It is extremely important to answer these questions.

Why?

Today’s business enterprise brings together a great many men of high knowledge & skill, at practically every level of the organisation.But high level & skill also mean decision-impact on how the work is to be done & what is to be done.

As a result, decisions affecting the entire business & its capacity to perform are made at all levels of the organisation, even fairly low ones. Risk taking decisions – what to do & what not to do; what to continue work on & what to abandon; what products, markets, & technologies to pursue with energy & what markets, products & technologies¬† to ignore- are in the reality of today’s business enterprise made everyday by a host of people of subordinate rank, very often by people without traditional managerial title or position, e.g.,research scientists, design engineers, product planners & tax accountants.

Every one of these men base their decisions on some, if only vague, theory of the business. Every one, in other words has the answer to the question, What is our business & what it should be? Unless therefore, the top management has thought through the question & formulated the answer, the decision makers in the business will decide & act on the basis of different, incompatible & conflicting theories. They will pull in different directions without even being aware of the divergences. There will be chaos.

Common vision, common understanding & unity of direction & effort of the entire organisation require definition of “what is our business & what it should be.”

To answer these questions, there is only one starting point.It is the customer. The customer defines the business. A business is not defined by the company’s name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when he buys a product. The question can therefore¬† be answered only by looking at the business from the outside, from the point of view of the customer & market.

The question should be asked at the inception of the business – & particularly for a business that has ambitions to grow. The most important time to ask seriously, What is our business? is when when a company has been successful.

Success always makes obsolete the very behaviour that achieved it. It always creates new realities. It always creates, above all, its own & different problems. Only the fairy tale ends, “They lived happily ever after.”

It is not easy for a successful company to ask, What is our business? Everybody in the company then thinks that the answer is so obvious as not to deserve discussion. It is never popular to argue with success, never popular to rock the boat.

These questions will have to answered every ten years. Finally, management has to ask which of the consumer’s wants are not adequately satisfied by the products offered today. The ability to ask this question & to answer it correctly usually makes the difference between a growth company & one that depends for its development on the rising tide of the economy or of the industry. But whoever is content with the rising tide will also fall with it.

Answering these questions is not easy. But it alone enables a business to set objectives, to develop strategies, to concentrate its resources & to go to work. It alone enables a business to be managed for performance.