Ask the Author: Alex Edmans
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Alex Edmans
I started "Grow the Pie" in early 2018, prompted by concern for the polarisation between business and society that existed back then (and still exists today). Some businesses see exploiting society as the best route to increasing profits � cutting worker wages, hiking prices for customers, or polluting the environment. But equally, some reformers see businesses as the enemy of society and attempt to straitjacket them through regulation � when business can be a force for good, and profits are critical to provide returns to savers.
This polarisation is an example of the "pie-splitting mentality". Under this view, the value generated by capitalism is a fixed pie. Any slice given to stakeholders is at the expense of profits (and so some CEOs minimise society’s share); any profits are viewed as extracting from society.
I wanted to write a book about the "pie-growing mentality". This view stresses that the pie is not fixed. By investing in stakeholders, a company doesn’t reduce investors� slice of the pie � it grows the pie, ultimately benefiting investors. A company may improve working conditions out of genuine concern for its employees, yet these employees become more motivated and productive. A company may develop a new drug to solve a public health crisis, without considering whether those affected are able to pay for it, yet end up successfully commercialising it. A company may reduce its emissions far beyond the level that would lead to a fine, yet benefit because customers, employees, and investors are attracted to a firm with such values.
So in the face of the conflict between business and society, this is a fundamentally optimistic book. Yet this optimism is not based on blind hope, but on rigorous evidence that this approach to business works for both investors and stakeholders, real-life examples spanning industries and countries, and an actionable framework to turn it into reality.
This polarisation is an example of the "pie-splitting mentality". Under this view, the value generated by capitalism is a fixed pie. Any slice given to stakeholders is at the expense of profits (and so some CEOs minimise society’s share); any profits are viewed as extracting from society.
I wanted to write a book about the "pie-growing mentality". This view stresses that the pie is not fixed. By investing in stakeholders, a company doesn’t reduce investors� slice of the pie � it grows the pie, ultimately benefiting investors. A company may improve working conditions out of genuine concern for its employees, yet these employees become more motivated and productive. A company may develop a new drug to solve a public health crisis, without considering whether those affected are able to pay for it, yet end up successfully commercialising it. A company may reduce its emissions far beyond the level that would lead to a fine, yet benefit because customers, employees, and investors are attracted to a firm with such values.
So in the face of the conflict between business and society, this is a fundamentally optimistic book. Yet this optimism is not based on blind hope, but on rigorous evidence that this approach to business works for both investors and stakeholders, real-life examples spanning industries and countries, and an actionable framework to turn it into reality.
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