Grow the Pie audiobook cover - How Great Companies Deliver Both Purpose and Profit

Grow the Pie

How Great Companies Deliver Both Purpose and Profit

Alex Edmans

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Categories:
Corporate CultureCareer & SuccessManagement & LeadershipEconomics

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Grow the Pie
Core Philosophy+
Executive Incentives+
Share Buybacks+
Purpose-Driven Excellence+
Empowering Citizens+

Quiz — Test Your Understanding

Question 1 of 6
What defines the 'pie-splitting' mentality in business?
  • A. Expanding the total value of a company so that all stakeholders can receive a larger share.
  • B. Viewing value as a fixed amount to be divided, often maximizing one group's share at the expense of others.
  • C. Dividing a company into smaller, more manageable departments to increase operational efficiency.
  • D. Distributing profits equally among shareholders, employees, and the local community.
Question 2 of 6
Why did Merck's former CEO, Roy Vagelos, decide to give away the drug ivermectin for free?
  • A. To comply with new international health regulations regarding the pricing of essential medications.
  • B. To artificially inflate the company's Earnings Per Share (EPS) ahead of a major stock buyback.
  • C. To undermine competitors in the pharmaceutical industry who were selling similar treatments.
  • D. To serve society by curing river blindness, which ultimately enhanced the company's long-term reputation.
Question 3 of 6
According to the book, what is the most effective approach to reforming executive pay?
  • A. Strictly capping CEO salaries to reduce income inequality within the company.
  • B. Structuring incentives, such as locking shares for several years, to promote long-term value creation.
  • C. Replacing equity-based compensation with complex, short-term cash bonuses.
  • D. Redistributing a large portion of CEO pay directly to lower-level employees to boost morale.
Question 4 of 6
Which of the following does the text identify as a common misconception about share buybacks?
  • A. They inherently come at the expense of employee wages and productive investments.
  • B. They often lead to more concentrated ownership and a committed shareholder base.
  • C. They offer more flexibility and targeted returns compared to traditional dividends.
  • D. They are sometimes used by executives to artificially inflate Earnings Per Share (EPS).
Question 5 of 6
How does the book describe the relationship between purpose and profit in a successful business?
  • A. Profit must be secured first in order to fund secondary, purpose-driven social projects.
  • B. Purpose and profit are inherently conflicting goals that require heavy government regulation to balance.
  • C. Purpose is the primary reason a company exists to serve society, and profit is a by-product of fulfilling that purpose.
  • D. Profit is the main objective of a business, while purpose is primarily a marketing tool to attract ethical investors.
Question 6 of 6
What regulatory mechanism does the text suggest policymakers use to ensure accountability without stifling business innovation?
  • A. Universal carbon taxes applied equally across all industries without exception.
  • B. Strict bans on executive share options and corporate stock repurchases.
  • C. Mandatory integrated reporting for all private and publicly traded companies.
  • D. 'Comply-or-explain' provisions that offer flexibility for different enterprise circumstances.

Grow the Pie — Full Chapter Overview

Grow the Pie Summary & Overview

Grow the Pie (2020) shows how businesses can thrive by creating value for society while also achieving sustainable profits. It reveals that companies prioritizing the well-being of all stakeholders often outperform those focused solely on shareholder returns. By presenting extensive research and real-world examples, it makes a compelling case that long-term success comes from growing the pie for everyone.

Who Should Listen to Grow the Pie?

  • Business leaders seeking sustainable growth strategies
  • Investors interested in long-term corporate performance
  • Academics studying corporate governance and responsibility

About the Author: Alex Edmans

Alex Edmans, Professor of Finance at London Business School, is a leading expert on responsible business. With a PhD from MIT as a Fulbright Scholar, he has spoken at the World Economic Forum and testified before the UK Parliament. Edmans has delivered popular TED talks on trust and business responsibility and co-authored the book Principles of Corporate Finance. He has also published May Contain Lies, which offers insights into how stories and statistics can exploit biases.

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