When leading executives define
the purpose of their business, many say it is to show a profit,
increase shareholder value, or produce a specific product
or service. On the surface, they are correct, but they miss
the mark because these are not purposes but outcomes.
Cause and effect are in reverse order. The
purpose of business is to provide ongoing and recognized
value -- and to stay
in business by providing it. David Packard (cofounder of
Hewlett-Packard) declared: “Profit is not the proper
end and aim of management -- it is what makes all the proper
end and aims possible.”
Many of the difficulties businesses encounter
are a direct result of operating under this misconception.
The current
scandals among large businesses and many product failures
are tied directly to a failure to provide value to their
customers. This is the number one priority. All outcomes
flow from how well businesses provide value.
The shortsighted focus on outcomes, and confusing
outcomes with their reason for being, are fatal errors. They
lead
companies to errors in organization, their compensation
policies, and what product and service
offerings they make to their customers.
Potential solutions to these business problems
can differ according to the perspective used to frame the
problem. For
example, falling or lackluster profits are never a problem
by themselves. They reflect a far more serious situation:
consumer disconnection with the product or brand.
Yet the “raise profits” mantra continues as
the battle cry of business for the next quarter or fiscal
year. Seller profits (high and low) reflect performance and
their performance is the direct result of interaction (positive
or negative) with their buyers.
Consequences of this disconnect are landmarks
in business history. In the beverage industry, Coke lost
touch with buyers
with New Coke because 200,000 taste tests (all in favor
of the new product) did not reflect the huge cultural equity
in the old Coke. In food service, McDonald’s introduction
of the Arch Deluxe, made to adult standards of taste and
preparation, failed. They discovered that the deal-breakers
are not parents but their children, who prefer the standard
kid-meal menu. In transportation, the Segway -- hailed as
the machine
to replace walking -- ignored “human factors” such
as sitting, carrying, and the surrounding driving environment,
so as to remain a specialty technology.
The cultural context of any business problem
is identified by asking: what values are involved; in what
context and ranking;
with which groups of people; of what age and development
stages; of what gender; and of what affiliation groups.
Our
research into Cultural
Analysis (the study of how people make decisions) reveals
solid intelligence about the ways we use space, experience
time, express our identity, make decisions, and relate to
our needs and relationships -- all aspects of the buying
process. For example, mobility – physical,
mental and social -- in the North American cultural system
is a primary imperative
and value. The mobility imperative often outweighs the basic
biological security impulse and the stability principle of
conservatism that is the active ingredient in more traditional
cultures. Many successful products, from the SUV to
portable food, the backpack, skateboards, the Walkman, PDA,
and cellular phones, are direct outcomes of the drive to
detach at will from location and community in order to extend
one’s “range
of motion” in the form of social and environmental
control.
To be in business has always been to live and
work within a fascinating paradox: the seller’s wealth
comes from giving the buyer extraordinary value. The basic
unit of free
market commerce is the exchange of value between supplier
and consumer. These values are deeply ingrained in culture.
Consumer economics (is there any other kind that counts in
a mass consumer society?) is the study of the “demand
behind the demand:” what drives people to want, need,
and buy -- or not. Only when this most basic unit of consumer
motivation is in place can businesses design products and
marketing messages to speak clearly and directly to the only
motivations that count: the buyer’s.
© 2004 The Global Future Forum. Margaret
J. King and Bret Rigby are Professional Futurists of the
GFF. Contact
them at cultureking@culturalanalysis.com, and read similar
work at www.thegff.com.
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