Sound corporate management requires the right purpose. The corporate purpose determines strategy, structure, and culture. If the purpose is wrong, the company cannot be managed correctly.
In a free economy, there is the freedom to choose the wrong purpose. This freedom, however, is deceptive, as it leads to dangerous misjudgments.
Wrong purpose decisions are shareholder value, (stock market) value maximization, and stakeholder value. They inevitably program the company for wrong decisions and prevent the development of a healthy enterprise.
There is only one correct purpose decision: The purpose of the company is the transformation of resources into value for customers.
Or, as Peter Drucker stated: “The purpose of a business is to create a satisfied customer.”
Value consists of problem solutions for which the customer is willing to pay. The only correct corporate purpose is therefore customer value.
Profit is not the goal of the company, but the result of fulfilling its purpose. It serves as a control signal indicating whether the company is doing the right things and whether it is doing them well.
A healthy company earns profits, but not because profit is its objective. Customer orientation typically increases profit and makes it sustainable.
In the corporate approach, the healthy company itself stands at the center, not shareholders or stakeholders. Their legitimate interests can only be fulfilled as long as the company has satisfied customers.
If the satisfaction of shareholders or stakeholders is prioritized, the downgrading of customer value is inevitable. As a result, value distribution takes precedence over value creation, which can only occur with the customer.
It is logically impossible to find a correct strategy if it is not explicitly oriented toward solving customer problems and creating value for customers.
The corporate purpose must be specified for each individual company: Which resources are transformed into what kind of value for which customers?
Resources include goods, services, information, and knowledge. In the knowledge society, knowledge is the raw material, the means of production, and increasingly the product itself. What is decisive is the knowledge that makes knowledge effective in creating value.
———————————————
INSTITUTE FOR STRATEGIC LEADERSHIP DEVELOPMENT RESEARCH
The right path, a bright future
🏢Address: 266 Lac Long Quan, Tay Ho Ward, Ha Noi
🌐Website: sleader.vn
📧Email: [email protected]
📞Hotline: 0965 965 368 / 0969 753 688 / 024 3201 1519
📱Zalo: Sleader/ 0969 753 688
