Business Quote by Peter Drucker
“"Value added" is a meaningless concept for a retail business , for a bank, for a life insurance company, and for any other business which is not primarily engaged in manufacturing.”
About This Quote
Source Book: The Effective Executive, Peter Drucker, 1966
Value added is a manufacturing term that doesn’t translate well to service‑oriented firms where value is created through relationships and experiences.
In simple terms: Value added fits manufacturing, not service businesses.
Key Takeaway
Focus on customer experience and relationship value.
Themes
service
value creation
industry differences
Mood
analytical
critical
Type
business
strategic
When to use this quote
- banking
- insurance
- retail
- consulting
Key Concepts
economics
business strategy
customer centricity
Questions to Reflect On
- How can a service firm measure value without tangible products?
- What metrics replace “value added” in banking?
A Different Perspective
Service firms must define value differently than manufacturers.
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