Drucker's most important insight concerned the role of the corporation in society. "The business enterprise is a creature of a society and an economy, and society or economy can put any business out of existence overnight," he wrote in 1974. "The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job." <...> Drucker showed that there is no "inherent contradiction between profit and a company's need to make a social contribution," but that the former is indispensable to achieve the latter. He also warned that an enterprise that fails to "think through its impacts and its responsibilities" exposes itself to justified attack from social forces. Consumerism and environmentalism, he taught, are not enemies to be vanquished, but symptoms of business' failure to understand its broad social role. <...> He held that the purpose of a business is to serve the customer by providing a good or service useful in both personal and social terms. Businesses that took their eyes off that objective in favor of pursuing profit as a paramount goal could not succeed. Such subtle distinctions eluded classical economists. <...> His targets included the celebrity chief executive and excessive compensation at the top. "Every CEO, it seems, has to be made to look like a dashing Confederate cavalry general or a boardroom Elvis Presley," he wrote in 1988. But real leadership "has little to do with 'leadership qualities'; and even less to do with 'charisma.' It is mundane, unromantic, and boring. Its essence is performance." <...> Excessive compensation, he wrote in 1974, is designed to create status rather than income. "It can only lead to political measures that, while doing no one any good, can seriously harm society, economy, and the manager as well." And when a financial benefit accrues to managers who lay people off, he stated in 1996, "there is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it." ...
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Drucker showed that there is no "inherent contradiction between profit and a company's need to make a social contribution," but that the former is indispensable to achieve the latter. He also warned that an enterprise that fails to "think through its impacts and its responsibilities" exposes itself to justified attack from social forces. Consumerism and environmentalism, he taught, are not enemies to be vanquished, but symptoms of business' failure to understand its broad social role.
He held that the purpose of a business is to serve the customer by providing a good or service useful in both personal and social terms. Businesses that took their eyes off that objective in favor of pursuing profit as a paramount goal could not succeed. Such subtle distinctions eluded classical economists.
His targets included the celebrity chief executive and excessive compensation at the top. "Every CEO, it seems, has to be made to look like a dashing Confederate cavalry general or a boardroom Elvis Presley," he wrote in 1988. But real leadership "has little to do with 'leadership qualities'; and even less to do with 'charisma.' It is mundane, unromantic, and boring. Its essence is performance."
Excessive compensation, he wrote in 1974, is designed to create status rather than income. "It can only lead to political measures that, while doing no one any good, can seriously harm society, economy, and the manager as well."
And when a financial benefit accrues to managers who lay people off, he stated in 1996, "there is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it."
...
The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job.
