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Idea: Those who buy your shares may own your company.
But those who buy your products own your chances for success.

 

 

It is the customer who determines what a business is

Earlier this year, we sent an Idea Email on the importance of knowing why your company exists—not just what it does or how it does it. “Great companies start with the why,” says author Simon Senik. “Such companies never manipulate; they inspire,” we wrote.

“That sounds like Peter Drucker,” a reader wrote back. We agree. The only difference is that Drucker not only said, “start with the why,” he already knew the why: To create and serve customers.

By the time of his death in 2005 at the age of 95, Peter Drucker had become one of the world’s most influential business management scholars, writers and consultants. He received awards from governments and corporations worldwide, including the Presidential Medal of Freedom, the highest civilian award in the United States.

Such awards are presented to people who go against their era’s common wisdom. As a recent Forbes essay on The Origin Of ‘The World’s Dumbest Idea’ pointed out, Drucker challenged the popular notion that a company’s mission can be focused on building shareholder wealth.

“It is the customer alone whose willingness to pay for a good or for a service that converts economic resources into wealth, things into goods. … The customer is the foundation of a business and keeps it in existence,” Drucker said.

During the decade following his death, and especially in the aftermath of the Great Recession and the explosion of the digital economy, Drucker’s insights on business have become even more influential. Having history prove one correct does that.

Drucker’s philosophy is behind the success and growth of companies like Whole Foods, Apple and Amazon: Serve the customer, he said, and the shareholder’s wealth will grow.

Don’t make your “why” about serving your shareholders, your board, your executives, your employees, your product, your history, your process, value proposition or positioning statement. They are all important, but they all benefit more if you serve the customer first, and foremost.

Serve your customer. That’s why your company exists.


Bonus Link: Our Favorite Peter Drucker Quotes About Customers: Drucker wrote dozens of books, all packed with some of the greatest quotes ever on topics related to all facets of business management. While preparing this Idea Email, we referred to our copy of The Essential Drucker, a compilation of some of the most memorable and influential writings from his 60 year carreer. While it is impossible to condense his lifetime of insights into a list of “greatest hits,” we’ve never let that stop us from trying before. Check out our post called, ” Favorite Peter Drucker Quotes About Customers and Marketing.”


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