Most companies assume they know where their profits come from. Yet, as Jonathan Byrnes demonstrates in Islands of Profit in a Sea of Red Ink, the reality is eye-opening: as much as 40% of business activity can be unprofitable when measured correctly. Profits often come from a few “islands of profit” — specific customers, products, or services — while the rest quietly erode margins.
The Hidden Problem with Profitability
Byrnes explains that many leaders chase top-line revenue growth, believing more sales automatically mean more profit. But when costs are allocated inaccurately, the business is blind to its true profit formula. Some customer relationships may look strong but, after factoring in service costs, logistics, and discounts, they may actually be profit drains. Others — the “profit peaks” — quietly generate the lion’s share of profit.
The book also highlights the danger of the “profit desert”: customers and products that break even or contribute little, consuming resources without creating value.
Why Traditional Costing Fails
Traditional accounting methods rely heavily on averages. They use simplified cost margin formulas that mask the real drivers of profit and loss. This makes it nearly impossible for CFOs and FP&A leaders to pinpoint which products or customers are truly profitable.
This is why Byrnes insists on precision in cost allocation — the only way to distinguish between profit peaks, deserts, and drains.
How Asher Nordics Helps You Find the Profit Islands
At Asher & Company Nordics, we bring these insights into practice. Using tools like Oracle Enterprise Profitability and Cost Management (EPCM), combined with methodologies like Activity-Based Costing (ABC) and Life-Cycle Costing (LCC), we help finance leaders move beyond averages and uncover real profitability, and we start this without you needing to buy software, but to start with your own Profitability Prototype.
Our probed “Profit Excellence” methodology allows you:
- Measure profit metrics by customer, cost center, and product.
- Understand direct product profitability and where hidden costs drain value.
- Apply incremental profit formulas when launching new products, campaigns, or investments.
- Align resources toward “profit peak” customers while reducing the impact of profit drains.
Turning Insights into Action
The lesson from Byrnes’ work is clear: profit is not about working harder or selling more — it’s about focusing on the right customers, products, and cost structures.
By connecting the costing frameworks like presented in this book with modern technology like Oracle Enterprise Profitability and Cost Management (EPCM), Asher enables CFOs and FP&A leaders to turn islands of profit into sustainable growth strategies.
Don’t settle for averages. Reveal your true profitability drivers with Oracle EPCM and Asher’s proven expertise.