Alex Edmans > Quotes

“As we’ll stress in Chapter 3, Pieconomics isn’t an excuse to shy away from tough decisions. Safeguarding all jobs would have been irresponsible as it would have endangered Airbnb’s long-term survival and the livelihoods of all colleagues. However, Airbnb ensured it took this commercially necessary decision in a humane way. It gave at least 14 weeks’ severance pay to all displaced workers even though none is required in the US,”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Consumers imply a one-time transaction: once you’ve consumed a good, it disappears. Customers provide an enterprise with their custom over the long term.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“unrelated to their comparative advantage. The power of this insight is that Pieconomics can be practised by all businesses at all times, not just large companies flush with cash in an economic upswing. Pieconomics is also relevant for small enterprises”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The importance of the size of the pie, rather than just its division, is linked to another important distinction – between ex ante (before the event) incentives and ex post (after the event) outcomes”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Shkreli was a pie-splitter: he had the pie-splitting mentality. This mentality views the pie as being fixed in size. Then, the only way to increase one member’s share of the pie is to split it differently, by reducing the shares of others. These other members are your rivals, whom you fight to grab as much of the pie as possible.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The pie-splitting mentality is widespread, and doesn’t just apply to the relationship between business and society. The tale of Robin Hood, who robbed from the rich to give to the poor, is much more celebrated than the Elves and the Shoemaker, where the elves help the cobbler make shoes without taking from anyone else.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“In all these cases, companies see society as a sitting duck, there for the taking. Even if they don’t actively exploit stakeholders, they may simply ignore them and focus on maximising profits, not caring whether stakeholders benefit as well.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“A company thus serves not only investors, but also colleagues, customers, suppliers, the environment, communities and the government. Together, these other parties are known as an enterprise’s stakeholders who, collectively, enjoy value. Members refer to either investors or stakeholders, and citizens are the people who live in society.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“not breaking promises shouldn’t be enough to earn the public’s trust. A trustworthy business is one that uses its expertise and resources to address society’s challenges.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“By far the main stakeholder Shkreli took from was customers – patients and health insurance companies. But Shkreli also took from his colleagues, who may have joined a biotech start-up excited about inventing new drugs, but instead spent their days ordered to squeeze higher profits from existing drugs. He took from suppliers, because the restricted sale and thus production of Daraprim slashed the demand for its inputs. And he took from communities, because reduced access to Daraprim hurt patients, their families and their friends.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“this seemingly difficult decision was easy for Roy. He was driven not by profits, but by the desire to use science to serve society.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“2008, Nokia faced stiff competition from low-cost Asian rivals, which had driven prices down by 35% in a few years. Over the same period, labour costs in Nokia’s plant in Bochum, Germany, had risen by 20%. Nokia decided to close Bochum. The closure may well have grown the pie – without it, Nokia’s long-term viability may have been jeopardised.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The negative publicity cost Nokia an estimated €700 million of sales and €100 million in profits over 2008 to 2010.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“what already exists, but through growing the pie. Under Pieconomics, a leader constantly asks herself whether she’s increasing profits through creating value or redistributing it from stakeholders”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“that profits are only one slice of the pie is an important contrast to ‘de-growth economics’. Advocates of this view argue that economies shouldn’t grow too fast or create too much value, otherwise we’ll exceed planetary boundaries such as resource constraints or temperature thresholds.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Pieconomics seeks to create profits only through creating value for society. Doing so may generate more profits than pursuing profits directly, and more value for stakeholders than sacrificing profits would.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Shkreli was a pie-splitter: he had the pie-splitting mentality. This mentality views the pie as being fixed in size. Then, the only way to increase one member’s share of the pie is to split it differently, by reducing the shares of others.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Surprisingly, this approach typically ends up more profitable than if profits were the end goal. That’s because it enables many investments to be made that end up delivering substantial long-term pay-offs. But since these pay-offs couldn’t have been forecast from the outset, the projects would have never been approved if profits were the only criterion.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The pie includes the long-term value customers enjoy over and above the price they pay, which we’ll call surplus. An enterprise creates surplus by inventing a product that materially improves their lives, providing free after-sales service or not using misleading marketing tactics.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“That businesses should ‘do no harm’ – curb their negative externalities – has long been recognised. This is how CSR has typically been practised. But Pieconomics stresses that companies should actively do good.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“I’ll acknowledge that the average responsible investing fund underperforms, and how ‘sin’ industries such as tobacco and alcohol have been highly profitable.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Crucially, the pie represents social value, not profits – profits are only one slice of the pie. A pie-growing company’s primary objective is social value, and it views profits as a by-product.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Employees suggest that workers are at the behest of the employer, employed as factors of production on a contractual basis. Colleagues are partners in the enterprise, contributing to its growth and sharing in its success.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Pieconomics most definitely sees investors as important. But an enterprise serves them not by giving them a larger slice of what already exists, but through growing the pie. Under Pieconomics, a leader constantly asks herself whether she’s increasing profits through creating value or redistributing it from stakeholders”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Enterprise, leaders, reward, colleagues, customers and investors. These words all emphasise the humanity of business and the relationships that underpin it, which we’ll see are crucial in growing the pie to benefit all of society.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Shareholders imply passive holding of an enterprise’s stock. Investors highlight their responsibility to invest in the long-term success of a firm through active monitoring or engagement.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“This harmonious outcome is known as a Pareto improvement, after Italian economist and political scientist Vilfredo Pareto.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The pie includes the value an enterprise gives to its colleagues. This comprises their pay, but also training, advancement opportunities, work-life balance, and the ability to pursue a vocation and make a profound impact on the world. We’ll call this value livelihoods,”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“The decision to donate Mectizan grew the pie. Initially, most of the increase went to West African and Latin American countries, communities and citizens. But Merck subsequently benefited as well, even though such benefits weren’t the primary reason for Merck’s decision. The MDP boosted Merck’s reputation as a highly responsible enterprise. In January 1988, Business Week described Merck as one of ‘the best in public service’ and called the MDP ‘an unusual humanitarian gesture’. Fortune named Merck America’s most admired company for seven years in a row between 1987 and 1993, a record never equalled before or since. This reputation for serving society in turn attracted both investors and stakeholders.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised

“Second, reducing profits is bad for shareholders. Many business critics don’t care – investors are often portrayed as nameless, faceless capitalists. But investors are not ‘them’; they are ‘us’. They include parents saving for their children’s education, pension schemes investing for their retirees and insurance companies funding future claims.”
― Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit – Updated and Revised