The Purpose Of a Business Is To Create an?Employee

What kind of organizations will be successful tomorrow?

When I was four, my mom went to a department store to buy some clothing for me and my brother. We lived in a socialist country at the time, so one needed to stand in huge lines to buy a thing. That time, it took my mom five hours.

And she bought not what she wanted but what was available. The local economy didn’t give citizens much choice, so they were happy with what they could obtain. Organizations in the communist countries were customer-friendly and consumer-oriented — but only on paper.

At first glance, companies in the Western world appear to treat customers much better. But we still face poor service, low-quality products, and the necessity to take too many actions to receive what we pay for.

If you get mad every time you need to create an online store account to make a one-off purchase or fill out dozens of paper forms to prolong your driver’s license, you know what I mean.

It happens because the idea of an organization as it is understood in the modern world is broken. Therefore, we need a new one.

Do you feel uncomfortable? They don’t?care.

We live in a world where people are planning to live on Mars and can call each other across continents for free. However, when hotel wifi is fast and reliable, we still feel happy, though it should have become the norm long ago.

A friend of mine recently wrote a blog post full of gratitude about her unexpectedly pleasant experience with her bank’s customer support. But isn’t service always supposed to be friendly? Isn’t it feasible to build a company with excellent customer service?

We all know it is, and some companies have proved it very well. But why are they exceptions rather than rules?

Because somebody out there doesn’t care about customers.

Imagine you need to complain about the poor quality of a recently purchased product. When you address the organization about this, you interact, directly or indirectly, with dozens of people, even if you never see most of them.

• Somebody answers your call or email. Let’s call this person Jane.
• Jane has a superior who supervises their work.
• Someone developed instructions, guidelines, and protocols that Jane and her boss follow.
• The software engineer created a computer program Jane uses and the website you see.
• The HR director implements a program that aims to increase employee engagement.
• The company’s CEO devises the business strategy and develops an annual budget. Jane’s wage and the funds the enterprise is willing to spend on customer support depend on the budget.
• The board of directors approves the strategy and the budget.

So, if you feel that the company isn’t very customer-friendly, and you have been through some unpleasant moments while trying to solve your problem, it’s like some (or maybe, all) of those people didn’t have sleepless nights thinking about customers.

And it doesn’t mean they are cynical, cruel, or indifferent. They can all be kind and caring — on an individual level. But an organization isn’t just a few individuals working simultaneously.

Some fundamental logical and psychological problems prevent the company from becoming customer-oriented.

‘Why does your business?exist?’

I often ask this question in different situations and invariably hear the same answer — to make a profit. Mature entrepreneurs, young startup founders, CEOs, and top executives are remarkably unanimous on the matter.

And when I ask questions about social responsibility, ESG, or customer satisfaction, they say they take it very seriously, but, at the end of the day, business is all about money — period.

Karl Marx was one of the first scientists who?put it this way, but he wasn’t the only one. The whole economic theory is based on this idea.

Some experts who believe that business isn’t ‘all about money’ insist that companies satisfy customer needs, add, and, thus, enhance the public good.

In theory, it looks idyllic. Businesses fight with each other for customers’ money (we call it ‘competition’) by enhancing the quality of their products and decreasing the price. But what looks perfect on paper not always works in the same manner in the real world.

• I have no need for software that always fails me when I need it most of all.
• I don’t want to hear ‘your call is very important for us’ for twenty minutes while trying to reach out to customer support.
• I don’t want to eat food made with using so many chemicals that it almost can glow in the dark.
• I would like to buy printers that don’t require an IT degree to connect them to my computer.

My needs are plain and straightforward, and I express them clearly and loudly. And yet, few companies seem to be eager to fulfill them.

Some business leaders would sincerely like to bridge this gap. But to do so, they need to persuade Jane and her colleagues to think more about us, customers. But how can they do it if the whole business world revolves around money?

Read any business magazine or newspaper. If they talk about a company’s success or failure, what indicators do they use? They use share price, earnings, EBITDA, revenue, like-for-like sales, but not customer happiness.

Do investors often ask entrepreneurs about customer happiness? I haven’t heard of it. Investors are more concerned about ROI.

Excellent service is expensive. Sound quality is pricy. Friendly customer support is costly. They kill the earnings, and that’s why business leaders try to save money on them.

If we still believe that business exists to make a profit, both customers and employees are the assets we exploit to reach our selfish goal — to become wealthy and famous.

No matter what your corporate presentation says about your employees, but until you treat them as assets, they will treat your customers as a burden.

But we can look at it from a different perspective.

To create an?employee

There is only one purpose of a business: to create and keep a customer

Peter Drucker, The Practice of Management

Some great business thinkers taught us that profit can not be a primary business goal.

“The single most important thing to remember about any enterprise is that results exist only on the outside. The result of a business is a satisfied customer. The result of a hospital is a healed patient. The result of a school is a student who has learned something and puts it to work ten years later. Inside an enterprise, there are only costs.?Peter Drucker, Management: Tasks, Responsibilities, Practices.?Source.

“Shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal…”?Jack Welch,?source.

But another quote is more important for this article than the ones above — the quote I used as an epigraph above. The full quote?says:

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic marketing and innovation functions. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

The meaning of the idea is this: a business creates customers by offering them new products they haven’t seen before. Doing so, and if the consumers like the products, the business turns people into loyal clients.

So, according to Peter Drucker and some other strategic thinkers, business leaders should focus on customers and their needs, not on profit. Profit is not a goal and not a cause but an effect.

But we can apply the same logic to employees.

Paraphrasing Drucker, we may say that ‘there is only one purpose of a business: to create and keep customer-focused employee.’

In the same way a customer shouldn’t be a ‘walking wallet’ for the business, an employee must not be ‘an asset.’

But it has to happen not only because employees are humans who deserve respect and care. And not just because workers are more productive when they can employ their creativity and full potential.

Thousands of tons of ink have been spent on books on how to lead large groups of people. Many of them are great and instructive.

But you can find the word ‘customers’ in a few of them. And in most cases, it means staffers are the assets. But I believe this worldview will disappear sooner or later.

Customers are the only source of a company’s prosperity.

People and?Profit

I am not an idealistic dreamer who envisions a world where people work for free or all organizations are non-profit.

Any business should bring profits to its investors. Employees will receive their wages and bonuses and dream about a pay rise or promotion.

But if you change your workers’ mindsets and switch their attention to customers, you’ll definitely benefit from this move.

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