Have you ever stepped back to think about why commercial enterprises exist?
Of course you have. As the main purpose of a company you have perhaps identified the need to make a profit. Or perhaps your choice for the main purpose is to add value to shareholders. Somebody else may have picked up faster growth than competitors, or gaining market share. All these are, indeed, extremely important factors, and are also utilized as measures of the success of an enterprise.
But is any of these factors the fundamental purpose for an enterprise? A reason for the existence of a company?
No, they are not. These factors express the results, which, if all has gone well, have been achieved through the functioning of the company. They do not reflect the real purpose, the core of everything that happens in the company.
That core is – or should be – customers.
Hence, the most important goal of an enterprise is to get and keep customers. This is what “the founder of modern management”, Peter F. Drucker, has particularly emphasized in his numerous writings; a company’s primary responsibility is to serve its customers. When it comes to profit, it is not the primary goal, but rather an essential condition for the company’s continued existence and sustainability.
What does this mean in real life? How should the customer view be reflected in a company’s strategy and activities?
Recently I asked an entrepreneur, who his company’s key customers are. “Anybody can buy my goods and services.” “Yes”, I said, “but who are the most important customers or groups, the ones whom you are connected to and whose needs you aim to satisfy in the first place?”
In order to get and keep customers the entrepreneur has to make a selection. He cannot satisfy the needs of everybody, at least in the long run. He has to define the key customers or customer segments to be able to address their needs properly. Of course he will also sell to others within the limits of his resources, but he has to have a priority order and focus.
When building a company strategy you have to start from defining the customers and their needs. Only after that you can proceed to describing your offering and your role in the value chain, as well as your business model. It is not uncommon to hear new entrepreneurs say: “Here is my product – who would need it?” Instead, they should proceed in the opposite way: first the customers, then the offering.
This thinking process is not for start-ups only! It is a useful exercise for any company, new or established, small or large, to regularly review the basic questions: Who are our customers? What are their needs and how are they expected to change going forward? How do our products and services meet the needs? In what way do they satisfy the needs better than the products and services of the competitors?
The responses to the above customer-focused questions form a “health insurance” for a company. They also pave the way from the strategy to concrete actions. Every single activity in the company should be validated from the point of view of whether it helps serving customers.
What a requirement! How to distinguish necessary activities from unnecessary ones?
In fact, customers probably could do it. Put the Customer Hat on your head for a moment. Go around, see what is being done, how time is being allocated in your company. Would the customer – who actually pays for everything – be pleased with how his money is used?
Most probably you identify several activities or investments where this is not the case. This is your opportunity to make changes that enable you to be more efficient while serving the customer more effectively.
The key to the success of a company is to “bring the customer inside”; to make sure that every activity is focused to address his needs. Any activity that is not – either directly or indirectly – doing this should be removed.
Päivi Heikinheimo, M.Sc (Econ). Consultant, trainer, mentor and writer. Long experience from international businesses and from consulting in renowned consultancies. Strategist and market intelligence professional focusing specifically on growth, leadership and entrepreneurial culture. Päivi’s strategy concept has been instrumental in helping companies to reach their goals. Her book on how to create enterprise successes was published in 2014 (in Finnish). She is an active mentor and Board member of Helsinki Metropolitan Business Mentors association and a Board member of The Kirkkonummi Regional Organization of Enterprises.
For more information, please visit www.keyconsulting.fi & www.menestystarinaksi.blogspot.fi