Think about it: Who is your customer? What does this customer value?
These are two of Peter Drucker’s “Five Most Important Questions” for your organization. I often find myself returning to Drucker’s questions in strategic discussions about a business or business idea.
Having clear answers to Drucker’s five questions doesn’t guarantee your success, but you can’t run a successful organization without answering them:
- What is our mission as an enterprise?
- Who exactly is our customer?
- What does this customer value?
- What is our plan?
- What are our results?
I have not found a better way to describe the core management responsibilities of leaders and entrepreneurs.
Three of the elements — your mission, your plan and your results — are required to lead and manage any organization. But your mission, plan and results depend on who your customers are and what unique value you bring to them. As Drucker says, the customer is the most important thing in a business: without customers, you have no business.
“Who are your customers?” and “What unique value to you bring them?” are the two most important questions for leaders and entrepreneurs to answer.
Drucker wisely differentiates between primary and secondary customers. Yes, there are many groups your business serves, but your primary customers are those “whose lives are changed by your product.” Everyone else your organization serves is a secondary customer. Your top priority should be delivering value to your primary customers.
For example, a school serves students, teachers, communities, school districts, and others — but only students’ lives are changed by the product of the school. A business serves investors, employees, partners, suppliers and others, but their customers pay them because they expect their lives to be positively changed in some way by the business’ product.
So when you see a struggling organization, of any size, it’s likely the problem can be traced back to Drucker’s two questions about the customer. Sometimes the company has lost focus and tried to serve too many customers, serving no one well enough. A startup organization with big dreams of creating a large market may need to focus on one target segment in the short term to survive.
Which of Drucker’s five questions presents the biggest challenge for your business? When you know the answer, you have defined your top priority as its leader.