Beyond Customers: Drucker's Non-Customer Strategy for Innovation

Most businesses are laser-focused on understanding their customers. But what about the 70% of the market they don't serve? Peter Drucker, the father of modern management, had a radical idea: to find true innovation, look to the “non-customers.”

The Traditional Approach

Peter Drucker in the first business strategy book — Managing by Results (1964) — discusses the importance of customers. We start with what we know.

A good deal of what is called “marketing” today is at best organized, systematic selling in which the major jobs—from sales forecasting to warehousing and advertising—are brought together and coordinated. This is all to the good. But its starting point is still our products, our customers, our technology. The starting point is still the inside.

He provides a range of questions to ask:

• Who is the customer?
• Where is the customer?
• How does he buy?
• What does he consider value?
• What purposes of the customer do our products satisfy?
• What role in the customer’s life and work does our particular product play?
• How important is it to him?
• Under what circumstances—age, for instance, or structure of the family—is this purpose most important to the customer?
• Under what circumstances is it least important to him? Who are the direct and the indirect competitors?
• What are they doing? What might they be doing tomorrow?

Drucker's Non-Customer Concept

Robert Swaim said :

Drucker coined the term "non-customers" and the importance of finding out more about them and why they do not buy from you. He observed that a company might be happy achieving 30 percent market share for a particular product, however this also means that 70 percent of the market is not buying from you. Why not?

This is such a fantastic approach, right. Starting with people who we do not serve. People we do not know. People who do not buy from us.

To see the unexpected, Drucker suggests asking ourselves:

Who is the non-customer, the man who does not buy our products even though he is (or might be) in the market? And can we find out why he is a non-customer?

Drucker gives a great example to illustrate non-customers from Managing from Results (1964):

One illustration is the experience of a successful manufacturer and distributor of do-it-yourself home-repair and home-maintenance supplies and equipment. A market study brought out that his main customer was the newly married family with the first home of its own. It would be an eager customer for about five years and then gradually fade out.

This is a new dimension for strategy and innovation. Who are our non-customers?

Peter Drucker's concept of the "non-customer" is a powerful reminder that innovation often lies in the unexplored territories of the market. By shifting our focus to those who don't buy from us, we can unearth invaluable insights that challenge assumptions and spark new possibilities.

Reader Pointers:

• Challenge the Status Quo: Don't be content with your current market share. Ask yourself, "Who are we not serving, and why?"
• Embrace Curiosity: Actively seek out and engage with non-customers to understand their needs, preferences, and pain points.
• Reimagine Possibilities: Use non-customer insights to rethink your products, services, and business models.

As Drucker eloquently put it: "The customer rarely buys what the business thinks it sells him. He buys what he considers value." Let's embrace this wisdom and venture beyond the familiar to unlock a new era of innovation and growth.