Largest privately owned company in the country

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	• The Science of Success: How Market-Based Management Built the World's Largest Private Company (Your Coach in ... Charles G. Koch Your Coach in a Box, 2008 average customer review:based on 69 reviews view larger image
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highly recommended

Largest privately owned company in the country

I was surprised to learn that Koch Industries was indeed the largest privately owned company. I had always thought that honor belonged to Cargil. The history of the founding of Koch Industries was very interesting, easy to follow the well written track. Charles Koch deserves to be read. His ideas are worthy of being followed.

Excellent book

This book provides a candid perspective on the economic fundamentals that drive enterprise success. It is refreshing to see the principles of comparative advantage and opportunity cost unabashedly presented as the foundation for optimal business decisions. The clarity of the presentation is enhanced by selected references to classical and modern scholars who have laid the foundation for successful management practice. This book is a must read for students and managers who are interested in understanding the linkage between economic theory and profitable business practice.

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A Fresh Look at Management

If you are looking for "management" book that recycles the organization scripts that appear in many other books, look elsewhere. Mr. Koch's book successfully links the performance of the individual employee, the company, and societal progress in the battle for more freedom and less control. This is a novel connection.

While all of the Market-Based Management dimensions are worth study, decision rights and incentives are two that really struck home. Giving employees the freedom to make decisions is earned by good performance. Employee performance is what decides compensation. Many others preach this, but Koch Industries has proved it.

Incentives must be aligned by the manager to match up: What is good for me (employee)?, What is good for the company/organization?, and What is good for society? This is a difficult task and requires critical thinking, but crucial and often overlooked.

This book works for those in the private sector as well as the non-profit world. I highly recommend it for anyone looking for a fresh take on management.

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Worth it for the HR section alone

A fair amount of this book presents an interesting, well-written personal account of how Koch Industries applies management principles that a lot of other good management books talk about: clear sense of mission, high ethical standards, and the like. At Koch, these are codified as "Market-Based Management."

The book really shines, I think, in its discussion of Human Resources. Koch industries does three things that I think are interesting:

1) When a new person enters a team, the firm redesigns the roles for every member of that team so that the new person fits in best.
2) Koch Industries pays close attention to Howard Gardner's theory of multiple intelligences in designing roles and picking people. (This is the idea that there are eight different but complimentary types of intelligence, six of them important in Koch's business, and that nearly everyone is above average in at least one of them.)
3) It use a version of Jack Welch's famous "rank and yank" system that grades everyone A-C.

Although nearly every employer at least does one of these things, I don't know of any other company that does all three. The first two are touchy-feely supportive. The last one, in many cases, brutal to the "C performers" targeted. Firing some "Cs" was one of the worst management tasks I've ever taken on myself.

As Koch explains, however, they're all mutually reinforcing ways of making sure that all employees have the ability to do their jobs well, do things they're good at, and have co-workers who can support their efforts.

I would tend to believe that this, more than anything else, leads to Koch Industries' apperent success in replicating the market's vibrancy within the firm. More market-based economies do better, I've always believed, because they do a better job letting people realize their potential. Sometimes this involves pain when a person ends up in a job that they can't do. A lot of the time, it's wonderful.

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Required Reading for MBAs and Politicians!

Koch's principled and visionary approach to business is like a breath of fresh air in the stodgy marketplace of business books. His practical implementation of economic principals and the scientific methodology behind his initiatives shows that good people can make good ideas work. Legislators are too often goaded on by the parochial constituencies that are merely promoting the business solution de jour. MBA students are often seduced by management fads and gimmicks rather than high integrity committed efforts.
The brilliant success of Koch's firm is clearly built upon the five dimensions of MBM. Continuity of vision in combination to the alignment of incentives drive his business to thrive while so many public companies furiously change stripes to indulge the whimsy of management experts. This book teaches us that in business, you need integrity, vision and the passion to consistently and effectively execute.
Charles' humility when talking about their failed business initiatives is as instructive as it it humorous. His candor is truly refreshing. How many times have we heard senior managers in large public companies speak about the acceptance of failure associated with risk, while all the managers present can barely refrain from bursting out laughing. Our public companies are becoming overburdened with regulations that remediate nothing and actually betray any underlying potential for true trust and authenticity. Meanwhile, students of MBM will be able to catapult their businesses to the front of the line. Is it any wonder that private equity funding is exploding?

Mental models and decision trees show the reader how businesses should be run. Koch rightly points out that society benefits as businesses with integrity and vision make products and services that actually improve the quality of our lives. Not only do we benefit from the products, but think of the tens of thousand of jobs that are created by entrepreneurs like Koch.

Though Koch sites Mises and Harper as his greatest influencers, I think it was Schumpeter's creative destruction that has allowed his vision to be relentlessly driven to improve his company and have a wonderfully positive influence on our world.

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reviews: 1, 2, 3, 4, 5, 6, 7, 8, 9, page 10, 11, 12, 13, 14

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