How To Use Customer-Centric Value Propositions to Avoid Organizational Pathology

© 2025, Barry Linetsky. All Rights Reserved

The purpose of a business is to create a customer with the goal of generating profits and avoiding a monetary loss.

• A necessary goal is to create enough value-in-exchange to warrant continuation of this activity, or to reassemble or dismantle the capital structure.
• Value co-creation requires alignment of resources to produce value-fulfilling services.
• To achieve the business purpose is to be customer-centric as judged by the primary value beneficiary, i.e., the customer/consumer (which may require alignment of values with intermediaries).

The customer utilizes the provided service for their own purposes:

• The customer rarely buys what the company thinks it is selling, noted Peter Drucker.
• Customers seek to fulfill their own value pursuit by creating a value-chain (acquire/buy/align services & capabilities) within their own particular situation (contexts-of-use).

If all of this is true, then customer-centricity or customer-focus is embedded directly in the purpose of a business and becomes a business axiom, or more fundamentally, an axiom of human action pertaining to voluntary cooperation in exchange.

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To be an effective managerial leader in these times, one needs to put aside the widely accepted idea that companies create products to sell, and win or lose based on whether the customer buys. That’s the perspective from the company’s point of view, not the customer’s point of view. Quoting Lusch and Vargo in Service Dominant Logic: “…’customer centricity’ or ‘customer orientation’ as traditionally employed is redundant, if not vacuous, if one adopts the A2A [actor-to-actor] perspective, along with other central ideas in S-D logic” (112).

Customer-centricity is declared “redundant” because of its axiomatic status in a coherent theory of the business. It is only by creating value as perceived by consumers that a business can engage in sustainable profitable exchange. Customer-centricity is not an optional or a beneficial tactic of business. Its absence negates the most basic requirement of the DNA of what a business is. A business only exists because there is a customer desire to be fulfilled.

Business philosopher Peter Drucker provides clarity of insight, writing in The Practice of Management (1954:37):

It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of first importance—especially not to the future of the business and its success. What the customer thinks he is buying, what he considers ‘value’ is decisive — it determines what a business is, what it produces and whether it will prosper.

The customer is the foundation of a business and keeps it in existence. He alone gives employment. And it is to supply the consumer that society entrusts wealth-producing resources to the business enterprise.

If inherent in the concept of business is customer-centricity, then sustainable business requires an alignment that has the agility to embrace “pull” rather than deliver a primacy of “push.” There are many reasons customers buy with lacklustre enthusiasm because a particular offering is perceived to be the best of unsatisfactory options being pushed on them rather than being suitably adapted to their particular situation.

Enhanced value is created for buyers and sellers when they can work together to create and transact solutions that consumers seek (pull) rather than the outmoded business model in which businesses predetermine solutions, create, and inventory them to predetermined plans, and sell those solutions as-is or with optional and supplemental after-market refinements for customers who may seek them. In these situations (push), production is divorced from actual customer value-creation—value propositions are developed for segments, not for individuals.

Where there is customer-centricity, organizations allow customers to pull resources through the supply chain to participate in the creation of value as perceived and defined by the customer. Where customer-centricity is lacking or avoided, organizations see their role as “creating value” only as far as the point of purchase, leaving the customer alone to create the value embedded in the solution that they seek the product or services to contribute towards.

The time of the philosophy of push is coming to an end, according to John Seely Brown, Lang Davison, and John Hagel III in their book The Power of Pull. What replaces the comfort of push is the power of pull—the ability of individuals to demand solutions and value-pursuit, made possible by the power of technology and creativity in innovation to develop and deliver solutions that are customized and individualized to satisfy customer demands (people demands) in real-time.

What is the conclusion one can draw from these observations? It is a symptom of organizational pathology for a business to fail to be customer-centric in the creation and delivery of value-propositions. To engage in business while dropping the context of organizing for the purpose of the business you are engaged in and the necessary requirement to deliver a contexts-of-use-driven customer-focus, is pathological. It is to abandon what should be the explicit purpose and goal of every organization aligned around profitably providing a valued product or service that customers desire.

© 2025, Barry L. Linetsky. All Rights Reserved. 

Barry Linetsky is the author of the acclaimed and best-selling book The Business of Walt Disney and the Nine Principles of His Success. He is a senior-level strategic advisor and enabler, writer, researcher, and photographer. His thought-leadership and research has been published by Rotman Magazine and Ivey Business Journal [https://iveybusinessjournal.com/?s=linetsky]. He blogs on strategic business issues at www.barrylinetsky.com. His current interests pertain to the application of new knowledge and skills to master value-creation under current and emerging conditions of increasing socio-technical complexity.