An Existential Crisis

As I was reading Stephen Denning's book The Age of Agile I was struck by the fundamental, indeed, existential crisis that many companies are now facing.

>An existential crisis is a moment at which an individual questions if their life has meaning, purpose, or value. more

Individual can have existential crises, so can organizations.

For years we have been told that the primary, if not sole purpose of a corporation is to increase shareholder value. Denning points out, however, that this dominant definition of purpose is actually a fairly recently created belief - built on the work of Milton Friedman and others only 40-50 years ago.

This perspective directly challenged the convictions of another important business theorist, Peter Drucker , who wrote some twenty years before: >“There is only one valid definition of business purpose: to create a customer.”

This shift of focus of a company's purpose from the customer to shareholders has had a profound impact on how our companies are managed. Often it leads to companies deciding to focus on extracting short-term value _from_ customers rather than on creating new value _for_ them.

Agile management is built on Agile Values, the first and foremost one is the Wholehearted Commitment to the customer. This commitment is made with the understanding that this focus on creating new customer value will lead to long-term Competitive Advantage.

Living by these values often puts agile managers in conflict with older, entrenched values in a company's leadership suite - those that often prioritized short-term financial returns.

This conflict leads to an existential crisis about the meaning and purpose of a company. It is a fork in the road. The path the management ultimately choses will profoundly shape its future.