What Is Our Business?

Just like Maximillen Brabec with whom I spent an insipiring day a fortnight ago, Peter Drucker, always seek a reply to the prime question: What is our Business?
I was pleased to read through again the legacy article written by Business Guru Drucker only a year before he left us in November 2005.

Answering the question, What is our business? is the first responsibility of leaders. That business purpose and mission are so rarely given adequate thought is the single most important cause of business frustration and failure. In outstanding businesses, success rests largely on raising the question, What is our business? clearly and deliberately, and on answering it thoughtfully and thoroughly.

With respect to the definition of business purpose and mission, there is only one focus and starting point—the customer. The customer defines the business. A business is not defined by the company´s name, statutes, or articles of incorporation. It is defined by whether customers are satisfied when they buy a product or service. To satisfy customers is the mission and purpose of every business. The question, What is our business? can be answered only by looking at the business from the outside, from the point of view of customer and market. Customers are only interested in their own values, wants, and reality. So, any serious attempt to state “what our business is” must start with the customers´ realities, situation, behavior, expectations, and values.


Who is the consumer? is the first and most critical question to be asked in defining business purpose and mission. It is not an easy or obvious question. How it is answered determines, in large measure, how the business defines itself. The consumer—the ultimate user of a product or a service—is always a customer. Each customer defines a different business, has different expectations and values, and buys something different.

It is also important to ask, Where is the customer? and What does the customer buy? If they ask the question at all, most managers only ask What is our business? when the company is in trouble. Of course, then it must be asked. And then asking the question may, indeed, have spectacular results and may even reverse what seams to be irreversible decline. But the question should be asked at the inception of a business—particularly for a business that has ambitions to grow. The most important time to ask seriously, ‘What is our business?’ is when a company has been successful. Success always makes obsolete the very behavior that achieved it. It always creates its own and different problems.

It is not easy for managers of a successful company to ask, What is our business? because everybody thinks that the answer is obvious. It is never popular to argue with success. But sooner or later, even the most successful answer to the question, What is our business? becomes obsolete. Few definitions of the purpose and mission of a business have a life expectancy of more than 10 years.

In asking, What is our business? managers also need to add, And what will it be? What changes are likely to have high impact on the characteristics, mission, and purpose of our business? And how do we now build these anticipations into our concept of the business—into its objectives, strategies, and work assignments?

Again the starting point is the market, its potential and trends. How large a market can we project for our business in 10 years—assuming no basic changes in customers, market structures, or technology? And, what factors could validate or disprove those projections?

The most important trend is one to which few businesses pay much attention: changes in population structure and dynamics. Populations used to change very slowly, except as a result of catastrophic events. Today, however, populations change drastically, affecting buying power and habits, and the size and structure of the workforce. Population shifts are the only events regarding the future for which true prediction is possible.

Management needs to anticipate changes in market structure resulting from changes in the economy, from changes in fashion or taste, and from moves by competition. And competition must always be defined according to the customer´s concept of what product or service he buys, and thus must include indirect as well as direct competition.

Management has to ask which of the consumer´s wants are not adequately satisfied by the products or services offered him today. The ability to ask this question and to answer it correctly usually makes the difference between a growth company and one that depends on the rising tide of the economy for its development. Whoever is content to rise with the tide will also fall with it.

Asking What will our business be? aims at adaptation to anticipated changes. It aims at modifying, extending, and developing the existing business. But there is need also to ask, What should our business be? What opportunities are opening up? What might we create to fulfill the purpose and mission of the business by making it into a different business? Businesses that fail to ask this question are likely to miss opportunity.

Just as important as the decision on what new and different things to do is planned, systematic abandonment of the old that no longer fits the purpose and mission of the business, no longer conveys satisfaction to customers, no longer makes a superior contribution.

A key to deciding what our business is, what is will be, and what it should be is systematic analysis of all existing products, services, processes, markets, uses, and distribution channels. Are they viable? Will they remain viable? Do they still give value to the customer? Do they still fit the realities of population and markets, of technology and economy? If not, how can we best abandon them—or at least stop pouring in further resources and efforts? Unless managers address these questions seriously and act on the answers to them, the best definition of “what our business is, will be, and should be,” will remain a pious platitude. Energy will be used up in defending yesterday. No one will have the time, resources, or will to work on exploiting today or making tomorrow.

Defining the purpose and mission of the business is difficult, painful, and risky. But it alone enables a business to set objectives, develop strategies, concentrate its resources, and to be managed for performance.


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