The third in a series on the topic of the purpose of business. Follows:
Business exists to establish and drive mutual value creation. Steve Denning challenged this statement, preferring Drucker's assertion that the purpose of business is to create and keep a customer. I responded, and he has challenged my response:
we may be talking about different things: theoretical purpose of a firm and how to run it
"satisfying all the stakeholders" isn't a viable heuristic to run a firm. See Making Management as Simple as Frisbee
“satisfying all the stakeholders” was tried in mid20thC. It led to Garbage Can firms.
Steve refers to "garbage can firms" in his Forbes article, Is The Tyranny Of Shareholder Value Finally Ending?, an eloquent take down of prioritizing the pursuit of shareholder value. When it comes to garbage it quotes a trio of academics – Cohen, March and Olsen – who in 1972 explained: Read more