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The Science of Success: How Market-Based Management Built the World's Largest Private Company (精装)
by Charles G. Koch
| Category:
Business success, Management, Corporate excellence |
| Market price: ¥ 248.00
MSL price:
¥ 208.00
[ Shop incentives ]
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| Stock:
Pre-order item, lead time 3-7 weeks upon payment [ COD term does not apply to pre-order items ] |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
Useful advice, real substance and no platitudes makes this book a brilliant strategy for sustained business success. |
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AllReviews |
1 Total 1 pages 9 items |
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T. Boone Pickens (MSL quote), USA
<2007-05-26 00:00>
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.
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Vernon Smith (2002 Nobel laureate in economics) (MSL quote), USA
<2007-05-26 00:00>
What accounts for Koch Industries' spectacular success? Charles Koch calls it Market-Based Management: a vision that nurtures personal qualities of humility and integrity that build trust and the confidence to enhance future success through learning from failure, and a culture of thinking in terms of opportunity cost and comparative advantage for all employees.
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William B. Harrison Jr. (Former Chairman and CEO, JPMorgan Chase & Co. ), USA
<2007-05-26 00:00>
In a very thoughtful, creative, and understandable way, Charles Koch explains how he has used the science of human behavior to create a culture that has produced one of the world's largest and most successful private companies. A must-read for anyone interested in creating value.
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Verne Harnish (Founder, Young Entrepreneurs' Organization), USA
<2007-05-26 00:00>
The same exacting thought, rooted in the realities of human nature, that the framers of the U.S. Constitution put into building a nation of entrepreneurs, Charles Koch has framed to build an enduring company of entrepreneurs - a company larger than Microsoft, Dell, HP, and other giants. Every entrepreneur should study this book. (MSL remarks: Verne Harnish is also the author of Mastering the Rockefeller Habits, and CEO of Gazelles Inc. )
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Rob Walton (Chairman, Wal-Mart) , USA
<2007-05-26 00:00>
My father, Sam Walton, stressed the importance of fundamental principles - such as humility, integrity, respect, and creating value - that are the foundation for success. No one makes a better case for these principles than Charles Koch.
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Robert Morris (MSL quote), USA
<2007-05-26 00:00>
As Charles G. Koch explains in the Preface to this book, Market-Based Management® (MBR®) has enabled Koch Industries, Inc. (KII) to become one of the largest and most successful companies in the world, with a 2,000 fold growth since 1967, now employing 80,000 people in 60 countries, with $90-billion in revenue in 2006. MBR consists of five dimensions: vision, virtue and talents, knowledge processes, decision rights, and incentives. No surprises there, nor are there any head-snapping revelations throughout Koch's narrative. The great value of the material, rather, is derived from the clarity with which Koch explains each of the interdependent, mutually reinforcing core concepts, and, by how skillfully he illustrates them in real-world situations while examining the evolution of KII. Based on the Science of Human Action, these core concepts are relevant to any organization, regardless of size or nature.
According to Koch, these are the questions that must constantly be asked?
1. Where and how can the organization create the greatest long-term value?
2. Are we hiring, developing, and retaining the people who have the right skills?
3. Are we creating or acquiring, then sharing and applying relevant knowledge, and measuring and tracking profitability?
4. Do we ensure that the right people are in the right roles with the right authorities to make decisions? Do we then hold them accountable for their performance?
5. Are we rewarding people according to the value they create for our organization?
As indicated earlier, there are no head-snapping revelations in this book, nor does Koch claim to offer any, and these questions offer a case in point. Of course, these are questions which decision-makers in all organizations should ask every day. In fact, few do... and even fewer obtain or provide correct answers. As explained by Koch, MBM is all about "blocking and tackling" effectively in business...and in life...in order to succeed.
I especially appreciate Koch's skillful use of a reader-friendly device throughout the text that features relevant information within a boxed, pale blue background. For example, quotations, brief explanations, definitions, and graphics. Beyond its visual appeal, this device serves two practical purposes: it highlights key points, and, it facilitates periodic review of them later.
The material of greatest interest to me is provided in the last chapter, "Lessons Learned." It is important to keep in mind that Koch has obviously learned a great about business and about life during his central involvement in the evolution of his company. However, he also learned a great deal from his exploration of remarkably eclectic sources that are indicated in the Notes and Bibliography sections. In the final chapter, he shares what he has learned about "the science of success," hence the title of this book. It is possible, Koch notes, that people will gain a conceptual or professional understanding of MBM but lack sufficient personal knowledge and experience. As a result, they tend to misapply it.
"For this reason, before an organization can successfully apply MBM, its leaders must gain personal knowledge through a dedicated commitment to understanding and holistically applying MBM to achieve results. Gaining this personal knowledge involves self-modification that starts with understanding the underlying concepts. It also requires seeing how the concepts contribute to long-term profitability, and then repeatedly applying them over time."
To be successful, MBM requires a culture of what Koch characterizes as "principled entrepreneurship, "one in which everyone is engaged in a passionate pursuit of innovation "toward an unknown future of ever-greater value creation." Moreover, innovation only thrives within a system of discovery, ""of spontaneous order, of mutually adjusting individual initiatives." Koch cites Michael Polanyi analogy, which compares such a system of innovation with a group trying to solve a giant 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. The rate of discovery is lower when the solution is centrally directed or when each person works the puzzle separately."
Those who share my high regard for this book are urged to check out Bill George's Authentic Leadership and True North, Michael Ray's The Highest Goal, Jason Jennings' Think Big, Act Small, Thomas Kelley's The Ten Faces of Innovation, Frans Johansson's The Medici Effect, Thomas K. McCraw's Prophet of Innovation, Lynda Gratton's Hot Spots, and Ram Charan's Know-How. |
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Michelle Bernard (MSL quote), USA
<2007-05-26 00:00>
The Science of Success is a must-read book for anyone who manages people and wants to take their organization to the next level, whether the current level is in the high-powered corporate world, a non-profit organization, or even an educational institution. In fact, the principles espoused in this must read book will help take any manager, entrepreneur, or leader of any sort much higher! The author, Charles Koch, made his own company the largest privately-held business in the world. He engagingly recounts how this was achieved, including stories about his entrepreneurial family. Though an aspiring manager or captain of industry can look at this as a how-to book, and though it does contain fascinating examples, it is really more philosophical than this description implies. In fact, from a philosophical point of view, Koch makes arguments that are dazzling and even mind-changing. An engineer by training, Koch realized that the science of engineering is based on fixed principles. He began to ponder fixed laws as applied to managing a company and people. This book is a billionaire's sharing of those fixed laws of management. He puts forth fascinating thoughts on compensation (it should be based on the "value" and employee adds to the company and not on education level or at regular intervals) and is an advocate of "creative destruction" in the workplace. I think that anybody who reads this book will be challenged and come away changed. I enjoyed grappling with the philosophical ideas in this book, and I know I'm going to be a more effective leader for having read it. All my thumbs up!
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Louis Barnett (MSL quote), USA
<2007-05-26 00:00>
What makes this a five is the originality of the concept and material, as well as the fact that it presents the actual system of management that build "the World's Largest Private Company."
Here is a real life capitalist who applies what he preaches within his own company.
Most students of management will understand allowing companies' divisions to buy services (legal, accounting, PR, etc.) internaly or externally. However, that's a fairly pedestrian concept compared to how far Charles Koch releases the power of free markets within his own company. You have people within the company competing against each other for company assets (that happens everywhere) but Koch presents Market-Based Management principals that super charge and rationalize the empowerment of the employees of Koch Industries. The boss's favorite doesn't end-up with the additional resources.
The growth rate of Koch is nothing short of astounding and, suprisingly, it doesn't appear to have abeted due to the growth of the company.
Koch's competatiors will probably be reading this from cover to cover but the lessons are applicable to everyone in business - or government or the private sector.
What's missing? I wish that Charles Koch had give us examples of the processes in action. The book is limited to the strategy and how Koch himself developed it piece by piece. The book would be more interesting and much more valuable if it included specific examples of the tactical applications of the principles of Market Based Management.
But, maybe that will follow. For, maybe that's a trade secret or market advantage.
For followers of the quality movement or Demings approach to quality which has certainly caught on in the US even if TQM is somewhat passe, this is an additionly enjoyable read.
For those who were intriged by the Deming or TQM but couldn't see it through, this will be a fresh take on the subject from more of a business perspective.
Note: Market Based Management is not TQM. |
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M. Skousen (MSL quote), USA
<2007-05-26 00:00>
Finally, Austrian economics has triumphed - in the business world! Imagine, a billionaire thanking Ludwig von Mises and Friedrich Hayek for creating the world's largest private company, Koch Industries. Koch's book shows how his "Market-based Management" (MBM) strategy could revolutionize business, government, and non-profits.
Two years ago, Koch established the "Market Based Management Institute" at Wichita State University. Will it not be long before MBA students at Harvard and Stanford are assigned Mises's Human Action or Hayek's Individualism and the Economic Order? There's nothing like a big success story to transform the B school's pedagogy.
And there's nothing bigger on the scene today than Koch Industries, which has transformed itself into a giant commodity and financial conglomerate. The company has grown as fast as Warren Buffett's Berkshire Hathaway. Is the next paradigm shifting from Omaha to Wichita?
Economics of late has transformed itself from the dismal science to the imperial science, invading politics, finance, history, law, religion, and now business management. In Koch's MBM guidebook, the Austrian concept of opportunity cost of capital is now "Economic Value Added (EVA)," property rights has become "decision rights," and Hayek's rules of just conduct translates into "principled entrepreneurship." Koch's book is an essential translation of Austrian theory into business practice.
Charles Koch is a shy man. Unlike Buffett's company, Koch Industries is a private company, a situation Koch prizes. He doesn't have to worry about Sarbanes-Oxley, nor how quarterly earnings and executive stock option compensation distort the stock price. "Perverse incentives make managing a public company long term extremely difficult," he writes.
Undoubtedly, many businesses and B schools have matched Koch's performance by incorporating such MBM concepts as incentives, integrity, internal profit centers, local autonomy, economic value added, sunk costs, comparative advantage, and marginal price analysis. At Columbia Business School, John Whitney taught MBM for years, and I followed in his footsteps using Koch Industries, Whole Foods Market, and Agora Publishing as case studies. These companies are run by libertarian CEOs who apply market strategies to "create long-term value." Koch doesn't have a monopoly on these market concepts.
Koch has trademarked MBM throughout the book, which can only be justified by his unrelenting systematic application of its principles, and the work is peppered with numerous examples of successes and failures. In this respect, his book is too short for my tastes. In only 194 pages, there's not enough space to determine how much of Koch's success is due to MBM and how much to engineering brains, business experience and just plain luck. For instance, in a 15-page summary of the evolution of Koch Industries, he states, "Thanks to my brother David's leadership, KII has grown its process equipment and engineering business more than 500-fold." Amazing, but how was it achieved? Charles doesn't tell how David used MBM principles to accomplish this monumental goal.
Is "Success" a science? Koch goes to great lengths to prove that his MBM methodology is universal and objective, but Koch is not without controversy. My course at Columbia was rated highly by the MBA students, but an illiberal department chair refused to renew the course, calling it "too political." (At Columbia, can anything be "too political"?) Charles Koch's politics are libertarian, and he has been a major contributor to free-market foundations such as the Cato Institute and the Institute for Humane Studies at George Mason University. For many business schools, it's hard to separate science from politics.
Koch is no Keynesian businessman. According to his book, he is no fan of meaningless make-work projects, guaranteed employment, automatic pay raises, seniority, centralized planning, or running to the government for subsidies or trade protection. Most employees are Koch Industries are union, but must be flexible if they are going to survive. Koch aggressively searches for only "A" or "B" grade employees; those rated "C" either must improve or are let go. Koch Industries doesn't tolerate failure for long. I like his anti-Marxist slogan, "From each according to his ability, to each according to his contribution." Now that's marginal analysis at work!
Though anti-statist to the core, Koch reveals in his book some things that will surprise libertarians. For example, most libertarians practice "minimum" compliance with state rules, but Koch teaches "maximum" compliance with environmental and other government regulations. In today's litigious society, it is suicide to act otherwise: Koch Industries faces 159,000 lawsuits and employs 125 full-time lawyers.
Until now, Koch's Market Based Management, Principled Entrepreneurship, and other trademarked management techniques were taught to company officials and employees, and there was always a shroud of mystery about his guiding principles. His new book "Success" is a giant step in the right direction. Charles Koch has lived up to Ben Franklin's line, "It is incredible the quantity of good that may be done in a country by a single man who will make a business of it." |
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1 Total 1 pages 9 items |
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