The following is an excerpt from the March 12 Daily Drucker. Emphasis is by the author.
The Purpose of a Business
A business enterprise has two basic funtions: markeing and innovation
If we want to know what a business is, we have to start with its purpose. And the purpose must lie outside the business itself. In fact, it must lie in society, since a business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. The customer is the foundation of a busines and keeps it in existence. he alone gives employement. And it is to supply the customer that society entrusts wealth producing resources to the business enterprise.
Because it is the purpose to create a customer, any business enterprise has two-and only two-basic functions: marketing and innnovation. These are the entrepreneurial functions. Marketing is the distinguishing, the unique function of Business.
Action point: Find out what needs your customers want fulfilled today. Determine how well your products are meeting the needs of your customers.
The Practice of Management
You’ll notice that Mr. Drucker puts the customer at the foundation of the business, not the shareholder. I do agree with him on that. But where I disagree with him is in his action point. No doubt he was on target when The Practice of Management was first written years ago, but now that “target” is moving. And today’s answers to what a customer needs are is most likely changing. Here’s how I would say it, given the state of change we’re in today.
ACTION POINT: Create a process that allows you to continually identify what your customers needs and wants are and when they begin changing. Continually measure how well your products are meeting the needs of your customers.