The Science of Success: How Market-Based Management Built the World's Largest Private Company

by Charles G. Koch

Book Overview

Praise for THE SCIENCE OF SUCCESS "Evaluating the success of an individual or company is a lot like judging a trapper by his pelts. Charles Koch has a lot of pelts. He has built Koch Industries into the world's largest privately held company, and this book is an insider's guide to how he did it. Koch has studied how markets work for decades, and his commitment to pass that knowledge on will inspire entrepreneurs for generations to come." --T. Boone...

• Format: Hardcover
• Language: English
• ISBN: 0470139889
• ISBN13: 9780470139882
• Release Date: February 2007
• Publisher: John Wiley & Sons
• Length: 194 Pages
• Weight: 0.85 lbs.
• Dimensions: 0.8" x 5.5" x 9.0"

Customer Reviews

Amazing

Amazing

A value-added philosophy

"Steak. No Sizzle" is the thought that came to my mind in describing Koch Industries and the success that Charles Koch has had in growing his company for the past 40+ years. The business section of book stores are full of quick-fix books that are loud with sizzle, but leave one wondering where the steak is. Charles Koch's book, the Science of Success, is the steak. Written from the very successful Chairman and CEO of the world's largest private company, Koch gives good, core insight into the philosophy that he uses to operate and grow his business, Koch Industries. That philosophy, called Market-Based Management (MBM) gets the focus set squarely on the bottom line of value added. It's that focus on the value added impact that makes the book and Koch's philosophy so valuable. While it would take readers years to perfect the application of Koch's MBM philosophy, Koch would surely say that his approach is not a quick fix or an approach for everyone. Rather, it is an approach for those who are dedicated enough to want to make a valuable difference in their own life, profession or business. I can't imagine it's easy being humble after having grown a business more than 2,000-fold, but Koch not only mentions that he's had his share of colorful failures, but also mentions frequently and with great emphasis that he and the business succeeded with great people around him. No doubt that some of the great people in his life that he mentions, such as his wife Liz, his brother David, and one of his top officers, Rich Fink, have grown in their knowledge of MBM and have made a significant impact on the company by applying Mr. Koch's philosophy. Readers looking for a straight forward and hearty approach to a value-adding philosophy will find it here, like the person looking for a good steak dinner who savors a hearty steak.

An Extraordinary Book

Charles Koch has quietly and humbly built one of the most successful companies on the planet, in industries that most entrepreneurs would find challenging, to say the least. Market Based Management distills the ideas and beliefs that have made America the strongest, richest and most virtuous country in history into a set of principles that can be applied to business. You won't find any "One Minute Manager" type advice in this book, which may disappoint people who are used to chasing the latest business fads. It's more like reading Peter Drucker or Jim Collins...you know it's true, but wish someone could transplant all of the ideas neatly into your business. Unfortunately, that's what great leaders do, and even Charles Koch can't be expected to reduce that sort of magic to a simple set of recipes for a management cookbook.

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.

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.

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