I Never Thought That P&L Ownership Could Be So Attractive!

This past week, I reached an exciting milestone.

One of my articles just reached 15,000 reads on Medium, although I'm not writing much on that platform these days!

Whatever your definition of “viral,” these are still tiny numbers in the scheme of the "Interwebs". But, I was pleasantly surprised to see such traction on a rather technical topic.

Its title:

The Six Habits of Extremely Successful P&L Owners

Profit and Loss Fundamentals for Product and Business Leaders

I originally wrote this article thinking of my niece, Agathe, who was just about to start her Masters in finance.

Finance teams are naturally drawn toward all the aspects of Profit and Loss. Yet, interestingly, the most considerable traction I got was from product management leaders trying to make sense of a responsibility they have that often comes without much empowerment.

You can read the full article here, but let me summarize the key points.

The basics of Profit and Loss. Income and costs are the fundamental elements of your P&L, and depending on which one is higher, you will end up with a profit or a loss.

There are six habits I ended up forming while in charge that gave me the best outcomes:

Habit #1: Apply the 80/20 rule when managing your costs and focus on optimizing for your top suppliers and expense areas. 

Habit #2: Study and assess what should be fixed costs (like salaries) vs. variable costs and optimize them all.

Habit #3: Analyze your product portfolio and eliminate “dogs”: in other words, your least profitable products.

Habit #4: Rethink your channel strategy, working with your sales team on a clear articulation of the channel landscape and your expected channel penetration.

Habit #5: Be strategic about pricing. Value-based pricing is the way to extract maximum profit, as it forces you to adapt your offering and price structure.

Habit #6: Optimize your customer lifetime value by identifying the best ways to up-sell or cross-sell your existing customers. They are your low-hanging fruit.

I’m sure you’ve noticed a pattern here. While managing costs is essential, the most significant leverage P&L owners have is maximizing income.

Lastly, the best P&L leaders know they don’t truly “own” it. It’s a genuinely collective and cross-functional effort. The ones who know best how to collaborate and engage all the other teams will succeed in their P&L journey.

P&L responsibility can seem daunting at first, but by forging these six habits and involving the right people, you'll soon make the difference.