Thursday, December 23, 2010

Four structural barriers to effective profitability management

Books of Account
Islands of Profit in a Sea of Red Ink
Jonathan L. S. Byrnes
( http://www.penguin.com/)

Redefine CFO as Chief Profitability Officer

Embedded unprofitability is a huge issue in every company, rues Jonathan L. S. Byrnes in Islands of Profit in a Sea of Red Ink. The three resulting problems, as he lists, are that the reported profits are much lower, often half of what they could be; the best customers generally receive only average service, which raises a critical risk of competitors picking off the profitable piece of the business by offering better service; and the company loses the opportunity to shift resources to the highest payoff activities.

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