1.3. The two primary functions of business: innovation + marketing
"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
When Drucker formulated that the purpose of business is to create a customer, he concluded that the result of this purpose is that there are only two primary functions of business: innovation and marketing. Innovation and marketing are two equally important functions that need to be addressed from day one.
Let's expand and clarify what Peter Drucker means by two primary functions. Under innovation, we can put engineering, product design, product management, R&D, and every other business function that touches product and services production and support.
Marketing includes sales, marketing, communication, PR, customer success, and other functions related to acquiring and keeping customers.
To paint the full picture of how businesses operate, it's worth mentioning the third pillar of every business — operations. Operational functions include all the areas of business that cover basic services that keep the business running, such as accounting, finance, HR, and administration.
- Innovation: Engineering, Product design, Product management, R&D
- Marketing: Sales, Marketing, Communications, PR, Customer Success and Support
- Operations: Accounting, Finance, HR
Marketing doesn't come after you innovate or launch a product. Marketing starts on day zero. "We have a great product. It's working and valuable. We just need marketing for people to find us." is flawed logic. Unfortunately, I can't tell you how many times over the years I’ve heard founders say something along the lines of, We have a great product and customers love us — now we just need some good marketing.” These founders imagine a great marketer as a magician who comes in and the money starts flowing down from the ceiling. That's what many founders and executives think. Often these executives went through two, three, sometimes four VPs of Marketing in just a couple of years. They don't understand how marketing works and that's why they create wrong goals and incentives for marketing leaders.
One of the goals of this book is to explain marketing to founders and C-level executives. They will hire better candidates, they will understand how to set proper goals, and how to see marketing as a core function of their business.
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