Why does the organization even exist?

Peter Drucker has a famous quote where he said "the purpose of business is to create and retain a customer" . I love Peter Drucker's work. The guy was brilliant even in his seemingly stodgy way.

A while back we had an "All Company" meeting. After the meeting, I was told a story about a client who was upset. We had agreed to deliver a project for the client under a very tight timeline. We originally said we couldn't meet their aggressive timeline and we were ready to walk away from the work rather than let them down. But because of the significance of the work to them, we collaborated with their team and said we could do it, but only if we agreed upon a very structured process with a couple of controlled incremental reviews of the work.

All was proceeding as planned, the client was happy with the initial reviews, and then someone from the client outside the core group got involved. They wanted to add another review and additional reviewers into the process. One of our consultants said we simply can't meet the dates we agreed to and do that….one reason she gave was because our entire company was tied up for two days at our All Company Meeting (while it's debatable whether she needed to shared why since we had already said we couldn't meet the timeline with this process, her doing so was probably a reflection of our belief in transparency). Predictably, his reaction was something to the effect of "I don't give a **** about your company meeting, you only exist because of clients like us."

That story was relayed to me and it really caused me to pause. He had a point. We pride ourselves on being client-centric. We frequently hear from clients that a reason they work with us is because we are adaptive, and responsive and easy to work with. Those characteristics of our brand are really important to us. But as I thought about his comments, I also thought the following: "Yes we exist because of clients like you….And also we exist because of our people." For us our company meeting is a signature event. It is a service and gift that as a leadership team we provide to our internal customer, that is, our associates. It aligns and energizes them and hopefully inspires them to do even better work for our external customers.

Ultimately I think every organization has two sets of customers - those external who pay money in exchange for value and those internal that we pay in exchange for value. If we serve one at the detriment of the other, things will unravel. We've believed that for 14 years and it's served us pretty well in growing both externally (as evidenced by 10 straight years in the inc. 5000 and numerous clients we have healthy, fantastic, respectful relationships with) and also internally (as evidenced by Best Places To Work, internal survey data, etc.). We believe that in today's economy, organizations have to realize that they exist to serve people - both externally and internally. And it's tough choices you have to make to stay to committed to that. But it will and does pay off.

I think Drucker was right, but I think his quote was incomplete: The purpose is to create and retain a customer by creating value in ways that individuals can't do alone. The organization becomes the broker of this value, serving people on both sides of the equation and hopefully raising the performance and quality of life of both.

The bottom line is, people don't exist to serve organizations, organizations exist to serve people. And if we as leaders take care of our people, our people will take care of our customers. 

*By the way, the story ended well - we continue to have a strong relationship with the client (not sure what became of the outside reviewer!) and we've done many projects together since.