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The Purpose of a Business

A business enterprise has two basic functions: marketing and innovation.

If we want to know what a 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 a business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. The customer is the foundation of a 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 a 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 needs your customers want fulfilled today. Determine how well your products are meeting the needs of your customers.

The Practice of Management

* Source: The Daily Drucker by Peter F. Drucker

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