The Purpose of Business

“The purpose of business is to create and keep a customer.” – Peter F. Drucker 

Creating and keeping a customer is only possible if you are satisfying a customer need better than other competitive options. Innovation and growth requires understanding the customers’ needs in order to deliver superior value. It’s hard to hit a bull’s eye when you don’t have a target. Every company, if it’s going to be successful long-term, must define its goal as the satisfaction of customer needs, not selling products, services, or technology. Study after study has shown that the key to successful growth is having a clear understanding of customers needs.

Some companies do very well driving technology improvements. But even then, to be successful, they must either use an “ideas-first” methodology such as lean start-up that can test ideas quickly and cheaply to assess customer needs (think Google) or they must already know what the customer is trying to get done (most computer and automobile manufacturers). The reason many technology companies can be successful focusing on technology rather than on customer needs is because they already know their customers’ high level needs so they can focus on how to help those customers get their tasks done better through improved technology. But such companies must never forget that their technology only exists to satisfy a customer need. To ensure continued growth, companies must understand what their customers are trying to get done (their needs) and develop solutions that help them accomplish those tasks better than the competition. It’s the only way that you can hope to sustain growth.