By Rory Sutherland
Those of you who are, like me, only dimly familiar with the writings of Peter Drucker will at least know one of his most famous pronouncements. “There are only two things in a business that make money – innovation and marketing. Everything else is a cost.”
I always liked this assertion, and have probably quoted it once or twice. But, to be perfectly frank, I had never used it very confidently. It always seemed so contrary to the prevailing business culture of the moment (where the highest end of business seems to be cost cutting) that to use it seemed more like a deliberate provocation than a seriously held point of view. But, as I shall explain, it is a serious assertion.
I had lazily assumed Drucker was German or Swiss. He was in fact Austrian. The distinction is important here. For Drucker grew up in the Vienna most famous for Freud and Klimt, but which was also home to a remarkable, dissident tradition in economics. In fact one of Drucker’s father’s best friends (and former pupils) was the Austrian economist Joseph Schumpeter. This close family connection helps explain why Drucker spoke out so confidently in favour of marketing.