The Purpose of a Business is NOT Customer Value

I keep saying that the purpose of a business is NOT to satisfy the customer. And people keep asking me why.

Here’s why…

An organization is a multiminded system, a voluntary association of purposeful members who have come together to serve themselves by serving a need in the environment.

Michael C. Jackson – Systems Thinking

Every business is a complex adaptive system of stakeholders working together in order to create value for everyone involved.


The aim proposed here for any organization is for everybody to gain – stockholders, employees, suppliers, customers, community, the environment – over the long term.

W. Edwards Deming – New Economics

Unfortunately, again and again, management fads and hypes try to reduce this systemic view on organizations into a simplistic view, with dumb suggestions such as “maximize shareholder value” or “delight your customer”.


A common deficiency is the failure of such panaceas not taking into account the social system of stakeholders.

Russell L. Ackoff – Re-Creating the Organization

Most fads and panaceas ignore that a business is a social complex system. It’s purpose is not to satisfy only shareholders, or only customers, or only employees, or only the local community.

A business must satisfy everyone!

We will have to redefine the purpose of the employing organization and of its management as both satisfying the legal owners, such as shareholders, and satisfying the owners of the human capital that gives the organization its wealth-producing power—that is, satisfying the knowledge workers.

– Peter F. Drucker – Management

Of course, managing multiple stakeholders is hard! It is difficult to satisfy customers and shareholders and employees and suppliers and the local community and the whole shebang. Indeed, nobody promised business life to be easy. Sorry! But because it’s so hard, dumb people tend to focus only on one kind of stakeholder, and they ignore all the others.

But you’re not dumb, are you?

Why would an intelligent group of people pursue a vision that  ignores the needs of customers, employees, or investors?

– John P. Kotter – Leading Change

As a reader of this blog, I assume you’re not dumb. You’re intelligent! You will follow the advice of leading systems thinkers and management gurus such as W.E. Deming, Russell L. Ackoff, Peter F. Drucker, John P. Kotter and Michael P. Jackson. I assume you will not make the same mistake as all those other people with their dogmatic and simplistic approach to “maximize customer value”.

Because if you do, you will fail…

A corporation that fails to see itself as an instrument of [all] its stakeholders will not survive.

Russell L. Ackoff – Re-Creating the Organization

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  • Yavor

    To me most natural seems if one’s goal is to satisfy himself.
    Taking care of others is just a consequence – we’re just somehow happier to make the whole system (world) better and happy. (Are we?).

  • Pappy

    Yeah? Without the Customer, there is no business – that’s not a panacea, that’s a reality. Without the sale, there is no business. Period.
    Meditate on that!

  • Dave Moran

    I agree that there are multiple stakeholders to satisfy in business. I didn’t have the impression that there were those advocating only one thing, which seems rather foolish.
    I recently blogged about the need to “Delight Your Customer Today, Enjoy Profits Tomorrow,” but only to point out that too many companies over-emphasize the wrong things, like “making money.” (Making a profit is a great measure, it ensures that you are doing all the right things.) Companies need customers and they darn well should understand their customers’ needs and what they value.

  • Kevin Rutkowski

    Thanks for a great post. When I’m in a business analyst role on a software project, it’s amazing how often management will forbid me from talking to some of the key stakeholders. Invariably, there are problems with the software that affect the stakeholders who were ignored.

  • sachin kundu

    perhaps the title should add ONLY after NOT to be correct.

  • Ralf Westphal

    Absolutely agree!
    I´d even go as far as saying, companies are some form of living entity.
    Don´t look for aliens on Mars, they are here on our planet 🙂 An intelligent species – but so different from everything we expected. No little green creatures with tentacles, but much larger and sometimes scattered across the whole planet.
    Companies are autopoietic systems: they sustain themselves. And their primary purpose sure is not to satisfy customers. When founded the primary purpose is to provide a living for the founder – well, by satisfying customers.
    Customer satisfaction is more of a means than an end, so to speak.
    But sooner or later it is of course obvious, that the initial primary goal cannot be seen in isolation. A founder cannot sustain himself for a longer period of time without customer satisfaction.
    So in the end, many parties – parts of the company system, parts of the environmental system – need to be satisfied.
    You can do business without satisfied customers for some time.
    You can do business without satisfied employees for some time. You can do business without a satisfied natural environment for some time.
    You can do business without satisfied IRS for some time 😉
    For prolonged business, though, a satisfaction balance has to be establied. A dynamic equilibrium, I´d say.
    The questions then is: How to accomplish that?
    And I´d say, what´s fundamentally necessary for that is to get all stakeholders at the table for decision making. Because no single stakeholder can reasonably decide what satisfies the others.
    This is what companies have to learn: To not autocratically decide, but to find ways of “collaborative decision making”.

  • Roberto Bera

    “Without the Customer, there is no business”, but customer, business, company, team… are part of systems.
    There is an italian joke not so easy to translate because of the word “RAGIONE” means both “right” and “reason”.
    “Il cliente ha sempre RAGIONE!” – “No, il cliente ha sempre le sue RAGIONI”
    “The customer is always right!” – “No, the customer always has his reasons” .
    And the reasons of the customer may be implicit or unexpressed.

  • Jurgen Appelo

    I didn’t say customer value is unimportant. I say it is not the purpose of the business.
    Breathing oxygen is important for a human being. But it is not the purpose of living.

  • Jurgen Appelo

    I argue against those who say that customer value is the purpose of the business. It is not.
    Indeed, nobody is saying that customer value is unimportant. But it is also not the purpose of existence, as some would want to make us believe.

  • Dirk

    The only purpose of a business is to make money
    Here’s why:
    The economic system is a complex and adaptive social system. A business is a business as long as it survives as a member of the economic system. Since the economic system’s binary distinction is having-money vs. not-having-money, the purpose of a business is to make money. There is no other.
    I remember hearing an EasyJet cabin crew member dismissing the passengers saying “and remember, nobody loves your money more than we do” (with an ironic undertone). A refreshingly honest guy, he earned a big cheer.
    If you set up an organization (better, let it self-organize) to implement a business, in order to be successful our business is well advised to focus not only on customer value, but have an eye on the motivation of all parties involved (aka stakeholders).
    But a business is not required to satisfy everyone. It is basically free to do whatever it can get away with, as long as it makes money. And some people would argue that the most successful businesses, while carefully observing all their stakeholders, do not aim to satisfy them all. I didn’t say I like it this way.

  • Jurgen Appelo

    What you’re describing is the intrinsic purpose, or archeo-purpose as Richard Dawkins would call it. For business it is to make money and survive. For human beings it is consume and reproduce. This is obvious, and it’s not the kind of purpose I’m talking about.
    My purpose in life is not to consume and reproduce, it is “to be immortal by being creative”. The mission of Google is not to make money, it is to “organize the world’s information”. We call that emergent or extrinsic purpose, or neo-purpose.
    But no matter if we’re talking about intrinsic purpose or extrinsic purpose, either way it is never delighting customers.

  • Ralf Westphal

    @Dirk: What´s the purpose of life, an animal, a human being? Is it to breath? Or is it to spawn? Or is it just to sustain itself (keep on living)?
    Autopoietic systems, I´d say, are just that: autopoietic. They try to keep on existing.
    “Purpose” is something attributed to such systems from the outside (or from the inside in case of conscious autopoietic systems).
    So I guess whatever helps to keep a company in existence is to be pursued. If money helps to keep a company in existence, great. If it´s motivated people, great. If it´s a new product, great.
    Companies are not bound by human morale. They are not human. (Like humans are not bound by “bacteria morale” 😉 However, companies are trying to survive in an environment of humans (and other companies) and consist of humans. So they are not independent of them; they better need to take them into account.
    So the question probably is: How to establish a balance between the needs of a company and its constituents and its environment?

  • Charlie

    Great post!
    At the risk of channeling Bill Clinton, it depends on what the meaning of the word “purpose” is.
    Peter Drucker also once wrote, “The purpose of a business is to create and keep a customer.” On the face of it, that would contradict both your post and his own quote which you cite above. But let’s give him a break; in the “purpose” quote, he clearly meant something like, “If you want to set an over-arching goal, or good-thing-to-aim-for, or rallying cry, then a very good choice would be “create and keep a customer.” I would agree.
    But in the bigger picture, I think you are very right. “Purpose” is a wildly ambiguous word. A sociologist writing about “structural functionalism” would use it to mean what role does a business play in a broader social structure? A religious person might view “purpose” as an idea that gives transcendent meaning. And so on.
    I take your broader point to be that mindless adoption of single-variable slogans, and the subsequent imputation of meaning to them, is a wasteful and even harmful endeavor. And one that has been seriously pursued, in particular with respect to shareholder value, the most egregious exemplar of mono-purpose thinking.
    Thank you for skewering this abuse of language and thought.

  • Raju

    Good One and great references to the quotes. I guess total agreement there. We tend to get carried away with the flow with all we hear in a day to day life thinking “Customer” is “Business” but such posts really makes us take a step back and think. Loved it.

  • Joe Talent

    Drucker put it more succinctly in another quote: The purpose of a business is to MAKE and KEEP customers.
    MAKE is easier than KEEP. Keep implies satisfying tomorrow’s customers which means that the platform – the business itself – is hugely important.
    The article below looks at what we feel the key driver to corporate success is: customer engagement.

  • Bill de hÓra

    “In my opinion, building software is about delivering value to customers and making users happy” – Jurgen Appelo
    “I assume you will not make the same mistake as all those other people with their dogmatic and simplistic approach to “maximize customer value”.” – Jurgen Appelo

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