It’s easy to get overwhelmed with what it takes to effectively run a company today.

September 1, 2021


4min read

Sam Frentzel-Beyme


All you have is marketing and innovation. In that order.

The Short of It

  • The purpose of a business is to create a customer.
  • Being able to "create a customer" requires knowing and understanding exactly who your customer is.
  • Marketing is the collective set of activities focused on knowing and communicating with customers in a way that allows a product or service to "sell itself" .

It’s easy to get overwhelmed with what it takes to effectively run a company today. The complexity of today’s products and services means more diverse and distributed teams, which take more time to integrate and oversee. More complex products and services also lead to more complex organizational structures with multiple layers of management, tracking and KPIs.

What this means for executives is that it’s easier than ever to get lost in data and daily emergencies. So, what are the right things to focus on?

Peter Drucker, American management consultant, educator and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation, shares a wonderful piece of clarity:

“Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

- Peter Drucker

The concepts expressed within these three sentences are substantial and fundamental, so let’s break them down a little. Drucker clarifies three things:

  • 1. Purpose of a business and its two basic functions
  • 2. Marketing
  • 3. Innovation

Drucker’s perspective is that you must know what things are in their simplest terms.

A business, for example, is not set up to change the world (although it could). Nor is a business set up to simply make or produce something (although it does). A business is set up because it can convert ideas into products or services that customers are willing to pay for because those products and services solve a real-world problem.

So, we could say that the purpose of a business is to solve as many customer problems as possible with a given set of products or services. In simpler terms, we could say that the purpose of a business is to make sure that the product or service is provided to every single person who can benefit from its use and is willing to pay. To use Drucker’s words, the most critical step is to “create a customer.”

But how do we define this critical step? If creating a customer is the act of getting them to exchange payment for solution, then one of the key goals needs to be to find the customers that need what you’re selling. Here again, Drucker clarifies:

“The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

- Peter Drucker

If the goal is to get your products and services into the hands of those who can benefit and are willing to pay, then the next logical step has to be understanding who these people are and how they think. In Drucker’s words, we need to “know and understand the customer.” Both of those terms are worth additional exploration.

To know something is to have an awareness of it through observation, enquiry or access to information. We might know our customer has a specific problem or works in a specific industry or even has a certain job title. There are multiple layers of variables that we can know about our customer, and it’s important that they are identified and well-researched. But discerning these facts and labels informs us about just one aspect of a person—just like knowing a person’s name is important, it certainly isn’t representative of everything about them.

What adds real value to an organization is understanding the customer. This means moving beyond classifying people by what they do or where they do it and instead towards insights about how that person thinks about their job, their world and their responsibilities as both an employee and a human being.

There must be an attempt to tap into the essence of who that person is and what drives them, since none of us work at our jobs inside a vacuum that separates us from who we are outside of work. Who we are is not defined by one point in time, but by an accumulation and amalgamation of our experiences over a lifetime. Thus, the goal of marketers and leaders with sharp marketing mindsets should be to understand how customers have spent their time and what experiences have shaped them.

Taking the time to understand these insights is critical as it is only by understanding how the customer perceives the world that we can figure out the best way to connect with them. An example here is helpful:

Two individuals are HR executives in mid-sized firms in the same industry and in the same part of the world. They are both looking for software to help them be more efficient at their jobs. In terms of knowing the facts about each potential customer (job title, role, responsibilities), we will, for simplicity’s sake, consider them to be pretty much identical.

But let’s take a deeper dive into understanding each customer. For our example, let’s say that we discovered talks and presentations by both executives and they revealed the following:

Executive A

This person sees the HR function really as one based on efficiency and ensuring the operational aspects of the job run as smoothly as possible (payroll, health insurance, retirement accounts, etc.). This person knows a lot about the company as they were one of the first employees and rose through the ranks over the course of many years. A guiding philosophy for this person is to make sure that there are clear rules, so that employees know what they should and should not do. This person doesn’t believe in a lot of frills, but hard work and discipline.

Executive B

This person sees the HR function as a key strategic role to not only help to build and maintain a strong corporate culture, but also to make sure that the company attracts the best talent. This person believes that talent is a key differentiator and that creating the right culture is critical to attracting and retaining the best people in the field. A guiding philosophy for this person is that people should find inspiration in their work and be empowered by their work environment and their colleagues. This person is relatively new to the position, but had a similar role at a competing organization. This person believes in the power of hope, creativity and inspiration.

If a hypothetical HR software provider was selling to both of these executives, would they sell to them in the same way? Probably not. That is if they wanted to connect with each person individually and equally. Everyone has way that they perceive the world and fitting with that perception is a large part of effective communication. By delving even deeper, we would then see that each of these executives would require a specific approach if the goal was to show how the software was a best fit for their needs.

At this point, we begin entering the realm of what most people think about when they hear the term marketing. Because after knowing and understanding a customer, there has to be an attempt to communicate with them. In any industry and with any solution, it doesn’t matter how deeply we understand the customer if we don’t communicate with them.

While Drucker doesn’t point to a specific solution, I think he would agree that there is only value in knowing and understanding a potential customer if that information is going to be used to improve the communications process. When he states that the “product or services fits him and sells itself,” what he is alluding to is that the way in which the product is presented conforms to that customer’s view of the world and leaves no opportunity for misalignment.

When we think of communication tools, we need to consider the full spectrum of the language that is used in communication. A quick list here is useful.

Note: To avoid getting into a much longer post around meaning and interpretation, we’ll limit ourselves to the actual tools themselves. We’ll also ignore for now the role of product design itself. The communication of value through industrial form is also worth an entire separate post.

• Language: We have the ability to use letters, words and grammar to form sentences that create meaning and form nuance. From our own experience, we know that there is an infinite range as to how language can be structured—from the Bible to Baudelaire. At the same time, there is a strong body of work that discusses how we can best use language to elicit effective communication, which we’ll save for another post

• Typography: This refers to the shape and format of the letters themselves. Each category or family of shapes is what we call a font. Fonts can influence how people perceive the meaning of the words.

• Shapes: We live in a world of shapes. As we can attest to from our own experience, there are some shapes that seem calming (circles) and some shapes that elicit more alert states (sharp, multi-pointed shapes). There is a great study that looked at the association of sounds to shapes and it found that harder sounds like “k” are associated with sharp shapes, and softer sounds like “b” are associated with more rounded shapes. A great overview of the Bouba-Kiki effect is at Scientific American.

• Photography: Again, we get into deep water quickly as the psychology of photography is a whole tome unto itself. But some of the basics of photography that influence our perception are color, composition, focus, subject matter, perspective, context, framing, technique, style and story.

• Illustration: Illustration is the use of the full range of lines, shapes, space and color to elucidate a concept or convey meaning. Here, illustration also takes influence from basic color and shape psychology. The simplicity of illustration is powerful as can be seen in the clarity of meaning in the wide range of illustrated children’s books.

• Design: Any product or service requires two distinct and fundamental components. If we are to use the tools of language, the other tool has to be the consideration of how they are used together. The hammer, lumber and nails only come together through a blueprint of some kind. If we think of the goal of the marketer as to influence a specific audience, then the designer has to ask him or herself this: How am I going to effectively combine and integrate language, typography, color, shapes, photography and illustration to best connect with the intended audience? The design process, which is inherently a thinking process, thus delves into history—what are historical underpinnings of the subject matter and audience? Culturally, which elements and context are most useful? In terms of taste, which references will be most useful? And regarding composition, what is the best way to lay out all of this information to have maximum impact?

The challenge for the marketer is that there is such an incredible depth to how we communicate that it’s necessary to have partner that can help them navigate.

The one area that calls for specific emphasis is language. Just as the designer is required to have a depth of knowledge as to how to put all the visual pieces together (typography, color, shapes, photography and illustration); the linguist or language expert, often the copywriter, is required to bring the same level of sophistication and understanding as to how to select the correct words, phrases and contextual cues to create the desired impact.

In the advertising world, this combination of design and language came together as art, with the art director as the person responsible for the visual concept and overall conceptual design framework. They usually work with a copywriter, the person responsible for choosing the right words and tone for the intended meaning. The documentary Art & Copy is worth a viewing if you are interested in learning more.

Let’s look at a few examples to see how all of the pieces come together. I’ve used a couple examples from my own experience that have a foundational relevance to illustrate the above points, while trying to remain as objective as possible and keeping a bird’s eye view.

Apple: I’ve been a Mac user since about 2000. I don’t think I ever needed a brochure or had anyone ever try to sell me anything. I wanted what they were offering because the product spoke to me and tapped into a view I had of myself (for right or wrong). Here are some ways Apple has shown they understand me:

What Apple seems to know about me: I’m interested in possibilities. I believe that design and creative thinking are a kind of lifeforce of sorts. I have a strong rebellious streak probably from my years of skating and being influenced by the Thrasher crowd.

Amazon: I’ve been on Amazon Prime for a while. Again, no sales or effort on their part at real “conversion” in the traditional sense. They simply offered a perspective: “Hey, you probably order online a lot because you’re all about efficiency. We could make it even more efficient by knocking off all those pesky shipping fees. Oh, and here’s some cool content for you as well.” Done. Here’s some of the ways that Amazon has shown they understand me:

What Amazon seems to know about me: I’m interested in efficiency. I read life-hacking articles. I’m a person who has a habit tracker. I believe in the good that technology can bring. I’m not a technologist, but I’m eager to understand the direct benefits to me as a human being.

Leuchtturm: A constant note-taker and scribbler, I was looking for a Moleskine alternative. I came across this Hamburg company and immediately bought into its message. The fact that I’m half-German and have relatives in Hamburg can’t be completely ignored, but really had nothing to do with what the company had to say. Here are some of the ways that they showed they understood me:

The text from their About page is worth quoting here in full.

“Founded in 1917, Leuchtturm can look back on over 90 years of experience in the production of high-quality stationery. The company was re-established in Hamburg from 1948. From the 1960s, Leuchtturm's international expansion continued apace, culminating in the company becoming the world's leading supplier of postage stamp and coin albums. Axel and Max Stürken took over management at the end of the 1990s as the fourth generation to head the traditional Hanseatic family-run company.

Experience and consistency are important requirements for quality. Quality brings ideas and a solid foundation on which they can develop. We are convinced that small details can make a big difference.

Some items, such as the spring-back binder, are still made in the same way as they were back in the days when the company was first set up. Since then, many items have been added to our range. All LEUCHTTURM1917 items unite the belief that success stems from quality and well thought-out, detailed solutions. Today, LEUCHTTURM1917 stands for premium quality in more than 50 countries.”

What Leuchtturm seems to know about me: I prefer quality over quantity. I am trying to scale down my life and get rid of the things that don’t “spark joy.” I can be prone to romanticize the past and have a strong belief in the value of craftsmanship. I own tools and have no problem putting together a bookshelf in the middle of the living room.

SuitSupply: Over the summer, I was invited to a wedding in Florence. This seemed as good an occasion as any for a new suit and I’d recently been walking past this shop on my trips down to Panama. A big of fan of Suit Company from living in Tokyo, I was attracted to the crisp design at reasonable prices. Once I bought into the overall messaging and positioning of the company, the suits basically sold themselves. Drucker was right. Here is how they showed me they understood me:

What SuitSupply seems to know about me: While I want to stand apart from the pejorative aspects of dandyism, I have to admit a pretty long fascination with style—from the influence of my skater days reading Thrasher and Transworld to my functional perspective from years working in construction. I also can’t ignore the influence of fashion and style through documentaries like Valentino the Last Emperor and the wonderful European photography (particularly Italy) of Scott Shuman of The Sartorialist.

The beauty of Drucker’s insight is not merely that he makes things simpler. If anything, he insinuates that to be an excellent marketer requires the same depth of understanding required of the academic. The difference is that while the academic is driven by the desire to personally deliver impact through the creation of new knowledge published in books and journals, the marketer need only be focused on the results.

This means that the success of marketers is ultimately tied to the firms they work with and the experts they hire.

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