Questions? Feedback? powered by Olark live chat software

The Purpose of a Business

PurposePeter Drucker famously wrote in The Practice of Management that the purpose of a business is to create and keep a customer.

While that may indeed be true, it’s the bare minimum and something that’s required to keep the doors open (unless you’re VC funded.) I think to aim there as the purpose of a business is to shoot terribly low.

I believe the purpose of a business is to create and keep purpose.

While purpose can be a loaded word for some, I think that in this day and age businesses that are built to do something that people can rally around, regardless of what the company actually makes and sells, are the ones that will naturally experience growth.

Organizations that can foster and communicate, what I called in The Referral Engine, a higher purpose, will always attract employees, customers and opportunities that are drawn to that higher purpose. Attempting to serve an organization’s higher purpose is also a great way to maintain business focus when stricken by the idea of the week.

Some of the most successful brands today, Apple, Zappos, and Southwest, have captured people’s hearts and imaginations around simple purpose. Now purpose doesn’t always mean a “noble” cause as we might traditionally think about it. Purpose can be an innovation that attracts, a culture that attracts, or a single idea like trust.

People commit to companies, products and stories that are built on and positioned with a simple, easy to communicate purpose – we commit to things we believe in and companies that get that make their entire marketing about purpose instead of product.

  • 37Signals is an anti software company that happens to make the simplest software on the planet
  • Evernote is trying create memory as a platform and build universal trust around data
  • Zappos is about customer service and they happen to sell shoes
  • Southwest just makes all the other airlines look silly by doing things that seem normal
  • Apple makes computers for people that want a simple, intuitive, stunningly designed experience

I propose that commitment to a product, service, company or job comes from connection and connection comes from making a business about a single minded purpose that happens to sell something.

So, what does this mean for your business? Can you discover a purpose greater than simply creating a customer, can you create a business, a culture, built to communicate that purpose? What might change if you did? What organizations could you model your working on purpose business upon? How can you draw people to commit and connect to your higher purpose?

Don't miss a single word!
Complete the form and we will send you articles just like this every week.

  • http://goodwolve.blogs.com/moxieworks Jacqueline

    You are right on target. In all of my years of working for large and small businesses it is those that cultivate a practice of service and simplicity that seem to do the best. It isn't complicated to be a good person and it should be complicated to do good work. I think we are moving in a direction where some companies are getting that – and it makes me so happy to see.

  • http://www.therisetothetop.com David Siteman Garland

    Purpose goes WAY beyond product.

  • http://twitter.com/StartupSidekick Jason Sullivan

    As usual, great article John. Nice reference to Peter Drucker (who is an absolute genius). I think you are correct however when you say that we need to extend beyond simply creating customers. It is the auxiliary characteristics of a business that make it truly memorable. Many companies sell books, but I like Amazon because they offer me other books that I am likely to buy. Amazon also provides user reviews on books. They utilize Business Intelligence to provide a tailored experience that you simply can't find in a bookstore, and that's why I keep coming back.

    Jason
    http://www.facebook.com/pages/StartupSidekick/1… (Follow me on Facebook for more entrepreneurial advice)

  • http://www.carronlinemediallc.com/social-media-manager Social Media Manager

    I agree, but at the same time I disagree. Yes, a business has to have a purpose but it also HAS to make money. It a utopian world, businesses could survive on purpose. However, in our real world, they can only survive on profits.

  • http://www.ducttapemarketing.com/blog ducttape

    I guess I'm saying that if you go into business only to make money it probably won't be very satisfying, If you capture a purpose that attracts both employees and customers, you are more likely to build a business that is vastly more profitable and more satisfying.

  • http://www.marsdorian.com/ Mars Dorian

    it even goes further – I believe that people buy a product because of the purpose behind it !

    Apple is a glorious example – what do they do ? They believe in thinking differently – breaking the status quo (Microsoft ?) by inventing remarkable products. If you buy something from Apple, you say: I'm different – I belong to an elite group that separates itself from the majority !

    It's a powerful mind statement, and all great brands that are flavored with a purpose and mission (Harley Davidson = freedom) convey that to the happy client.

  • http://www.ducttapemarketing.com/blog ducttape

    And I think that's the innovation of Amazon that draws people to their purpose – they wanted to be the world's biggest and best book store and do it in a way that created a better experience – that's purpose pure and simple and it's attractive

  • Mike Moore

    Drucker's genius is capturing a rich and complex idea in a simple statement. John's article is not an extension of Drucker's idea. It is instead an unpacking of the richness of the Drucker's simplicity. Mission and purpose are embedded in the notion of getting and keeping customers.

  • http://twitter.com/tuuk_ tuuk | innovation

    I wanted to dismiss your thoughts; Stengel and even the guys at GSD&M have been pushing “Purpose” based brand strategy for organizations for years now.

    But the nugget and underserved component of your post is: conviction and commitment. Only when you have your organization driving towards a central tenet and organize everything around it to deliver will it ever be achieved.

    Call it purpose, brand idea, whatever. The point is when you decide what your promise will be, you better deliver it throughout the customer experience AND the organization. Be full of action, not fluff.

    Good stuff. Thanks for the post.

  • http://simplewebguys.com JayTurn

    It is very difficult to give up on your business if it is built on purpose. It is also very difficult for employees to give up on a workplace that gives them a sense of purpose.

    Richard Branson had the most satisfied staff, even though they were paid less than most of the other airlines. His company purpose of combining innovation with fun resulted in a workplace employees didn't want to leave. For memory, he held monthly staff parties which created a culture where socializing wasn't frowned upon in the workplace. No other airlines offered that.

  • bkjrecruiter

    “The purpose of a business is to create and keep purpose.”
    This is $ in our new social technology/digital business world… Best, Brian-

  • http://www.417marketing.com/ Nick

    Great post John. I loved Referral Engine (it is on my kitchen table right now – and I plan on reading through it for a second time this weekend). While I'm a big fan of Drucker (it's the MBA in me), I see your point. Having and maintaining a purpose is critically important. Like you stated, a purpose gives something for everyone to rally around. While in the macro-sense Drucker is technically correct, your point here is valid and something I can get behind. Thanks again.

  • http://www.ducttapemarketing.com/blog ducttape

    A purpose that drives you also allows you to get through the BS times – an there will those!

    Thanks, glad you loved the book.

  • http://www.facebook.com/tiagocsimoes Tiago Chinez Simoes

    Hi John,
    Really nice article!
    Peter Drucker was a genious indeed, but i preffer your way of thinking.
    We do business because we love to, and not just to keep a customer.
    Sorry for my bad english :-)
    Best regards from Brazil.

    Tiago C. Simões

  • http://www.islandbuzzy.blogspot.com Island Buzzy

    So true, like the addage “form follows function”, I equate function to purpose…the form will come as I focus on it.
    Build it and they will come! Also keeps my adhd from getting the best of me…ha!

  • http://www.gotoorder.com/ Cting98

    Apple is a glorious example – what do they do ? They believe in thinking differently – breaking the status quo (Microsoft ?) by inventing remarkable products. If you buy something from Apple, you say: I'm different – I belong to an elite group that separates itself from the majority !

  • http://www.gotoorder.com/ Wholesaleedhardychothes

    I wanted to dismiss your thoughts; Stengel and even the guys at GSD&M have been pushing “Purpose” based brand strategy for organizations for years now.

  • http://twitter.com/iamchrisgreen Chris Green

    Interestingly though… Apple are getting to the size where it will no longer be 'different' to own an apple product. In fact, we may have reached that point already?

  • http://www.ducttapemarketing.com/blog ducttape

    I agree the iPod and iPhone certainly crossed that line, but I still see it in the computer Apple vs PC world