The question
Since the 2008 crisis, the regional operation's profitability had been falling and was not recovering. Leadership needed to know why the business was earning less and less, and what to do about it.
What everyone assumed
The natural reading was that the problem came from the market. If demand had weakened after the crisis, the answer seemed to be selling more volume or cutting costs. Neither addressed the cause.
How we solved it
We followed the price from the list to what customers actually paid, country by country. Profitability was not being lost in the plant or in demand. It was lost along the way, in discounts that had piled up without rules and that each country managed its own way.
With a team deployed across the region, we designed a pricing program tailored to each market. It set discount rules, who could grant them and how to measure their effect on margin.
The decision
Instead of cutting structure or chasing volume, leadership decided to regain control of price. The program was rolled out in every country and profitability recovered within a year.
What applies to other companies
When profitability falls, the temptation is to look for the cause outside, in the market or the competition. Often it is inside, between the list price and the price collected.
Before cutting costs or pushing volume, measure how much of the price actually reaches the company. It is the cheapest diagnosis and usually the one with the greatest effect.