“Profit is not the explanation, cause, or rational of business behavior and business decisions, but rather the test of their validity…. There is only one valid definition of business purpose: to create a customer. ”

Lately, arguments over the role of profits spilled into ethics and paychecks, and of course, we remember the late 1990s hype ‘customers are first’. But if you look closer, Drucker saw the rise in importance of demand. The mantra of ‘build it and they will come’, no longer works in open markets where markets shifts are fast and brutal.

“Marketing and innovation are the foundation areas in objective settings. It is in there two areas that a business obtains results.”

If the purpose of a business is to create a customer, than markets, and the process of building markets (innovations) and finding customers (marketing), are the standards by which a business operates. As managers quickly realize no execution, no business.

“Basic assumptions about reality are the paradigm of a social science, such as management.”

Drucker proclaimed that a company’s greatest asset is its people. Sadly, most companies and business schools have yet to realize that Management is a people’s business.

What about the individual?

“Effectiveness must be learned. … The knowledge worker is, first of all, expected to get the right things done…. But there seems to be little correlation between a man’s effectiveness and his intelligence, his imagination, or his knowledge.”

Peter Drucker predicted the emergence of a Knowledge Society. But what does it mean to society, to business, to people. That’s a job for us in the 21st century to find out. He will be missed.

(Quotes from Peter Drucker, The Essential Drucker, Harper 2001)