Grow The Pie

Grow The Pie, How Great Companies Deliver Both Purpose and Profit, by Alex Edmans, Cambridge University Press, 2020 

Do the best companies pursue purpose or profit?  Or, as one would ask in the plague year of 2020, how much are you willing to pay for that cotton mask, because in tough times with over 250 people dying just in Boston and 500 in NYC each day from the virus, that's when the stripped down reality of organizations show their stuff.  And sometimes, as we are all discovering, it really hurts..,

Author Alex Edmans believes that business reformation rests on thinking through the numbers, performing an evidence-based examination of what exactly are the pieces of the pie that improve workers' lives and attitudes.  Although at times the numbers or primary indicators get blurry, in this plague year 2020 the choices have simplified, from either wholesale layoffs vs.strategic reduction of force, or, in the case of medical equipment suppliers, ramped up production to meet public needs, vs. price gouging for those same medical supplies.  Edmans argues that our dilemma need not be an either-or-choice, as we have seen many examples of companies and industries that struggle to continue to deliver true value to the world, companies such as Johnson & Johnson and Market Basket.      . 

Edmans cites results of the 2007 financial/banking crisis that cost 9M Americans their jobs and 10M their homes.  We all know neighbors and friends who were hurt by that crisis, and we can chalk that one up to greedy banking mortgage activity.  Or look at one of the results of unlimited out-sourcing; according to Edmans, 14 Chinese workers were driven to suicide "by the unbearable working practices at the Foxconn City industrial park where they made electronics for US giants." 

But as humans we need live examples, examination of the behavior Edmans seeks to change, and for that Grow the Pie offers numerous solid and detailed examples in Bart Becht, former CEO of Reckitt Benchiser, and BP, the oil giant, as well as many others:

"In 2015, BP suffered the biggest loss in its history - $6.5 billion. This was a dramatic reversal of fortunes compared to the $3.8 billion profit  earned in 2014.   BP  argued that a different measure 'underlying replacement cost profit' was more relevant as it excluded one-off items such as Deepwater Horizon and the  fall in oil and gas prices.  But even this halved from 66 to 32 cents per share.  Investors suffered a 14% stock price fall, and  and 5400 colleagues lost their jobs. "

Yet BP increased the pay of CEO Bob Dudley from $16.4 million to $19.6 million And investors could do nothing about it..."

Take a second look at the institutions and for-profits that are supposedly engaged in helping to fight this destructive epidemic.  Ask yourself if when its over these are the operations you will continue to buy from and help grow.  And when you've figured it out, laminate it on your bathroom mirror.  Power to the people AMEN.

Patricia E. Moody

FORTUNE magazine  "Pioneering Woman in Mfg" 

IndustryWeek IdeaXchange Xpert

A Mill Girl at Blue Heron Journal, on-line resource for business thought-leaders and decision-makers, pemoody@aol.com, patriciaemoody@gmail.com, tricia@patriciaemoody.com,