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?

How Evernote Is Changing the Free Model

Marketing podcast with Phil Libin (Click to play or right click and “Save As” to download – Subscribe now via iTunes

evernoteFor this episode of the Duct Tape Marketing Podcast I had the chance to visit with Evernote CEO Phil Libin.

Evernote is a simple service that allows you to track and store everything you want to remember and get it out of your “meat brain” and housed somewhere safe and trustworthy. About 9,000 people a day are joining the free version of this service that also syncs incredibly well with iPads and mobile devices. (GTD fans, funny David Allen story here)

One of the reasons I wanted to record this show is that on top of being a user of the service, I’m taken by the fact that Evernote has also figured out how to get serious numbers of users to upgrade from the free to the premium version. The traditional freemium thinking is that you get lots of users and figure out how to turn them into paying customers.

While the web 2.0 landscape is littered with lots of bad freemium ideas, Evernote is turning users into fanatics and fanatics into profit. So, how do they do that?

According to Libin, “focusing on the free part is where people make the mistake. Evernote focuses instead on how many people are paying and how much it costs to get them. That’s the approach all businesses need to take. Freemium doesn’t change that approach, it just changes the math.”

To get a million people paying you just need to get ten million people using it. The free users are just part of the cost.

While this explains, to some extent, why Evernote is profitable, it doesn’t capture the other part – why people would pay for it. In my view, Evernote has done a couple things that people find attractive and worthy of commitment. They’ve created something that works and is simple – simple to use, to explain, to adopt. And, they’ve captured trust – repeatedly stating that your memories are safe. Evernote is adamant that they have no data deals in the works, just put your stuff here and don’t worry about any funny stuff or privacy issues. Those two items are central to what gets people to want to pull out their wallet and pay for the premium version – there’s actually an element of support as well as value.

Too many freemium offers start off with an offering that’s not worth paying for, assuming lots will jump on board simply because it’s free.

I’m working on my next book and using Evernote as a significant bridge to all the information I need to explore and save for this project.

So, tell me your Evernote story, how are you using it?

The Duct Tape Marketing Podcast is brought to you by Fairfield Inn & Suites Small Business Road-to-Success Challenge