Understanding the Dynamics of the Value Chain

Focus on the Customer

In his landmark 1973 book, Management, Peter Drucker, perhaps the most renowned management scholar of the 20th century, clearly and succinctly stated the purpose of a business:

There is only one valid definition of business purpose: to create a customer … What the customer thinks he is buying, what he considers value, is decisive—it determines what a business is, what it produces, and whether it will prosper.13

Ashkenas et al., in their principles for minimizing horizontal ­dysfunctions, like Drucker, recommend keeping the focus on the ­customer. They note, “The boundaryless horizontal organization is effective when all employees understand and feel the needs of the ­customer and all internal processes aim to form ...