The Illusion of the Total

Many leaders review only the consolidated profit.
They feel relief seeing the overall numbers “in green,” but rarely pause to ask:

• Which branch is actually creating this profit?

• Which one is quietly draining cash, energy, and logistics?

It’s like having five engines in an aircraft — two are strong, two are idle, one is leaking fuel — yet the pilot only checks total speed, not fuel efficiency.

Survival Mode Isn’t Strategy

Too often, leaders justify underperforming subsidiaries:

“At least it’s covering its costs.”

That’s survival talk, not growth language.

If a branch only “breaks even,” it’s likely:

• Consuming logistics and accounting bandwidth

• Distracting leadership focus

• Occupying inventory and working capital

• Creating complexity that slows down decision-making

In Scaling Up, we call this energy dilution — too many open fronts, not enough focus on where you win.

The Missing Process View (Lean Thinking)

When we run a Lean or process analysis, we discover that many inefficiencies don’t sit in the branch itself — they sit around it:

• Logistics runs special deliveries “just for that branch.”

• Accounting spends hours reconciling separate ledgers.

• Procurement places micro-orders to serve it.

• Management holds extra meetings to “fix” issues that shouldn’t exist.

This is waste — or in Lean terms, Muda — activity that doesn’t add value but still consumes effort.
So the question isn’t just “is this branch profitable?”
It’s “is this branch Lean?”

Root Cause Before Planning Next Year

When planning next year, many companies start with:

“Let’s set a higher sales target.”

But Lean and Scaling Up thinking both insist:

“First, find the constraint.”

Ask:

• Why are margins thin?

• Where do delays or rework happen?

• What’s really consuming management’s time?

• Is it people capability, process clarity, or structure?

If you don’t find and fix the root cause, next year’s plan is just wishful thinking — more of the same, but with higher targets.

Ideation: The Right Ideas vs. The Loud Ideas

Once you’ve identified the leaks, you’ll get dozens of ideas on how to “improve things.”
But not all ideas are equal.
You need a filter:

• Impact – Does it move the needle on cost, cash, or customer value?

• Ease – Can we implement it with existing capabilities?

• Alignment – Does it support our main strategic direction?

Many companies collect ideas but never rank them.
So energy spreads thin again.
The key is not to have many ideas, but to have the right few ideas executed well.

What You Might Be Overlooking

When you assess your subsidiaries, include:

• Full cost of logistics, supply, accounting, and admin support

• Leadership time and energy spent managing issues

• Opportunity cost — what could this capital do elsewhere?

• Customer feedback and brand impact by region

• Cash conversion cycle per location

These tell a clearer story than “sales” or “net profit” alone.

From Surviving to Scaling

Closing or re-structuring a branch doesn’t mean failure — it means focus.
True scaling isn’t about “how many” locations you have; it’s about “how effective” each one is.

Lean leaders know: every process, every branch, every product line must earn its right to exist.

Closing Thought

Before you plan next year, ask yourself:

“Do I really know where my business is leaking — or am I only looking at the total?”

Because growth doesn’t come from adding more;
It comes from removing waste, focusing energy, and scaling what truly works.