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The Best-managed Firms Excel in Customer Satisfaction

Lawrence A. Crosby

Using the Drucker Institute’s five-dimensional model of corporate effectiveness, firms can expect to see financial gains if they improve customer satisfaction.

The Wall Street Journal’s recently released ranking of the Management Top 250 offers a holistic appraisal of the corporate effectiveness of America’s largest public companies. The rankings are based on the Drucker model and measurement system developed by our team at the Drucker Institute. Behind the top 250 is a longer list of 693 large-cap, U.S. and Canadian firms that were ranked by the institute. These rankings and the underlying dimensional ratings shed light on the role of intangibles, such as customer satisfaction, in driving business success. The conceptual foundation for our work is drawn from the writings of the late Peter Drucker, generally regarded as the “father of modern management,” who also commented on marketing and customer satisfaction saying, “To satisfy the customer is the mission and purpose of every business.”

A firm’s Drucker Score is derived from a validated model that treats corporate effectiveness as a higher-order construct (aka “latent variable”) that’s composed of five performance dimensions: customer satisfaction, employee engagement and development, innovation, social responsibility (including environmental, social and governance factors) and financial strength. The model is operationalized using 37 specific indicators from a wide variety of third-party sources; eight indicators focus on customer satisfaction.

The nonfinancial metrics were all current as of the first quarter of 2017, but depending on the timing of data capture by the sources, some largely reflect 2016 performance. The financials were current as of June 30, 2017. Drucker measurements are at the firm level, not the brand level, and the firm is the unit of analysis. Brand-specific scores were averaged for firms with multiple brands.

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Lawrence A. Crosby

Lawrence A. Crosby is the retired dean of the Drucker School of Management. He is the chief data scientist at the KH Moon Center for a Functioning Society, a part of the Drucker Institute at Claremont Graduate University.