A business enterprise has two basic functions: marketing and innovation.
If we want to know what business is, we have to start with its purpose. And the purpose must lie outside the business itself. In fact, it must lie in society, since business enterprise is an organ of society. There is only one valid definition of business purpose: to create customer. The customer is the foundation of business and keeps it in existence. He alone gives employment. And it is to supply the customer that society entrusts wealth-producing resources to the business enterprise.
Because it is the purpose to create customer, any business enterprise has two – and only two – basic functions: marketing and innovation. These are the entrepreneurial functions. Marketing is the distinguishing, the unique function of business.
ACTION POINT: Find out what your customers want fulfilled today. Determine how well your products are meeting the needs of your customers.
Extracted from Peter Drucker’s book The Daily Drucker published in 2004.
