The Burning Platform

The purpose of companies, their very raison d’etre, is to make money for their shareholders.  This is their legal obligation. The key focus of many companies is to maximize shareholder return in the short term, earning their executives a tidy bonus for a job well done. So isn't a bit naïve to talk about putting customers first?

But we can all see that it is not working.  The economy is screwed, companies are going under at a rate of knots.

What do we need to do differently?

Peter Drucker gave us the answer 50 years ago:

"To know what a business is we have to start with its purpose.  Its purpose must be outside of the business itself.  In fact, it must lie in society since business enterprise is an organ of society.  There is only one value definition of business purpose: to create a customer ..."

To change from a focus on shareholders to a focus on customers involves a fundamentally different way of thinking and being.

From a managerial perspective it means becoming humble.  To shift away from insulated, centralised, ego-boosting control to developing an outside-in organisation:

• where information flows from the market to the decision-makers who then base their decisions on this information.
• where the organization is curious and agile so that it seeks out and responds to change in consumer opinions, values and behaviours.
• where business targets are set on real world, sustainable improvements in consumer value.

No small challenge.  Is it worth it?

Yes, because companies that are acting in this way are the ones that are developing the curiosity and agility, and therefore resilience to survive the fast pace and vigorous competition of today's marketplace.  The old-style companies, focused on shareholder value and governed by legacy and hierarchy are going out of business.

So, there isn’t really much of a choice.