Charles G. Koch may very well be the most successful businessman you’ve never heard of. He is also one of the richest men in the world — Forbes ranks billionaire Koch as the 49th richest man on the planet. Rarely has such a successful businessman shared his secret formula for success.
But Koch has done just that in his newly released book, “The Science of Success: How Market-Based Management Built the World’s Largest Private Company” (Wiley). Unlike many success and self-help books that are written by experts that have never had tremendous business success, Koch has built his family’s business, Koch Industries, Inc. (KII) into what Forbes says is the “world’s largest private company.” KII is a leading maker of natural resource-based products, including gasoline, chemicals, polymers, fibers, building products, packaging, tissue, and process equipment.
You know Koch by some of its well-known brand named products, including Dixie cups, Quilted Northern tissue, Stainmaster carpets and Lycra spandex.
When Koch joined his family company in 1960, it had revenues of $70 million. Today, Koch has revenues of about $90 billion, employing some 80,000 people in 60 countries across the globe.
KII’s growth has been enormous. Consider if one had invested just $1,000 in the S&P 500 in 1960 it would be worth about $125,000 today. The same $1,000 invested in Koch Industries would have a book value of more than $2 million today!
KII is a true rarity: As a large company it has not only survived, it has grown tremendously. It continues to grow rapidly!
Charles Koch has revealed the principles of success he has discovered during almost five decades of business. You can tap into his lessons for your own business and personal success. Check out Koch’s “Science of Success” on Amazon — Go Here Now.
How has KII had such enormous growth?
The answer, according to Charles Koch, is simple. It’s called MBM® or Market-Based Management.
Koch defines MBM as “a philosophy that enables organizations to succeed long term by applying the principles that allow free societies to prosper.”
He says there are five dimensions to understanding the success of free societies, five dimensions that can applied for business success.
In his book Koch reveals the five dimensions and discusses how to apply them for business success.
Koch developed MBM from his desire to build a great company and his studies of the principles that lead to prosperity and society’s progress.
“After studying history, economics, philosophy, science, psychology, and other disciplines, I concluded that the two passions were strongly, indeed intimately, related,” Koch writes.
Koch believes all business people can tap into MBM for success, but they must understand it “is a never-ending process of learning and improvement. Like the North Star, it is not a goal in itself but a guide in this instance toward greater and greater value creation.”
There’s plenty of practical advice in the book that helps you turn theory into real business success.
Here’s just some of the nuggets:
- It’s OK to make mistakes and why Koch’s father gave the surprising advice: “I hope your first deal is a loser . . .” It helped make his fortune.
- Progress and success require failure. Failure can be good — if you learn from it. Don’t try to eliminate failure.
- Why virtues and values — like honesty — are indispensable in building a successful, prosperous, and sustainable business.
- Embrace change: The marketplace is constantly replacing old ways with effective alternatives in a process called “creative destruction” — drive this process!
- How self-interest works for the better good.
- Grasping the importance of “subjective value” and the fact that all economic value comes from people valuing the good, not its cost. This value is revealed by people’s actions, not what they say.
- Harnessing the “multiple intelligences” people have and using human capital to achieve your goals.
- Discovering that a market economy is based on “useful knowledge” — and why knowledge must be plentiful, accessible, and relevant in your business life.
- Why cost cutting is not always the best way to improve your bottom line and can be “shortsighted and can seriously damage future profitability.”
- Thinking outside the box: Koch explains how Southwest Airlines succeeded because it ignored competitors and looked to NASCAR in figuring how to move baggage and passengers.
- Jointly solve the jigsaw puzzle: The rate of discovery is highest when everyone works together in sight of each other so that every time a piece fits the others are alerted to opportunities for the next step. Apply this process to your company to unlock the discovery process and profits.
The Science of Human Action
Koch argues that MBM is rooted in the Science of Human Action and is defined by five dimensions.
Understand and apply these dimensions and your business will soar.
The five dimensions:
- Vision — Determining where and how the organization can create the greatest long-term value.
- Virtue and Talents — Helping ensure that people with the right values, skills and capabilities are hired, retained, and developed.
- Knowledge Processes — Creating, acquiring, sharing, and applying relevant knowledge, and tracking profitability.
- Decision Rights — Ensuring the right people are in the right roles with the right authority to make decisions and holding them accountable.
- Incentives — Rewarding people according to the value they create for the organization.
When these dimensions are applied in an integrated, mutually reinforcing manner, they create continuous transformation and positive growth.
Any organization — corporation, small business, nonprofit, government agency — and the people who manage them can apply these proven principles.
MBM will benefit you, your company, your customers and your employees!
Find out more about MBM and Charles Koch’s “Science of Success” — Go Here Now.
About Charles G. Koch
Charles Koch is chairman of the board and CEO of Koch Industries, Inc., a position he has held since 1967. Since then, the company has been transformed into a dynamic and diverse group of companies in refining and chemicals, process and pollution controls technology, fibers and polymers, minerals including fertilizers and exploration and production, commodity and financial trading, and forest and consumer products. Koch has continuously supported academic and public policy research (including numerous Nobel Prize winners) for more than 40 years and has helped build a number of market-based organizations. Koch received a bachelor’s degree in general engineering and two master’s degrees — in nuclear and chemical engineering — from the Massachusetts Institute of Technology.
trademark designer clothes, they were paid for with stolen money.
