Chasing Relevance Undermines Profit

Profitability and relevance can be allies — except when they’re not. PwC’s “profitability paradox” is a tidy way to describe a real tension, but tidy can hide sharp edges.

Here’s the thing: the piece nails a dilemma many boards actually feel in their bones. Do you pour scarce resources into staying culturally and technologically relevant, or do you protect margins and promise investors reliable returns? PwC forces companies to drag that tension into the boardroom and treat it as a driver of strategy instead of background noise. That’s useful. It pushes decisions away from instinct and toward explicit trade-offs.

But the way the paradox is framed often turns relevance and returns into opposite poles instead of overlapping circles.

When the Trade-Off Helps — and When It Traps You

Treating the trade-off as real has merit. Companies that act as if relevance is accidental end up chasing trends disconnected from their core economics; those that treat relevance as a marketing veneer end up commoditized. Making the tension explicit helps leadership allocate resources and accountabilities instead of hoping both demands magically reconcile in the annual report.

The trap is when the paradox hardens into a mental ceiling.

Plenty of modern business models — platforms, subscription plays, network-effect businesses — are built so that relevance is the profit engine. Think of how ecosystems in tech, media, and even B2B software turn engagement into lock-in and pricing power. These firms aren’t straddling a paradox so much as exploiting a flywheel: the more relevant they become, the better their economics look.

That doesn’t mean every company can copy that architecture. It does mean PwC’s frame tends to fit incumbents who can “budget for both” more than insurgents trying to design relevance and returns into the same motion.

Who’s Missing from the Memo

Yeah, no, PwC clearly wrote this for C-suites and institutional boards. That’s fine, but there are two big blind spots.

First, investor time horizons and governance incentives diverge wildly. A public company under intense quarterly scrutiny faces a different reality than a family-owned manufacturer or a venture-backed startup still in land-grab mode. Treating them as if they all experience the paradox in the same way flattens the problem.

Second, sectoral constraints change the math. Heavy industry, healthcare, and regulated utilities navigate capital cycles, approval processes, and compliance hurdles that tech and consumer brands mostly don’t. In those worlds, “competing for relevance and returns” can look less like a portfolio of bets and more like picking which single bet you’re willing to stake the balance sheet on.

PwC offers a menu. But the wrong menu in the wrong kitchen just keeps orders waiting.

Boards in steel, healthcare, or municipal services don’t need slogans about paradox; they need translations: what does “relevance” mean when your core asset has a decades-long depreciation schedule and regulators in the board packet?

Designing Strategy Around the Tension

If relevance and returns can be aligned, how do you engineer it rather than pray for it?

Start by measuring relevance with the same seriousness you measure returns. Not vanity numbers, but indicators tied to actual economics: customer stickiness, substitution risk, ecosystem dependency, switching behavior. Those should sit next to margin and cash flow in board decks, not buried in an appendix from marketing.

Then fix decision rights. Growth teams need runway with guardrails instead of vetoes from every incumbent P&L owner. Your CFO should be co-owner of product and go-to-market bets, not just the person who shows up at the end with a red pen. When finance and product sit on opposite sides of the table, the paradox always “wins” and relevance usually loses.

Investor mix matters too. If your cap table is dominated by actors who are structurally short-term, you can’t PowerPoint your way into a longer horizon. Patient capital isn’t a slogan; it’s a governance choice.

A Quick Detour to Trantor

I keep thinking of Asimov’s Foundation — not because companies should psychohistory their customers (though some are certainly trying), but because long arcs matter. The whole point of psychohistory was understanding how small nudges accumulate over time. Strategy needs a timeline that stretches beyond the next earnings call. That, in turn, demands governance that’s willing to trade a bit of short-term comfort for longer-term optionality.

The “Only Giants Can Do This” Rebuttal

A common rebuttal is that alignment is a luxury: only dominant firms with deep pockets can chase relevance while protecting returns. There’s some truth there; smaller firms don’t have infinite runway.

But that objection underrates the tactical moves available to non-giants. A niche industrial supplier can become indispensable in a single vertical by wrapping services and data around a very boring product. A mid-market SaaS firm can partner into ecosystems rather than trying to own the entire stack. A consumer brand can focus on a product experience so distinct that price comparisons become fuzzy instead of precise.

Those tactics don’t erase the paradox. They shrink it to a size where operating choices matter more than boardroom slogans.

History backs this up. Look at how Toyota treated quality and efficiency not as a trade-off but as a reinforcing system in the postwar decades; what looked like “extra cost” on the factory floor translated into brand relevance and pricing power over time. That wasn’t magic. It was design.

Where the PwC Frame Really Bites

Execution, not philosophy, decides winners. PwC’s framing nudges leaders to choose; that’s its strength. The danger is that public companies will treat “recognizing the paradox” as a compliance checkbox, not a mandate to rewire capital allocation, compensation, or M&A criteria.

On that last point: buying relevance rarely works if you don’t fuse incentives and operations. Bolt-on innovation units that report to a different set of KPIs than the core almost always stall. It’s like welding a new engine to an old chassis and then acting surprised when the steering feels off.

Three practical red flags for boards: when relevance is measured only by marketing impressions; when R&D or product is structurally siloed from finance; and when investor relations treats long-term strategy as theater instead of a binding promise to the market.

PwC did a service by naming the tension. The test will be how many boards treat the “profitability paradox” as a diagnostic tool for governance — and how many just add it to the buzzword pile while their more quietly aligned competitors eat their lunch.