Marginal Analysis

De-Averaging: Understanding Where Profit Is

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Watch: Leaders discuss how breaking down broad financial averages to understand the specific profitability of individual products, customers, or processes is necessary to identify where value is actually being created.

Apply: Look at a project that appears successful “on average” and try to identify one specific segment that might be underperforming.

Ask: “If we looked at this piece by piece, which parts are truly creating value and which are dragging down the total?”

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