#520 The Costlexity Trap: When Growth Quietly Becomes Expensive | Barbara Wittmann and Niels Brabandt
The Costlexity Trap: When Growth Quietly Becomes Expensive
Article by based on the interview of Barbara Wittmann and Niels Brabandt
Growth is often romanticised in business. Particularly in start-ups and scaling organisations, growth is celebrated as the ultimate validation of strategy, market fit, and leadership. Revenue rises, teams expand, clients increase, and investors applaud. Yet beneath the optimism, another reality frequently emerges: growth becomes expensive in ways leaders did not anticipate.
In this week’s leadership podcast and videocast, leadership expert Niels Brabandt interviews Barbara Wittmann on a challenge many founders, investors, and senior leaders experience but struggle to define: the Costlexity Trap.
Coined by Barbara Wittmann, the term merges two forces that frequently accelerate simultaneously in growing organisations: cost and complexity. Individually, both are manageable. Together, they can quietly undermine scalability, profitability, and operational effectiveness.
The challenge often begins innocently.
Fast-growing companies rarely pause to reflect upon their operational architecture. Teams move quickly. Departments adopt software independently. Productivity takes precedence over governance. The result is often a fragmented landscape where multiple teams unknowingly purchase overlapping technologies, subscriptions, and AI tools.
Growth, in this context, creates invisible duplication.
What initially appears agile can rapidly become operationally inefficient. Organisations suddenly find themselves with twenty overlapping software subscriptions, disconnected workflows, unclear ownership, and rising expenditure that few fully understand.
The instinctive response for many leaders is predictable: invest in a large ERP system.
However, as Barbara Wittmann explains, this is frequently where organisations make their next major mistake. In an attempt to solve growing complexity, businesses often rush into costly technology decisions without sufficient understanding of their own operating model. Significant financial commitments are made toward systems that ultimately fail to solve the real issue.
The fundamental question is not which system to buy.
The real question is whether leaders genuinely understand the organisational landscape before investing.
Barbara Wittmann advocates a deceptively simple but highly strategic approach: orientation before movement.
Before investing in large-scale transformation, organisations must first create transparency. What subscriptions already exist? Which systems overlap? What operational gaps remain uncovered? Most importantly, how does technology support value creation across the business?
This process, contrary to common assumptions, does not require excessive bureaucracy. One of the most revealing insights from the interview is that meaningful clarity often begins with short, focused conversations and clear visualisation rather than extensive documentation.
The resistance to documentation itself frequently reflects a deeper leadership bias.
Founders and growth-focused executives often believe that pausing to document systems slows momentum. Yet failing to create visibility frequently proves significantly more expensive later. Growth without clarity can quickly become expensive growth.
One particularly valuable insight concerns what Barbara Wittmann describes as the “middle phase” of organisational growth. Many founders ask when informal communication, intuitive decision-making, and founder-driven operations begin to break down.
Her answer is remarkably practical: the middle phase begins when organisations hire their first operations professional.
At that moment, what previously existed informally inside a founder’s mind must become formalised, scalable, and understandable to others. This transition often represents the first signal that operational maturity must catch up with commercial ambition.
Equally compelling is the discussion regarding investors and technology spending.
Many founders encounter resistance when requesting investment into ERP systems or operational infrastructure. Investors frequently prioritise sales acceleration over operational capability. Barbara Wittmann’s advice is strategically important: founders must change the narrative.
Rather than positioning technology investments as expensive systems, leaders should frame them through value chains and monetisation pathways. How does work flow? Where are inefficiencies? Which gaps prevent sustainable growth?
This reframing transforms operational investment from perceived cost into visible business necessity.
The Costlexity Trap ultimately reminds leaders of a powerful truth: sustainable growth requires operational wisdom as much as commercial ambition.
The organisations that scale successfully are not necessarily the fastest-growing businesses. They are often the organisations whose leaders understand when agility must evolve into structure, when informal systems require clarity, and when investment decisions demand strategic context.
Growth alone is not success.
Sustainable growth is.
For further leadership insights, interviews, keynote speaking, organisational development, and executive coaching, connect with Niels Brabandt and discover more expert perspectives including Barbara Wittmann on leadership, growth, and business transformation.
Niels Brabandt
---
More on this topic in this week's videocast and podcast with Niels Brabandt: Videocast / Apple Podcasts / Spotify
For the videocast’s and podcast’s transcript, read below this article.
Is excellent leadership important to you?
Let's have a chat: NB@NB-Networks.com
Contact: Niels Brabandt on LinkedIn
Website: www.NB-Networks.biz
Niels Brabandt
Growth. And you probably know when you're a startup owner say, "Well, of course we need to grow, and we need to grow exponentially." However, at a certain point you wonder that something is suddenly changing with the vibe and also with the cost side of it, what's happening right here. And we have an expert on the matter with us here today, backed by popular demand. Hello and welcome, Barbara Whitman.
Barbara Wittmann
Hi Niamh. Thanks for having me back.
Niels Brabandt
Thank you very much for taking the time yet again. You have a highly interesting approach to this. You call it the cost laxity trap when growth becomes expensive. Can you tell us what you mean by that? Because many people will say, "Well, we need to grow," but suddenly something changed which they probably didn't expect.
Barbara Wittmann
Yeah. So I know we always view these two things separately. We look at cost separately and we look at complexity. So I lumped the two together and made it a bit of a provocative word because it is really a little bit of a disadvantage if both is growing at the exponential rate. And if you grow, yes, you will grow complexity. The question is how do you deal with it?
Barbara Wittmann
And companies go about it in a little bit of a different way because you don't have clear responsibilities of who is buying what. So everyone is buying their tools that is helping their way of working, just an example. And then you end up with 20 different AI tools and other things.
Barbara Wittmann
Other companies deal with it a different way and they say, "Ooh, we really need an ERP system," and that's going to be the happy-go-lucky. And they sink 100,000 plus into this investment, but it really wasn't the right choice.
Niels Brabandt
So how can they make the right choice then when they say there's so much choice on the market and we actually don't want to buy an ERP system where in two years' time we say, "Well, here we are with the next one then"?
Barbara Wittmann
Yeah. The big piece is you need orientation before you move. So you need to understand the landscape you are in.
Barbara Wittmann
One simple approach is you need to list very honestly and ask everyone in the company, "What are the subscriptions we actually have right now?" Because if you don't have that regulated, and most growing companies don't because it's all going so quickly, you need to have one list where you show, "This is what we have," and then get everyone together and say, "Okay, so what is this doing and do we have any overlaps?" So essentially you need to understand the lay of the land before you make any other moves.
Niels Brabandt
So when you now tell this to organizations in a growth phase, they will usually say, "Look, we are agile, we are growing. Sitting down, just documenting what we have here is really not on the agenda." So how would you convince someone who says, "Look, it's all about growth, getting more clients on board, more clients on board. Growth is number one. Sitting here documenting things, we really can do this later."
Barbara Wittmann
Yeah, that's a fair pushback. And we have an entirely wrong idea about documentation because we are thinking, "Oh my God, it's going to be 600 pages and we have to write everything down." So I have a very, very simple approach that it's like, "Hey, we have two conversations. I pick your brain for 15, 20 minutes, and then I come up with a visual."
Barbara Wittmann
And the visual is really going to help you out in making an informed decision going forward or showing you where the gaps are. It is not a highly time-intensive thing. And honestly, just to list what you have—and it may be a nuisance, I get it—but once you have it, then you can keep up on it.
Barbara Wittmann
It doesn't take that much time. So it's also a question of where are you leaning in? Where are you really investing your time as an entrepreneur, maybe as an operations leader or an IT leader? And what makes the most sense? Because we always jump towards, "Oh yeah, but this is the most important thing right now, but is it really?"
Niels Brabandt
Excellent point here. And when I prepared our discussion that we have, I, of course, discussed that with startup owners before. And they said it's a highly interesting point where you say this weird middle phase where the informal communication breaks down.
Niels Brabandt
However, many people then said, "How do I know when I enter the middle phase?" Because I'm sitting in my startup every single day. There's not going to be a marker on my calendar saying, "And today the middle phase begins." So how do I actually know?
Barbara Wittmann
It's a very simple thing when you hire the first operations person. So when you hire an operations manager or a VP of operations, that's when things get real. And that's the first time when what has been in the founder's head needs to be formalized in one way or another. So that is a good indicator. When you're thinking about hiring an operations person to make your day-to-day life easier, that's when you're in that middle phase.
Niels Brabandt
Excellent. And now I had another person telling me, well, more than one. They said, "Look, I was sitting there and thinking we should have this ERP system. And guess who said, 'No, way too expensive right now. It doesn't get us enough input.'" And that was the investor who said, "Look, we have to invest in sales. We need to get a sales system on there.
Niels Brabandt
Get Salesforce. Get whatever you want, but don't come along with an ERP system telling me, 'Oh, we need to document this and put this into some system.'" They basically blocked the decision towards an ERP system. How do you want to convince people when they are the ones sitting on the money and basically you are depending on what they say?
Barbara Wittmann
Well, that's fair. And that's not an unusual thing that happens because, of course, they want their money to be invested wisely. But you also need to give them context. So if you're saying, "Hey, we need an ERP system," that's when all the ringers go off, right? Because they're thinking, "Oh my God, they want to dive into SAP or something, and it's going to."
Niels Brabandt
Usually, that was exactly what they said. Because some people said, "Okay, this is going to mean SAP and there's this bottomless hole of money where we're going to flow into, which will never end because as soon as we have one system installed, the next version is just on the horizon."
Barbara Wittmann
I know. Yes. So that's the wrong signal. So it's also a question as a founder, how do you pitch the approach? And you can only pitch the approach of your system landscape needs to grow if you are overlaying your operating model with your technology landscape. That's when it gets interesting.
Barbara Wittmann
And I want to say that most founders don't have a clear understanding what their operating model is because it's still growing. It's trial and error. But you need to have a basic understanding of what are the value chains that we bring to the table and then start matching it. So if we have the value chain of, for example, lead to offer, do we have a system actually covering it?
Barbara Wittmann
And then how do we ship this stuff? So if you put that into very simple pictures, it doesn't need to be like a very detailed documentation, but you need to build the arc for an investor to say, "Look, this is where the money comes in. This is how we monetize things, and this is where we have the gaps." That's when you can land it.
Barbara Wittmann
You need to come in from a different angle. If you talk ERP, it's the kiss of death.
Niels Brabandt
Yeah, it's the kiss of well said, very well said. And to avoid that kiss of death and actually to have someone on site who can probably help with all of that, I think you can help here when people now say, "Hey, how can we get in touch with Barbara? How can they get in touch?"
Barbara Wittmann
Very simple. Go on to my website, digitalwisdom.co. And there's a little link for booking a call, and I'm happy to have a conversation with you. And it's a very simple thing we can do that makes your life easier towards the investor and also towards your organization.
Niels Brabandt
Perfect. I think these are the perfect final words. You see, cost laxity is the point where you have to take care of it, and Barbara is the person to talk to. So at the end of this interview, there's only one thing left for me to say, Barbara. Thank you very much for your time.
Barbara Wittmann
Thank you.