Grow the Pie

02How to grow the pie in business?

Have you ever marveled at how some businesses seem to create value for everyone involved, not just their shareholders? It's like they've discovered a secret recipe for success that goes beyond traditional business thinking. This secret recipe is what Alex Edmans calls 'growing the pie' in his book "Grow the Pie". So, what's this pie we're talking about? Picture a pie that represents the total value a business creates. Traditional business thinking is all about slicing that pie up, figuring out how to distribute it among stakeholders - shareholders get a slice, employees get a slice, customers get a slice, and so on. But what if, instead of worrying about how to divide the pie, we focused on making the pie bigger? That's the essence of 'growing the pie'. The beauty of this approach is that it benefits everyone. When the pie grows, every slice gets bigger. Shareholders see increased returns. Employees enjoy better wages and working conditions. Customers get better products or services. Even society at large benefits, as businesses that focus on growing the pie tend to be more socially responsible. So, how do you go about growing the pie? Edmans provides some practical advice in his book. It starts with shifting your mindset. Instead of seeing business as a zero-sum game, where one person's gain is another's loss, start seeing it as a positive-sum game, where everyone can win. This involves focusing on long-term value creation, investing in employees, and building strong relationships with customers. Next, it's about putting this mindset into action. This could involve investing in employee training and development, improving product quality, or adopting sustainable business practices. Each of these steps contributes to growing the pie by creating more value for all stakeholders. Edmans provides several examples of companies that have successfully adopted this approach. One such company is Unilever, which has committed to doubling its size while reducing its environmental impact. This commitment has led to innovations like concentrated laundry detergent, which uses less packaging and water, benefiting both customers and the environment. Another example is Salesforce, which has invested heavily in employee training and development. This investment has paid off in the form of higher employee productivity and satisfaction, leading to increased value for shareholders. In conclusion, 'growing the pie' is about creating more value for all stakeholders, not just shareholders. It's a win-win approach that benefits everyone involved. So, next time you're thinking about how to improve your business or workplace, why not consider how you can grow the pie?

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