Solving customer pRoblems must be done profitably (so that you don’t waste society’s resources). But the only test of your business’s ability to solve pRoblems is a clear statement of the pRoblem and proof (which could include perception of a solution but can’t be solely based on customer perceptions) that the pRoblem has been solved.

Profit has been made by many businesses that failed to solve customer pRoblems. Again there is a lag time between people buying a promise and finding out that the business doesn’t live up to their promises. During the lag many businesses are profitable.

For example, a lot of enterprise software buyers get far less than an acceptable solution from their vendors. I even saw one study where a significant minority of software buyers were worse off after employing the software. The profits in those cases were earned while making a pRoblem worse!

The question is, does it work both ways? If solving customer pRoblems => profit, does profit => solving customer pRoblems? When I say this, I mean economic profit, not financial profit.

He says very clearly profit is not the “explanation, cause, or rationale of business behavior and business decisions.” If profit was the proof that you are making a valuable contribution to society wouldn’t it be a valid rationale or at least an explanation of why you behave the way you do? He says no!

Later Drucker says that not making a profit wastes society’s resources. But to stretch “not wasting resources” to the proof that you are making a valuable contribution to society is going too far.

I think his statement that profit “is the test of their [business behavior or a decision's] validity” needs to be explored further. Drucker was (to my mind) very clearly admonishing both the view that profit is a bad thing and that profit is the driver of good decision making.