The Devil Isn’t in the Details. The Answer Is.

Author: Larry Chester

People love to say that the devil is in the details.

I’ve spent my career helping companies understand their financials, and I’ve come to believe the opposite is true. The devil isn’t in the details. The answer is. The real problem usually appears much earlier, when leaders either avoid asking the right question or ask the wrong one entirely.

Almost every business owner has had the same moment. You review the income statement and ask yourself a simple question. Sales look solid. The team is working hard. The business seems busy. Yet the profit is not where you expected it to be.

The first instinct is to stare harder at the income statement or ask why sales are not higher. But the answer is rarely hiding in the top-level numbers. The answer almost always lives deeper in the business, inside the subsidiary reports that most leaders glance at quickly and move past.

Those reports tell a very different story: gross margin by product, sales by customer, inventory valuation, inventory turns, and trend analysis across months and quarters. When you start looking at those details, patterns begin to emerge that were completely invisible before.

This is where many leaders run into trouble. Instead of starting with a clear question and letting the numbers guide them, they dive randomly into reports and data. Before long, they feel overwhelmed and frustrated. That is where the details start to feel like the devil.

The details are not the problem. The lack of focus is.

In many ways, this reminds me of how people are using AI today. If you ask the wrong prompt, you get a poor answer. The tool is incredibly powerful, but it only works if you ask the right question. Running a business is no different. The numbers are powerful, but they only reveal their value when they match what you are trying to learn.  This is where KPIs become incredibly important.

There are hundreds of possible KPIs you could track. I once saw a book that listed more than three hundred different metrics that companies could measure. The truth is that no business needs to measure three hundred KPIs. They need a small set of the right ones. The right KPIs focus attention on the areas that actually determine profitability.

For many companies, those insights begin with reports such as inventory value, gross margin by item, inventory turns, and sales trends by customer. These reports help leaders understand what is really happening inside the business rather than relying on assumptions.

Once you begin measuring the right things, a simple decision test begins to emerge. Every product line, service offering, or operational activity eventually leads to one of three choices:

• Keep it.
• Fix it.
• Dump it.

Those decisions sound simple, but they are impossible to make without the numbers.

This is where the details begin to matter. Not because they create complexity, but because they reveal the truth of how the business actually operates. The deeper you look, the clearer the answers become.

I was recently speaking with a law firm that had about seventy-five attorneys. Their philosophy was straightforward. They wanted to be able to serve all of their clients’ needs. If a client needed help with real estate, litigation, employment law, or general business matters, the firm wanted to offer it.

At first glance, that sounds like a strong strategy. It prevents clients from going elsewhere for legal services. But when I asked a very simple question, the room became quiet.

What is the profitability of each practice area?

Nobody knew.

They knew the revenue. They knew how many lawyers were assigned to each group. But they had never fully examined the profitability of each lane of law. Real estate had attorneys, paralegals, and administrative support. Litigation had its own structure and staffing. Employment law had different time demands and billing patterns. But without understanding the true costs and margins of each practice area, the firm had no way to determine whether those areas were actually contributing to the firm’s success or quietly dragging it down.

There can certainly be strategic reasons to maintain a practice area even if it is not highly profitable. Some services act as feeders for others. A client may come in for a contract review for a real estate purchase they want to make. But later, they may require assistance with an M&A transaction, which would be far more profitable.

But that should be a conscious decision, not an accidental one. If you do not know the profitability of each lane, you cannot evaluate whether that work should be improved, expanded, reduced, or eliminated.

I see the same issue frequently with manufacturers. A company may believe its highest-volume product is also its most successful. After all, it sells the most units and brings in the most revenue. But when we examine gross margin by item, the story sometimes changes dramatically.

The highest-selling product might also carry the lowest margin. Meanwhile, a smaller product line with less volume might generate significantly higher profitability. Occasionally we even discover a product that is quietly losing money once labor, setup costs, scrap, and overhead are properly allocated.

Now management has the information to determine how they should proceed.  Without the detailed reports, the company continues producing the wrong mix of products. With the reports, leadership can finally make informed decisions about pricing, production priorities, or whether certain products should remain in the portfolio at all.

This is the real purpose of KPIs. They are not there to create fancy dashboards or impressive reports. They exist to help leaders answer one essential question.

Numbers are only valuable when they answer the right question.

And the most important question every leader eventually faces is simple:

What should we do next?