Saturday, April 18, 2015

Arguing with Drucker

@sheldrake via @cybersal challenges Peter Drucker on the purpose of business.

"Peter Drucker asserted that the purpose of business is to create and keep a customer. He was right at the time in offering previously inward-looking firms a more appropriate beacon. His dictum is, however, wrong for our time."

Philip Sheldrake's challenge is based on two points.

1. A concern with the health and resilience of living systems such as organizations, society and the environment.

2. The need to recognize and understand complexity.

I completely agree with these points, but I do not think they contradict Drucker's original statement of purpose. As the webpage cited by Philip indicates, Drucker always called for a healthy balance - between short-term needs and long-term sustainability - and I think he would argue that a concern for resilience and the need to understand complexity were entailed by a customer-centric purpose.

Philip proposes an alternative purpose: Business exists to establish and drive mutual value creation. My problem with this alternative formulation is that it fails to answer Lenin's fundamental question: Who, Whom? There are businesses and business networks today whose purpose appears to be to mutually enrich a small number of mutually back-scratching executives at the expense of everyone else, including customers and retail shareholders. Drucker would not approve.

A statement of purpose is essentially an ethical statement (what is the value of the business) not an instrumental statement (what is needed to deliver this value). So let me propose an alternative ethic, a compromise between Drucker and Sheldrake, based on the wise saying of Hillel the Elder.

1. If a business is only for itself, what is it?
 (Expresses a concern for customers and society)

2. If a business is not for itself, who is for it?  
(Which may entail a concern for resilience and complexity)

3. If not now, when?  
(Expresses a concern for a balance between the present and the future)

Philip Sheldrake, What, exactly, is the purpose of business? An answer post-Drucker (April 2015)

Peter Drucker's Life and Legacy (Drucker Institute, retrieved 18 April 2015)

Wikipedia: Hillel the Elder, POSIWID, Who, Whom?

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