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What’s the purpose of your business?

What’s the purpose of your business?

Slack and Company | October 26, 2017

Is it the same or similar to the great Peter Drucker’s—to create and hold on to a (we’d add “profitable”) customer?

Every year, seemingly hundreds of business books, thousands of articles and maybe billions of words are written about business—what it is, what it does, how to be successful at it and more.

When I feel inundated by so much competing—and often very good—thinking, I like to simplify my thinking and go sit at the feet of the (late) great Peter Drucker.

Drucker wrote, so exceptionally and simply, that the purpose of a business is to “create and hold on to a customer.”

Wow. No offense to the many authors and academics who write and teach about business, but these seven words pretty much say it all. They’re the last word for me on what business is all about.

Drucker did go a step further and state what are the primary—he actually said “only”—functions of a business in order to attract, create and hold on to customers: marketing and innovation.

He put both functions at the hub of the enterprise wheel, with all other functions—manufacturing, operations, financial, legal, HR—in certainly important but supporting roles.

I believe he meant to include sales with marketing, as the two are so intertwined, with the relationship perhaps best described by Kevin Clancy:

“The purpose of marketing is to make what customers want to buy. The purpose of sales is to get rid of what you make.”

Drucker might have liked this comparison of marketing and sales even better, as I do, from my friend Tom Insprucker, the chief marketing officer at Philips Lighting:

“Marketing's job is not just to help sales sell more, but to make customers want to buy more.”

(See my collection of other great marketing definitions.)

Consumer-packaged goods (CPG) companies and many other consumer-focused companies have for years put marketing at the hub of their operations. With so much product and service parity these days, innovation should be in that hub, too, and often is.

But, more often than not, marketing and innovation are rarely the hub for b2b companies. Though b2b marketing has come a long way in recent years, it still is too often thought of as solely a sales support function and not a strategic function driving company strategy and growth.

Innovation is given more lip service as a business function, and there are plenty of companies like 3M that are industry leaders and drivers thanks to their commitment to innovation.

The finance function helps companies secure the capital and investor support required to fund innovation and all the other things that enable a company to acquire customers.

The legal function, sometimes cynically called the “sales prevention” department, helps negotiate and win deals, protect IP and generally reduce friction with government, regulators, competitors and other would-be business obstacles.

The HR function, critical to ensuring you have the best and most motivated people working for you, fuels better marketing and better innovation.

A trend we see is more business executives at the executive level with combined marketing and innovation titles. I have in mind a man who is SVP of Marketing and Innovation at one of our largest clients. Another example is the former chief marketing officer at Motorola Solutions who is now Chief Strategy and Innovation Officer.

Believing Drucker and seeing the leverage good marketing and innovation give a company, I think one of the best career paths for future business leaders is getting both technical/R&D and marketing degrees in their early careers, followed by experience and growing responsibility in both areas.

Make marketing and innovation the purpose of your career, whatever field you are in, and you should be well-positioned to help attract, create, retain and grow customers—the Holy Grail of business today, tomorrow and forever.

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