating the "worst 20%" applies across the business. Beyond firing unprofitable customers, analyze your product lines and even your team. Discontinuing low-margin, high-hassle products or removing toxic employees can free up immense resources and improve overall business health just as effectively.

After two major clinical trial failures caused Fibrogen's market cap to fall from $5.5B to under $200M, the CEO executed a radical survival plan. He reduced headcount from 325 to about 50 and negotiated out of a crippling $90M lease to secure the company's future.