For anyone who wants to run a successful organization:

books:

	• 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

What Works For Economies Works For Organizations Too!

Charles Koch's core premise is universal and elemental, one that should prompt any reader to have a "V-8 moment," like the characters in the old television commercials. That premise is this: We know what makes an economy successful -- private property; the rule of law; individualism; risk and incentive; innovation; entrepreneurship; profit and loss; competition; and Schumpeter's "creative destruction." In other words, a market economy. Why shouldn't those very principles be the foundation of an organization's success? The challenge, as Koch puts it, is to "develop the mechanisms" that allow a firm (or any organization) "to harness the power of the market economy within the company."

Koch's book is more than a management guide. It's a refresher on the critical pillars of market economics. The reader is reminded of concepts he might have either forgotten or never learned -- opportunity costs, sunk costs, marginal utility, subjective value, comparative advantage, imperfect knowledge and numerous others. The author admits to being greatly influenced by some of the giants of economic scholarship, from F.A. Hayek and Joseph Schumpeter to Milton Friedman. He attributes the success of Koch Industries to the leadership's concerted effort to meld management principles with the principles of the market economy, and much of the book explains how that translated into real-world decisions, strategies and directions that built the company over the years.

Koch drives home that even in the for-profit business world, where markets exert a great deal of discipline, plenty of firms really still don't understand the power that market principles can have in their own operations. For instance, in looking at a private business, how many times have you noticed excessive bureaucracy, short-term thinking, ossified decision-making and reward structures that pay for tenure rather than entrepreneurship? How many times have you witnessed supervisors afraid to bestow real authority on those they supervise? And how many times have you observed a corporate culture beset from the top down with corner-cutting on both quality and integrity?

In most cases, what poor managers need is a reality check. If they don't comprehend the miraculous workings of a market economy, don't expect them to be diligently implementing its principles within their organization's operation. If they're managing as if they were Soviet central planners, they're probably reaping Soviet results.

Nonprofits sometimes behave more like unresponsive, unaccountable and nonentrepreneurial government outfits than they do for-profit firms. MBM can work well here, too, with the right leadership that knows how to implement the spirit (and not just the letter) of MBM principles. I'm proud to say that as I read Koch's book, I realized that my nonprofit organization, the Mackinac Center for Public Policy, has succeeded in great measure because of MBM-like ideas, though that wasn't fully apparent to me until I read the book.

The answer to what ails poorly-led organizations is Koch's principles of "Market-Based Management," or MBM, spelled out in very readable fashion in this new book.

Koch knows what he's talking about. He is CEO of Koch Industries Inc., a star performer of a company that boasts $90 billion in annual sales and 80,000 employees. Since the late 1960s, Charles, his brother David and their business associates have taken the oil firm that Koch's father started more than half a century ago and fashioned it into a privately held global conglomerate. It produces more "stuff" than I could describe if I had your attention for an afternoon, including things you eat, walk on, drink from or put in your car -- oil, beef, carpet, asphalt, disposable cups and paper towels, to name a few.

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Rare Opportunity

The Science of Success is a rare opportunity to learn how Charles Koch built one of the most successful companies in history. Think about it. This company:

1. Didn't have a sexy product or build a national image
2. Didn't get jump-started with a technological breakthrough, or create a new industry
3. Didn't rely on political connections or Wall Street gurus to help sell its products
4. Didn't, as a privately held company, have access to expansion capital from stock sales, and
5. DID face stiff competition from some of the largest and most competitive companies in the world.

Yet under the guidance of Charles Koch, Koch Industries grew from a relatively small company to the largest privately held firm in the country, along the way building a record of profitability that leaves most companies you thought were successful in the dust.

If you haven't heard of Koch Industries, you're not alone. This story really hasn't been available to the public until now. How did Koch do it? With Market-Based Management, the business philosophy he lays out in this book. The book includes a thorough discussion of what MBM is and how it was used to create phenomenal value for the owners, employees and customers of Koch Industries.

I'm usually highly skeptical of books "written" by successful businessmen. How many truly successful people are really willing to share their secrets? How many really take the time to write a book? But I have some experience with Koch Industries (I'm a former employee and still do some consulting for the company), and I can verify that these are the same concepts Charles Koch has been teaching his employees, from top management on down, for at least 20 years.

Obviously Charles Koch, as a billionaire, doesn't need money from book sales. He truly believes in the principles and applications in this book, and he's genuinely interested in sharing them with anyone who will take the time to read and learn.

Again, a rare opportunity to learn from a master.

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For anyone who wants to run a successful organization:

Mr. Koch describes a fascinating method for developing and managing an organization. Just an interesting is the real life story of how he leveraged `Market Based Management' to build the planet's largest private company.

I picked up this book not knowing what to expect and finished it (in short order, I might add) wanting more. The Science of Success is unlike other "management" titles found on books shelves today. Charles has actually practiced MBM, with extraordinary success, for decades.

I have already gotten an extra copy for a co-worker.

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Measurable results for businesses in the real world

There are thousands of business books published each year, many of them by authors with little or no personal record of producing positive, measurable results for businesses in the real world.

This is not the case with author Charles Koch. Since becoming Chairman and CEO of Koch Industries in 1967, Koch has transformed the company from a small concern to a behemoth with 80,000 employees and $90 billion in revenues. Koch Industries stock value has advanced 2000% in book value during his tenure, despite the fact that it operates in mature industries (such as commodities) where competitive pressures typically result in narrowing margins.

Koch's book, "The Science of Success: How Market-Based Management Built the World's Largest Private Company" details the management approach behind Koch Industries stunning success. Drawing on a variety of disciplines, Koch's "Market-Based Management" approach takes the same dynamics, incentives and mechanisms that propel successful free market economies and retools them to manage business organizations.

The book is a fascinating read and offers valuable, actionable insights for business leaders. It deserves a place on every executive - and entrepreneur's reading list.

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

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