If you have had some interaction with the discipline of economics at some point in your journey, you are very likely familiar with the name Adam Smith – he of the ‘invisible hand’ theory which went on to become a virtually religious creed in the development of much of today’s assumptions underlying the free market model of economic governance. The core of Smith’s thesis was that humans’ natural tendency toward self-interest (looking out for yourself) results in prosperity. I was quite intrigued therefore to find that the same author, in a separate work “The Theory of Moral Sentiments” opened with the following statement: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it”. The striking contrast between these two positions is that in the former the focus was self, while in the latter it was the pleasure of seeing others happy as the motivation to enterprise and prosperity. Peter Drucker, one of the foremost experts on management theory in his work “The Practice of Management” appeared to agree with Adam’s opening reflection in “Moral Sentiments” when he noted that the only valid definition of business purpose was to create and keep a customer.

In our time though, the majority of enterprise is operated on the basic assumption of Adam’s first theory – the self-interest of man – even though his opening in “Moral Sentiments” more closely captures why an entrepreneur is often thrilled to be launching out on a new project. The overwhelming focus in business management, taught in the management training by most any business school worth its name today is on maximizing benefits (read profits) for shareholders, with most other stakeholder concerns being peripheral to this, most importantly the worth of the customer to the enterprise. Businesses do all they can to be efficient not so much because they are inspired to translate efficiencies into awesome customer experiences; these efforts are mostly sold as creating additional return or greater profits to shareholders. Sales efforts often focus on persuading customers to buy what the business is offering, even when the business has not invested in establishing whether they really want, or need what is on offer the way it is on offer. Customers often find themselves treated as incidental rather than central to the interests of the business, with the adage “the customer is king” sounding really condescending to them. Small wonder then that they are increasingly cynical about business.

Now look, don’t get me wrong. Efficiency is good. It is right for shareholders and other investors to earn a profit from the risks they take in any business enterprise. On occasion it is necessary to trim waste from the way the business is operating. The issue though is the focus. The primary beneficiary from trimming of waste should be your customer, with the shareholder rewards accruing as a byproduct of an enthused client. In the local enterprises in which I have seen cost cuts and other waste trimming efforts, the efficiencies have not been reinvested in research and development to develop new solutions for customers. On occasion the costs that have been cut are those relevant to customer engagement and marketing initiatives – those meant to give customers a meaningful engagement in the value creation process of the business. In place of new solutions to emerging trends, challenges and changes with customers, I have seen a larger focus on ‘incremental’ improvements to existing products, all the while driving hellfire sales efforts to impress on our customers how the incremental change is actually ‘innovative’ and worth an extra few shillings of theirs. Profits are growing not because of clientele and increasing revenues; the trimming of waste is what’s driving the bottom line. This will keep the lights on but may not be the most sustainable orientation if you intend your enterprise to be long-term.

I like the possibility that the greatest motivation for any enterprise is the creation of an experience that pleases and continues to create customers, with profit and all other financial benefits being the byproducts of this drive. It is an invitation to fall in love with your customers. This will require you to be fascinated with your customer (not in a weird way – you get what I mean!): who exactly are they; how do they live, what do their daily routines look like, how do they buy goods and services; how do they sell, how (and how often) do they communicate, earn money, solve problems, celebrate, mourn; what drives them crazy; the list is endless. You will need to find means to cultivate meaningful engagements with them, be present in their lives – share in their celebrations, identify with them in their pain and anxiety, work with them through their problem-solving processes. You will need to consider how to build systems that support this engagement into your day to day business operations, find partners and networks that give you access to this knowledge at scale. The most exciting part will be creating and maintaining a pipeline of solutions that meet your customers’ needs – both those they knew of and those they had not really gotten around to articulating – and finding ways to place these solutions within their reach; in pricing, location, distribution, name it! It will be a thrilling adventure to organize your enterprise around this aspiration within the context of the purpose for which your business exists. Along the way shareholders will receive their return – maybe not every quarter will be profit earning or maximizing, but as long as there is a commitment to the pleasure of the customer, a recognition in service to them that they are human, precious, highly esteemed, intelligent; there is every reason to expect that over time your enterprise will grow to scale and be sustainably profitable.

I am also excited that I have found recently some authors that hold this view. “The Age of Agile” by Stephen Denning is a really good read as a start on exploring the customer centrality perspective on business organization. There are also examples of companies, big and small that are making the effort to organize themselves around this principle. Amazon and Apple are two of the big ones that come to mind. Amazon in particular, made their first quarterly profit in 2001, and the first full annual profit in 2003 – 9 years after the company started in 1994. In this same period however, they were bringing in impressive revenues – $5.3BN in 2003 alone when they made the first profit. The company prioritized research and development of solutions to please their customers over the generation of profit to return to shareholders. In 2018 the company made $11BN in profits and the company founder is now the richest man in the world. Other businesses like Microsoft, Spotify, SRI International, Menlo Innovations (to name a few) are also seeing impressive business performance from the central focus on delighting their customers. Your enterprise can be one of those whose name is listed among these too.