You can't fold paper more than 7 times, nor cut costs at a company beyond confines

Paper-folding and cost-cutting are impossible after a few iterations

CorporateNature Metaphor Series, No 117

1. THE LIMITS TO FOLDING PAPER

“You can’t fold a piece of paper more than 7 times” is an internet meme you've probably heard before. The explanation is straightforward: with every fold, the piece of paper halves in length and doubles in thickness. So with a standard A4 sheet of paper, after the 7th fold you end up with a paper blob 1.3 cm thick. The exponential growth in thickness is the real constraint and soon the blob of paper offers too much resistance, which requires superhuman strength to fold any further. The Guinness World Record for the most folds done on a single piece of paper is 12, but this was achieved using a strip of thin tissue paper that was 1.2 km long. 

2. FOLDING PAPER MAY EXPLODE

What if you applied enormous force to eke out more rounds of folding? Well, it has been tried. This viral YouTube video shows what happens when an A3 piece of paper is folded 7 times. On the final fold, the immense pressure makes the piece of paper “explode”  as the cellulose fibres in paper get untangled and released from the structure that holds them together.

3. THE LIMITS TO COST-CUTTING

Folding a sheet of paper multiple times is analogous to cost-cutting in business. When a recession hits and company revenues collapse, management is forced to streamline operations and cut costs. Some companies have a lot of flab so costs can be cut by a lot (like folding a long sheet of paper that has a lot of excess material to fold). But lean and efficient companies have little flab and cost-cutting soon reaches the bone (which is like folding a small sheet of paper that cannot be folded any further).

4. DEATH SPIRAL IN COST-CUTTING
How many employees can a company lay off before product or service quality deteriorates to unacceptable levels and before employee morale reaches rock bottom? And how many unprofitable customers or product lines can a company discontinue? 

In accounting, the latter type of cutting is known as the "death spiral": the more customers or product lines a company gets rid of, the more fixed costs will weigh on the profitability of the remaining customers or products, tempting further cuts until there is nothing left to cut and the company has to literally fold, if you'll pardon the pun. Economic history contains multiple cases of companies imploding by entering a death spiral.

5. TAKEAWAYS

Paper folding can teach us a metaphorical lesson about cost-cutting. How much is too much?

A) Folding a sheet of paper more than 7 times makes the paper explode. 

B) Cost-cutting that goes too deep could make the company implode.

A4 sheet of paper
(image source: Wikipedia)