A Purpose-Driven Business

A Purpose Driven Business
THE BIG IDEA: Today’s article asks executive leaders to take a step back and evaluate their business with some big questions that underlie the foundation of their enterprise.


If you were asked by someone to define your business, how would you answer?

  • Would you explain what services you provide?
  • What products you manufacture or sell?
  • What makes you different from your competitors?

Management guru Peter Drucker suggests that there is only one true way to define a business: by the want the customer satisfies when she buys a product or a service from you.

Satisfying the customer’s want is the purpose of every business.

What Business Are You In?

How, then, do you answer the question: “What is our business?”

You look at your business from the outside; you take the customer’s and the market’s viewpoint.

Drucker explains: “What the customer sees, thinks, believes, and wants, at any given time, must be accepted by management as an objective fact and must be taken as seriously as the reports of the salesperson, the tests of the engineer, or the figures of the accountant.

“And management,” Drucker continues, “must make a conscious effort to get answers from the customer herself rather than attempt to read her mind.”

Drucker wrote this in Management: Tasks, Responsibilities, Practice, originally published in 1973. Over four decades later, his words are just as relevant—and just as often ignored.

How to Define Your Business

To more precisely define your business, Drucker offers two powerful questions:

  1. Who is the customer?
  2. What is value to the customer?

The first question is a master work in itself. How deep you go in defining your customer is an indication of your commitment to serving your customers. Last month, we offered seven customers insights we feel every CEO should investigate.

The second question is very important too. Most business leaders may be certain they know the answer, but, Drucker points out, they are almost always incorrect.

Why? Because business executives tend to define value based on what they perceive as value.

What Do Your Customers Value?

“The customer never buys a product,” Drucker writes. “By definition the customer buys the satisfaction of a want. He buys value.”

For a teenage boy who buys a pair of Vans shoes, that value might be identification with a subculture.

For a 35-year-old mother shopping at Target, that value might be fashion and convenience.

For a 55-year-old executive ordering on Zappos, that value might be breadth of selection.

Different customers value different things. Drucker points out that the question of value is so complicated that management shouldn’t even try to guess the answer.

You have to go directly to your customers.

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