Introduction
Summary of the book Grow the Pie by Alex Edmans. Before moving forward, let’s briefly explore the core idea of the book. Picture standing in front of a bakery where everyone fights over a tiny pie. Each person tries to snatch a bigger slice, leaving others with crumbs. This is how many businesses behave today, seeing success as taking more for themselves. But what if, instead of squabbling over slices, they baked a bigger, tastier pie that could feed everyone? This book explores that idea. It’s about shifting from greed-driven decision-making to an approach that benefits society while still earning profits. We’ll see how better executive pay structures, carefully used share buybacks, purpose-driven innovations, integrated reporting, and engaged citizens can guide businesses toward fairness and lasting growth. By the end, you’ll understand how each of us can help companies embrace a pie-growing mentality. It’s a chance to reshape business into a powerful tool that improves our world, one slice at a time.
Chapter 1: Discovering a New Way for Businesses to Grow Value Without Just Taking More .
Imagine a world where many businesses think of success as slicing up a limited cake. In this view, if a company wants more profit, it must grab a bigger slice, leaving less for everyone else. This often leads to decisions that push down wages, raise prices unfairly, or harm the environment just to boost short-term gains. But what if there was another way to run a business—one that expands the entire cake, or pie, so that everyone, including customers, workers, and communities, ends up better off? This idea is not just a dream; it’s a practical approach known as the pie-growing mentality. Instead of fighting over who gets how much from a fixed pie, companies can focus on making the whole pie bigger. By doing this, they can still earn profits but also support society in deeper, more meaningful ways.
To understand this difference, consider a shocking example: the sudden and extreme price hike of the life-saving drug Daraprim by Turing Pharmaceuticals under CEO Martin Shkreli. One day, the pill cost $13.50, and the next day it soared to $750. Instead of caring for patients in need, Shkreli’s decision prioritized investors who wanted a quick profit. Sure, it increased Turing’s slice of the pie, but it shrank everyone else’s share—especially those patients who could no longer afford their essential medicine. This is a stark illustration of the pie-splitting mindset, where winning means forcing others to lose. It shows how chasing profit without concern for fairness or health can spark outrage and damage a company’s reputation. It also reveals how this approach can feel morally hollow, leaving communities and individuals worse off.
Now imagine a different leader facing a similar situation: Roy Vagelos, a former CEO of the pharmaceutical company Merck. Decades earlier, Merck discovered a treatment for river blindness, a disease affecting impoverished communities in Africa. Distributing this treatment to those who needed it most would be costly and would not promise big, immediate profits. Yet, Vagelos decided to give the drug away for free. He put patients first, ensuring countless people could see again and live healthier lives. Remarkably, this generosity did not harm Merck. In fact, by caring for society, Merck earned trust, improved its public image, attracted talented employees who wanted to work for a responsible company, and even gained loyal investors. In other words, by growing the pie—creating more value for everyone—Merck thrived financially over the long term.
This contrast between Shkreli’s narrow, short-term greed and Vagelos’s broad, long-term generosity reveals why a pie-growing mentality matters. When businesses focus on serving their communities, improving products, paying fair wages, investing in innovation, and respecting the environment, they help everyone prosper. This approach strengthens their own foundations because customers trust them, employees feel motivated, and investors believe in their future. Over time, the pie-growing way leads to healthier profits that are earned honestly. It’s not about dividing a small pie into different slices. It’s about making the pie bigger and better. As we explore more chapters, we’ll discover how to design executive incentives for long-term thinking, understand the tricky world of share buybacks, inspire purpose-driven innovation, and learn how citizens can shape businesses. All these ideas help us grow the pie together.
Chapter 2: Unmasking Hidden Forces Behind How Companies Reward Leaders for Better Decisions .
Think about what motivates a CEO to make choices that either help everyone or just enrich a few shareholders. The way leaders are paid can strongly influence how they behave. If a CEO’s pay depends only on meeting short-term financial goals, they might ignore the long-term impact on workers, customers, or the planet. For example, if top executives get huge bonuses for cutting costs, they might slash wages, skip safety checks, or avoid investing in the environment. This results in short-lived boosts in profits but can lead to angry employees, disappointed customers, and environmental damage. Over time, these problems weaken the company’s foundation. However, if leaders are rewarded for actions that build value over many years, they are more likely to invest in employees’ training, create higher-quality products, and develop responsible partnerships that benefit everyone involved.
A famous story involves Bart Becht, the former CEO of Reckitt Benckiser. Years ago, he earned an enormous amount of money—tens of millions of pounds in a single year—which sparked outrage among the public. At first glance, it seemed like he was just another greedy CEO getting rich at everyone else’s expense. But if we look deeper, we find that most of this money came from many years of hard work improving the company. During his leadership, Reckitt Benckiser’s share price soared, sales increased steadily, and the firm’s products got better and easier to use. He even inspired a culture where employees felt empowered to share ideas. The huge payout largely reflected a decade of success, not a sudden grab at profits. This story shows that high pay alone doesn’t always mean a leader is harming the company.
Still, we must acknowledge a big problem: some CEOs do indeed get paid far more than the average worker, creating concerns about fairness. People worry that massive pay gaps send a message that workers are less important, harming morale and trust. But simply cutting a CEO’s salary into smaller pieces and spreading it among thousands of employees would not solve the deeper issues. The real challenge is making sure CEO pay encourages decisions that increase long-term value for everyone. That means linking pay to long-term success measures, not just this quarter’s earnings. If a leader’s rewards come mostly from shares they must hold for many years, they’ll think beyond quick fixes. They’ll consider the future workforce, product quality, reputation, and community relationships. This helps guide companies toward pie-growing actions that benefit both business and society.
In the end, the key to fixing executive pay isn’t just about making it smaller; it’s about making it smarter. If a CEO knows they’ll gain most when the company thrives sustainably over five, ten, or even twenty years, they’ll be motivated to nurture all the elements that create true, long-lasting value. They’ll spend time developing better products, training employees, and respecting the environment. They’ll avoid harming their reputation with shady deals or unfair practices. Instead of focusing on quick shortcuts that boost a stock price for a few weeks, they’ll invest in strategies that keep the company healthy for decades. By designing executive pay structures that reward long-term thinking, we can guide leaders toward growing the pie. This shift aligns their personal interests with the interests of workers, customers, communities, and society at large.
Chapter 3: Untangling the Mystery of Share Buybacks and How They Can Help or Harm .
Have you ever heard about a company buying back its own shares? It might sound confusing, but share buybacks are when a business uses its spare cash to repurchase some of the shares it issued to the public. At first glance, share buybacks can look like a sneaky way to please investors by making earnings per share look better without improving the company’s real performance. Some critics argue that when companies do this, they’re ignoring chances to invest in their workers, innovate products, or protect the environment. They fear that buybacks steal resources from future growth and push top executives to chase short-term stock bumps. But is it always this simple? To find the truth, we need to dig deeper and understand when buybacks are harmful and when they might actually help everyone.
Consider a scenario where a company has already invested in all the promising projects it can find. Its factories are modern, its employees well-trained, and its environmental protection measures top-notch. There may be no obvious next step to productively use extra cash. In such a case, returning money to shareholders through buybacks could be a sensible move. It signals confidence: the company’s leaders believe they have done the right things to strengthen the business, and there’s no need to hoard cash. Shareholders who prefer to invest elsewhere can sell their shares back to the company. Those who remain become more invested in the firm’s long-term future. Rather than waste money on pointless projects, the company returns value to investors, who can use it for other ventures, potentially expanding the overall pie in the broader economy.
Misunderstandings often arise from viewing buybacks as always bad. Politicians, journalists, and even some experts worry that buybacks cheat workers and customers. But remember, wages and necessary expenses are paid before any profits are earned. By the time a company decides on a buyback, it has already covered its operating costs. If it wanted to raise wages or invest in employee training, it could have done so first. Many times, companies only resort to buybacks after ensuring no better long-term growth opportunities exist. Under good leadership, buybacks can show discipline: a commitment to not wasting resources on low-quality projects. They can create a more focused investor base, which leads to steadier pressure for long-term improvements. With the right mindset, buybacks become a tool that can help companies remain balanced, responsible, and forward-thinking.
Of course, this doesn’t mean buybacks are never misused. If executives use them just to boost short-term stock prices and meet temporary performance targets—like in the case where a CEO fiddles with earnings per share to secure a bonus—then buybacks can become harmful. They must be guided by the pie-growing mentality, where the ultimate goal is to create more lasting value. If companies remain transparent about their reasons for buybacks, investors and the public can judge whether they are sensible or greedy. By understanding that buybacks are neither pure good nor pure evil, but tools that can help or harm depending on intentions, we can better appreciate their role. This balanced view allows us to demand responsible practices and encourage buybacks that support long-term growth, fair treatment of stakeholders, and a healthier future for everyone.
Chapter 4: Unlocking the Power of Purpose and Innovation to Make Business a Force for Good .
Imagine living in a place with no bank nearby, where it’s difficult or dangerous to store, send, or receive money. Back in 2007, many people in Kenya faced this reality. Then came M-Pesa, a mobile money service from Vodafone that let people do financial transactions using just their phones. Suddenly, a goat herder like Emmanuel Sironga no longer had to travel hours carrying cash. He could save money more securely, pay suppliers with a few clicks, and focus on improving his business. This story shows how focusing on a genuine purpose—solving real problems—can turn a company into a powerful force for good. By innovating in ways that help ordinary people, businesses can make life easier for their customers, boosting economic growth and community well-being. True purpose-driven innovation goes beyond charity and shapes entire industries.
Purpose is not just a nice slogan; it’s the very reason a company exists. If a firm knows why it’s here—whether to simplify banking, cure diseases, or improve hygiene—it can plan its strategies around that goal. When purpose guides decisions, profit becomes a result of doing the right thing well, not an end in itself. Look at Unilever’s hand-washing campaigns. By teaching people about the health benefits of using soap regularly, Unilever improved public health worldwide while also selling more soap. This wasn’t about tricking people into buying; it was about genuinely serving their needs, helping them stay healthier, and building a reputation as a company that cares. Purpose drives long-term thinking, encourages finding creative solutions, and makes companies more resilient. When crises hit, purpose-driven firms bounce back because they have built trust and goodwill.
Another example of a purpose-driven brand is Patagonia, an outdoor clothing company known for its strong environmental stance. They told customers, Don’t Buy This Jacket to encourage them to think carefully about their purchases. Although this might seem like a strange way to make money, Patagonia strengthened its image as a responsible brand that values the planet more than quick sales. Over time, this honesty drew in loyal customers who respected the company’s courage and clarity. Purpose helps companies stand out in a world where many businesses push hard for more sales at any cost. By honestly caring about workers, communities, and nature, purpose-driven companies become magnets for talent, attract long-term investors, and build lasting relationships with customers who trust their mission.
To truly embrace purpose, companies must integrate it into everything they do. This includes daily operations, major decisions, and how they measure their success. Tools like integrated reporting combine financial results with social and environmental impacts, painting a bigger picture of a company’s performance. It’s not enough to claim a purpose; companies should prove it by showing how they treat employees, source materials responsibly, cut emissions, or contribute to public health. This transparency helps everyone understand where improvements are needed and where progress is being made. When purpose drives excellence, companies continually ask: How can we improve people’s lives, safeguard the planet, and grow responsibly over time? By embedding purpose at their core, businesses create a cycle of trust, innovation, and steady growth. This helps grow the pie for all, making everyone better off.
Chapter 5: Seeing the Whole Picture Through Integrated Reporting and Honest Accountability .
What does success mean for a company? Traditionally, people looked at profit as the ultimate measure. But this approach ignores many invisible dimensions: the well-being of employees, the satisfaction of customers, the health of local communities, and the state of the environment. Integrated reporting changes that. It means telling a complete story about what a company does and why it matters. Instead of focusing only on financial data, integrated reporting includes social and environmental results. This broader perspective helps leaders spot problems early, investors understand long-term value, and communities trust that a company’s success doesn’t come at their expense. By painting a fuller picture, integrated reporting encourages managers to think carefully before making decisions that might boost short-term profits but cause long-term harm. It’s like turning on the lights in a dimly lit room so you can see everything clearly.
When companies adopt integrated reporting, they must figure out what matters most to their stakeholders. Do employees care about training and career growth? Are customers worried about product safety or data privacy? How does the business influence the environment, and how is it reducing its carbon footprint? By answering these questions, integrated reporting prompts companies to set meaningful goals. These might include lowering waste, improving community health through better product design, or ensuring fair supply chains. Setting such targets keeps managers accountable and forces them to consider a wider range of outcomes than just quarterly profit margins. When investors see that a company is meeting these goals, they feel confident investing for the long run. When customers see genuine progress, they remain loyal. By tying financial and non-financial goals together, companies become truly responsible citizens.
This honest, transparent approach makes it harder for companies to hide harmful activities behind fancy marketing. If an enterprise boasts about being environmentally friendly, integrated reporting will reveal whether it’s cutting emissions or just talking big. If it claims to value its workforce, the data will show if employees are well-trained, safe, and satisfied. Instead of promoting empty promises, companies must back their words with verifiable action. Integrated reporting encourages what experts call integrated thinking inside the company. This means leaders see the connections between their actions and their outcomes. Cutting corners on materials to save a little money might backfire if it hurts customer trust. Overworking employees might push profits up for a short time but lead to burnout and weaker performance later. Integrated thinking helps leaders weigh all these factors before making decisions.
Of course, integrated reporting is not a magic wand. It requires time, effort, and a willingness to learn from mistakes. But as more companies embrace this method, investors, customers, employees, and communities benefit from clearer insights. Over time, integrated reporting could become the standard way of doing business, raising the quality and reliability of corporate information worldwide. This also encourages healthy competition, as companies strive not only to improve their financial results but also to strengthen their positive social and environmental footprint. By challenging organizations to be honest and holistic, integrated reporting supports the pie-growing approach. It reminds everyone that success is not only about making money today but also about ensuring future generations inherit a stable economy, a clean environment, and a fair society. This deeper understanding brings us closer to a world where business truly serves the greater good.
Chapter 6: How Ordinary Citizens, Workers, Customers, and Investors Can Shape Better Business .
Do you ever feel small and powerless when it comes to changing big corporations? In truth, individuals have a surprising amount of power. Citizens can influence businesses through their choices, voices, and values. For instance, you can decide to buy products from companies that treat their workers fairly and avoid those that pollute the environment. You can invest your savings—no matter how small—in socially responsible funds that support companies aligned with your principles. Websites and organizations rate and rank companies based on factors like worker pay and environmental care, making it easier to spend and invest ethically. By voting with your wallet, you send a clear signal that ethical practices matter. Over time, this encourages companies to think twice before making short-sighted decisions that harm society and the planet.
Employees also have a role. Where you choose to work and how you act at your job can push companies toward better practices. If you take pride in working for a firm known for fairness and innovation, you reinforce that positive culture. By speaking up when something feels wrong—like impossible sales targets that push unethical behavior—you help protect the company’s integrity. Even giant scandals, like the Wells Fargo fake-account scandal, started small, with employees forced into harmful actions. Courageous workers who raise their voices, resign in protest, or join together in constructive criticism remind companies that people matter. Employers notice if talented individuals prefer responsible companies. Over time, strong values become key to attracting skilled, dedicated workers, giving ethical firms a competitive advantage and motivating less responsible ones to improve.
Investors play a vital role, too. They can reward businesses that think long-term by buying shares and holding onto them, rather than chasing quick profits. Investors who care about societal and environmental outcomes encourage companies to publish integrated reports and meet sustainability targets. Some organizations, like ShareAction in the UK, even rank investment funds by their stewardship and ethical standards, helping people choose where to put their money. When investors demand responsible behavior, boards and executives listen. Over time, this steady pressure for fairness, innovation, and purpose-driven excellence reshapes entire industries. The more investors focus on genuine long-term health rather than short-lived gains, the stronger the incentive for managers to grow the pie for everyone.
Finally, influencers—such as journalists, researchers, activists, and social media voices—amplify these messages. They can uncover hidden wrongdoing, celebrate companies that do good, and present balanced arguments that help the public see all sides of an issue. By highlighting both successes and failures, influencers encourage transparency and keep everyone informed. Policymakers, inspired by citizen concerns and expert evidence, can adjust regulations to encourage responsible business practices without stifling innovation. From carbon taxes that motivate cleaner energy choices to flexible comply or explain rules for corporate governance, well-designed policies guide businesses toward sustainable strategies. When everyone—from customers and employees to investors, media, and policymakers—works together, they create a climate where businesses must consider more than just profit. This collective power ensures the pie keeps growing, making life better for us all.
Chapter 7: Crafting Policies and Guidelines That Encourage Businesses to Do the Right Thing .
Laws and rules shape how businesses behave. If regulations push firms only to produce quick profits, they’ll focus on short-term gains. But well-designed policies can nudge companies to think bigger. For example, consider environmental laws. A carbon tax can make it costlier to pollute, encouraging firms to invest in cleaner technologies. Over time, this not only reduces harm but also creates new markets for green innovation, leading to thriving industries in renewable energy. Such policies can transform the economy, steering it toward healthier long-term growth. The key is to design them thoughtfully, so they don’t choke off innovation but instead guide it in positive directions. Policymakers must listen to stakeholders—workers, communities, scientists, and industry experts—to understand how businesses can adapt without being unfairly burdened.
One-size-fits-all rules can backfire if they ignore the differences between companies or industries. That’s why flexible approaches are so valuable. Comply or explain rules allow firms to either meet certain standards or explain honestly why they are not doing so. This flexibility helps avoid rigid measures that might discourage experimentation or trap businesses in outdated models. Instead, it encourages them to think carefully about their decisions. If a company decides not to follow a recommended practice, it must justify itself to investors and the public. This encourages transparency and holds companies accountable for their choices, pushing them to consider the long-term consequences of their actions. Over time, these open-ended rules guide businesses toward responsible innovation and careful planning.
Governments must balance competing goals. They want to stimulate economic growth, but not at the cost of human welfare or environmental health. Smart policymakers recognize that the pie-growing approach isn’t just a business philosophy—it’s an economic strategy. If businesses focus on treating stakeholders well and investing in sustainable paths, society grows richer and stronger overall. Policymakers can amplify these efforts by offering incentives for responsible behavior. For example, tax breaks for companies that invest in community education or cleaner production can pay off down the line with a more skilled workforce and healthier environment. The result is a win-win: companies prosper by doing good, and society benefits from their success.
These policies don’t operate in a vacuum. Public opinion matters a lot. When citizens understand why certain policies exist—like carbon taxes or transparency requirements—they are more likely to support them. This feedback loop connects the dots: policymakers respond to public pressure, businesses adapt to policies, and communities see improvements in their daily lives. Over time, as responsible business practices become the norm, even companies that once resisted will come around, realizing they risk losing customers, talent, and investor support if they fail to adapt. In this way, well-crafted policies can set off a chain reaction that leads to more purpose-driven innovation, fairer corporate behavior, and long-lasting economic health. By using policies as a guiding hand rather than a heavy fist, societies can help businesses grow the pie for everyone’s benefit.
Chapter 8: Building a Sustainable Future Where Purpose and Profit Work Hand in Hand .
Bringing all these ideas together, we see a vibrant picture of what business could be. Instead of a world where companies squeeze every penny out of workers, customers, and the Earth, we can have one where enterprises compete to innovate better products, treat people fairly, and preserve natural resources. This isn’t just a feel-good dream; it’s a practical plan for long-term success. When companies embrace the pie-growing mentality, they stop thinking of social responsibility and profit as enemies. Instead, they see them as partners. By serving communities, protecting the planet, and rewarding employees, companies lay the groundwork for trust, loyalty, and cooperation—all factors that feed sustained financial growth. Over time, this approach outperforms short-sighted profit grabs. It turns out that doing the right thing is often the smartest move a company can make.
The journey isn’t always easy. Old habits die hard, and many firms are used to chasing quick results to please impatient investors. But change is possible when leaders commit to reshaping incentives and focusing on long-term goals. Transparent integrated reporting helps everyone understand a company’s true impact. Purpose-driven innovation shows that solving big problems for society can pay off big in the marketplace. Encouraging citizens to speak out and choose responsibly puts pressure on companies to improve. Wise policymaking sets fair rules that guide business behavior without smothering the spark of creativity. All these efforts, combined, shift the entire economic system toward fairness, sustainability, and lasting value.
As the pie grows, the benefits spread across a wider range of people and generations. Workers enjoy stable jobs and better skills, leading to higher-quality products and services. Customers trust the brands they buy, knowing that these companies share their values. Investors earn steady, reliable returns from businesses that prosper by doing good. Communities feel respected and included, and the environment suffers less damage. This makes the whole economy more robust and better prepared for future challenges. In an era of rapid change—technological advances, global competition, and environmental threats—pie-growing companies stand strong, adapting gracefully and helping society move forward together.
Ultimately, a sustainable future means rewriting the rules of what it means to succeed in business. It means accepting that profit and purpose don’t have to be at odds. Companies can still make money—sometimes even more than before—while contributing positively to the world. This approach makes sense for everyone involved. Over time, as more firms adopt these practices, the entire business landscape transforms. The best part? You don’t have to be a CEO, politician, or investor to play a role. Every citizen, worker, customer, and influencer can help shape better outcomes by making thoughtful choices and raising their voice. With each decision that supports fairness, responsibility, and long-term thinking, we help expand the pie. Bit by bit, we build a better world where business success and social progress go hand in hand.
All about the Book
Discover innovative strategies for sustainable business growth in ‘Grow the Pie’ by Alex Edmans. This book challenges traditional profit-maximization views, advocating for inclusive value creation that benefits all stakeholders while enhancing long-term success.
Alex Edmans is a renowned author and professor of finance, known for his insights on responsible capitalism and stakeholder value, making him a trusted voice in the business ethics community.
CEO, Financial Analyst, Business Strategist, NGO Leader, Corporate Social Responsibility Manager
Reading about economics, Investment strategies, Sustainable business practices, Ethical leadership, Philanthropy and community service
Stakeholder management, Corporate responsibility, Sustainable economic growth, Inequality in wealth distribution
Real value creation requires us to expand the pie for everyone, not just ourselves.
Richard Branson, Bill Gates, Indra Nooyi
Best Business Book Award, Financial Times Best Book of the Year, Management Book of the Year
1. How can businesses create value for all stakeholders? #2. What strategies help improve both profits and social impact? #3. Why is long-term thinking essential for company success? #4. How do companies benefit from enhancing their community ties? #5. What role does employee well-being play in company performance? #6. How can firms effectively measure their social impact? #7. Why is collaboration crucial among different stakeholder groups? #8. What are the misconceptions about the purpose of business? #9. How does sustainable growth contribute to future profitability? #10. What practices foster trust between companies and stakeholders? #11. How can transparency improve a company’s reputation? #12. Why is diversity important for innovation in businesses? #13. How does purpose-driven leadership inspire better performance? #14. What impact do business decisions have on society? #15. How can companies align profit goals with societal benefits? #16. Why is stakeholder engagement vital for business success? #17. How do ethical considerations influence corporate strategy? #18. What examples show the benefits of growing the pie? #19. How can businesses balance profits and societal responsibilities? #20. Why is a holistic view necessary for modern enterprises?
Grow the Pie, Alex Edmans, social impact investing, stakeholder capitalism, business ethics, sustainable growth strategies, corporate social responsibility, value creation, profit and purpose, long-term investing, economic sustainability, business management
https://www.amazon.com/dp/152935905X
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