Analyzing Profitability: Getting Past the Tip of the Iceberg
All companies need to maintain healthy margins in order to survive long-term. This is obvious. However, too often companies look at their overall profitability numbers and trends, and don't dig deep enough.
The question should not be: are we profitable and what are our margins? Nor should it even be is profitability (both at a margin level) and in total increasing? These questions, although necessary, do not provide the full picture.
The real question should be: Are we as profitable as we absolutely could be?
This moves the conversation from a backward-looking report to a prescription of future actions to achieve significantly larger gains.
Below I've created a model using Tableau to dive deep into that question and how you could solve it using visual analytics.
I'd love to know what you think. What else would you add to this analysis? What other insights would you pursue? Let me know in the comments.