The Real Purpose of a Business

After a recent presentation where I emphasized the importance of employees being aware of their purpose – their highest priority – at work (which, for most employees, is to create a delighted customer), I was approached by an attendee who asked, “Isn’t the real purpose of every business to make a profit?”

I asked to him to finish the quote by Peter Drucker, the father of modern management: “The purpose of a business is to create… ”

He thought about it for a moment and then said, “A profit?”

I said, “Drucker said that the purpose of a business is to create and keep a customer.”

And he was right. However, I have expanded on his observation by adding that the purpose of a business is to create a customer who keeps creating more customers. In other words, the purpose of a business is to create a delighted customer, a Promoter (defined by consulting firm, Bain and Company as a customer that is less price-sensitive, has higher repurchase rates, and is responsible for 80-90 percent of the positive word-of-mouth about a company or brand).

Employees must be made aware of their purpose, their highest priority, at work. Otherwise, they will make assumptions about what constitutes their highest priority at work. These assumptions may be productive (e.g., safety, attendance, cleanliness, compliance, etc.). Or they might be counterproductive (e.g., don’t upset my boss, don’t screw up, don’t rock the boat, etc.).

While there are certainly a multitude of worthy priorities, you can’t give your employees a set of highest priorities. They might have a set of priorities, but there can be only one highest priority. And that single highest priority should be defined by the leadership team or, more precisely, the leader.

There’s little ambiguity about WHAT employees are expected to do and HOW they’re expected to do it, but there is utter ignorance among frontline employees and their managers about WHY they do it.

And here’s a hint: it’s not profit.