Peter, Where Art Thou?
The purpose of a company is to create a customer
The first book I bought for my first graduate school class decades ago was “Management: Tasks, Responsibilities, Practices” by Peter Drucker. He wrote it in 1973, and it’s 800 pages of pure genius.
I’m not sure I needed to buy another business book. Seriously.
I was reminded of this when I recently read “The 250 Most Effectively Managed U.S. Companies — and How They Got That Way” (The Wall Street Journal, December 6, 2017). Fueled by Peter Drucker’s teaching, it ranks companies on five metrics: Customer Satisfaction, Employee Engagement and Development, Innovation, Social Responsibility, and Financial Strength.
It seems the good folks at the Drucker Institute were concerned about short-term thinking in the business community, and this is the output of their thoughtful pondering.
These are the top 10 companies in the first ranking:
- Alphabet (At this point, you should consider renaming your company starting with an “A.”)
- Johnson & Johnson
- Procter & Gamble
A damn good list. Yes, the methodology only considers large public companies because of access to public information, but for leaders in any size company who are challenged by daily firefighting, working on the urgent rather than the important, I suggest measuring the five buckets mentioned above to sharpen your focus.
I’ve worked with and spoken to hundreds of CEOs in my consulting career, and — not to poke a stick in their eyes — not one has effectively measured more than two of the above criteria. As you might guess, financial results are the only consistent metric.
I’ve recently spoken to groups of executives about what I believe to be the three most imperative questions a CEO must ask: What is our strategy? How do I create an aligned and committed team? Who do I need to be as a leader? Everyone agrees commitment is imperative, but I’ve only met a couple of CEOs who measure it.
Leadership is about driving change, and management is about taming complexity. At the intersection of those two might be the question, “What’s our focus, and how do we measure it?”
We can’t forget that Drucker also said that the purpose of a company is to create a customer. Once you’ve found a need to satisfy, measuring the five key metrics above would be a grand way to stay on track!