What do you think?
Rate this book
Good Profit: How Creating Value for Others Built One of the World's Most Successful Companies
THE UNIQUE MANAGEMENT SYSTEM FROM A LEGENDARY CEO
In 1967, Charles Koch took the reins of his father's company and began the process of growing it from a $21 million start-up into a global corporation with revenues of about $115 billion, according to Forbes.
So how did this MIT engineer manage grow Koch Industries into one of the largest private companies in the world today with growth exceeding that of the S&P 500 by almost 30-fold over the last five decades? Through his unique five-dimensional management process and system called Market-Based Management. Based on five decades of cross-disciplinary studies, experimental discovery, and practical implementation across Koch companies and their 100,000 employees worldwide, the core objective of Market-Based Management's framework is as simple as it is effective: to generate good profit.
What is good profit? Good profit results when a company creates value for customers in a way that helps them improve their lives. Good profit is the result of innovations that customers freely vote for with their own dollars; it's the result of business decisions that create long term value for everyone--customers, employees, shareholders, and society.
While you won't find the Koch Industries name on your home's stain-resistant carpet, your baby's more comfortable but absorbent diapers your stretch denim jeans, or your television with a better clarity screen, MBM(TM) drove these innovations and many more.
Here, drawing on revealing, honest stories from his five decades in business - the company's many successes as well as its stumbles - Koch walks the reader step-by-step through the five dimensions of Market-Based Management to show stockholders, entrepreneurs, leaders, students -- and innovators, supervisors and employees of all kinds, in any field --how to apply the principles to generate Good Profit in their organizations, companies, and lives.
From the Hardcover edition.
In 1967, Charles Koch took the reins of his father's company and began the process of growing it from a $21 million start-up into a global corporation with revenues of about $115 billion, according to Forbes.
So how did this MIT engineer manage grow Koch Industries into one of the largest private companies in the world today with growth exceeding that of the S&P 500 by almost 30-fold over the last five decades? Through his unique five-dimensional management process and system called Market-Based Management. Based on five decades of cross-disciplinary studies, experimental discovery, and practical implementation across Koch companies and their 100,000 employees worldwide, the core objective of Market-Based Management's framework is as simple as it is effective: to generate good profit.
What is good profit? Good profit results when a company creates value for customers in a way that helps them improve their lives. Good profit is the result of innovations that customers freely vote for with their own dollars; it's the result of business decisions that create long term value for everyone--customers, employees, shareholders, and society.
While you won't find the Koch Industries name on your home's stain-resistant carpet, your baby's more comfortable but absorbent diapers your stretch denim jeans, or your television with a better clarity screen, MBM(TM) drove these innovations and many more.
Here, drawing on revealing, honest stories from his five decades in business - the company's many successes as well as its stumbles - Koch walks the reader step-by-step through the five dimensions of Market-Based Management to show stockholders, entrepreneurs, leaders, students -- and innovators, supervisors and employees of all kinds, in any field --how to apply the principles to generate Good Profit in their organizations, companies, and lives.
From the Hardcover edition.
Audio CD
First published October 13, 2015
About the author
Charles G. Koch
12 books60 followersCharles de Ganahl Koch (M.S., Chemical Engineering, Massachusetts Institute of Technology, 1960; M.S., Nuclear Engineering, MIT, 1958; B.S., General Engineering, MIT, 1957) has been CEO of Koch Industries since 1967, and is a major philanthropic supporter of libertarianism. With Ed Crane and Murray Rothbard, he co-founded the Cato Institute.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 30 of 112 reviews
January 26, 2016
Holy crap, this is a bad book. I like the Koch brothers. I agree with them politically, both philosophically and in their desire to actually punch back at liberals and change the status quo, rather than simply feeding money into the rathole of establishment politicians and tasseled-loafer conservative consultants. Their demonization by the Left is emblematic of much that is wrong with America. But this is a business book, not a book on politics. And, holy crap, this is a bad book.
What I thought this book was going to be was an exposition of how Koch Industries got where it is today. Any business that grows from very little to very much has to slash its way to the top, dealing with innumerable existential threats, internal and external. Over decades, scores of highly interesting and highly informative stories must accumulate. This, the inside story of Koch Industries, is what I thought I was going to get.
What I got instead was 250 pages of pabulum, in which incoherent ramblings and gross generalizations are used in the service of hindsight confirmation. Every aspect of Koch’s business discussed in in the book is addressed as such a high level of generality as to leave the reader understanding nothing at all about Koch Industries or how it got where it is today.
Apparently Charles Koch (the author—his brother David is referenced but not involved in the book) believes that Koch Industries has a unique business management system. It is called Market Based Management, or MBM. (I actually had to go back and look that up, it is so un-memorable. And bizarrely, in several places it appears in the book, it has a registered trademark symbol by it, which is not required under trademark law and adds nothing except pretension.) Koch attributes Koch Industries’ success to that system. But every aspect of MBM is trite, obvious, and irrelevant both to the success of Koch Industries and to running any business.
Charles Koch has fallen into a false syllogism. Premise 1: Koch Industries is very successful. Premise 2: Koch Industries uses MBM to guide its actions. Conclusion: MBM is responsible for the success of Koch Industries. This is on its face a post hoc ergo propter hoc error. In fact, MBM is dumb and could not actually be responsible for any success.
The book contains endless statements like “Koch’s reality-grounded MBM mental models, customer focus, and innovation have made us one of the largest and most successful private companies, generating exceptional long-term performance.” These tiresome statements alternate with philosophical nods to Schumpeter’s creative destruction, while ignoring it is not Pareto optimal, claiming for example that a factory girl who loses her job will, herself, have a higher standard of living as a result, which is self-evidently false. Then there are odd claims, such as that MBM is a free-market model directly analogous to a sovereign country with a free market. But nowhere is the actual success of Koch Industries shown to derive from or be related in any concrete way to these philosophical positions.
Anyway, as to the organization and substance of the book. The first third of the book is a brief, mildly interesting but neutered recitation of the history of Koch Industries. In this telling, Fred Koch started a successful oil business; in the 1960s his sons expanded into related business areas. Then they bought some big companies, like Georgia Pacific and Molex. Now they’re very big. The end (so far). The second two-thirds is about MBM.
In all of this, there is lots of rambling talk, such as how “virtuous cycles” lead to Koch “spotting new opportunities to deliver value to our customers.” There is talk about how instead of “grand plans,” Koch has a “practice of exiting businesses with limited potential for us and focusing on ones with greater potential.” None of this is wrong, but it’s obvious as advice, and none of it tells us how Koch decided to make acquisitions, what obstacles they encountered, how they overcame those obstacles, etc. No, instead, this two-bit philosophy instead magically leads to mostly good choices, good results, and “good profit” for Koch (i.e., profit generated without government handouts).
MBM itself is an incoherent five-part system of “Vision,” “Virtue And Talents,” “Knowledge Processes,” “Decision Rights,” and “Incentives.” As far as “Vision,” did you know that “to succeed in the long term, a business must innovate and improve at least as fast as its most effective competitor”? Yes, so did I. On the other hand, “Koch’s Vision is different from most because it’s focused on value creation and people.” Ummmm . . . . sure. Whatever, Charles.
“Virtues And Talents” are apparently synonymous with Koch’s “MBM Guiding Principles,” which are ten, including such exciting and original gems as “Integrity, “Value Creation,” “Customer Focus,” and “Change.” Also, it is apparently important that employees have talents, and did you know that some employees have more talents than others? Among other startling conclusions, “feedback should be designed to actually help employees improve their performance.”
In other MBM pearls of wisdom, “Knowledge Processes” need to be developed to allow measurements, because apparently everyone else but Koch uses haruspices. And “Decision Rights” must be allocated to allow good decisions, while of course avoiding overconfidence, bad framing and anchoring. Finally, “Incentives” are important, and unlike everyone else, Koch Industries attempts to execute incentives not by random guessing, but by evaluating the value created by the employee.
None of this is wrong. All of it can be found in an undergraduate level business class. None of it is remotely informative to actually running a business, much less growing a business to a giant size. It is worthless.
The reality is that building a business is a Hobbesian gutter struggle, where the key element is simply getting things done and driving forward, forward, always forward, adapting, overcoming and improvising. Nothing in MBM would be helpful to a real businessperson. Anything true in it is subsumed in what a successful businessperson is already doing. I still don’t know what the real personality of Koch Industries is. I still don’t have the slightest idea why Koch Industries has been successful. I suspect it’s because the Kochs got handed an excellent core business, struggled in ways that are not revealed in this book, got lucky in some things, and here they are today. But this book says nothing about the real story of Koch Industries. It is a waste of time.
What I thought this book was going to be was an exposition of how Koch Industries got where it is today. Any business that grows from very little to very much has to slash its way to the top, dealing with innumerable existential threats, internal and external. Over decades, scores of highly interesting and highly informative stories must accumulate. This, the inside story of Koch Industries, is what I thought I was going to get.
What I got instead was 250 pages of pabulum, in which incoherent ramblings and gross generalizations are used in the service of hindsight confirmation. Every aspect of Koch’s business discussed in in the book is addressed as such a high level of generality as to leave the reader understanding nothing at all about Koch Industries or how it got where it is today.
Apparently Charles Koch (the author—his brother David is referenced but not involved in the book) believes that Koch Industries has a unique business management system. It is called Market Based Management, or MBM. (I actually had to go back and look that up, it is so un-memorable. And bizarrely, in several places it appears in the book, it has a registered trademark symbol by it, which is not required under trademark law and adds nothing except pretension.) Koch attributes Koch Industries’ success to that system. But every aspect of MBM is trite, obvious, and irrelevant both to the success of Koch Industries and to running any business.
Charles Koch has fallen into a false syllogism. Premise 1: Koch Industries is very successful. Premise 2: Koch Industries uses MBM to guide its actions. Conclusion: MBM is responsible for the success of Koch Industries. This is on its face a post hoc ergo propter hoc error. In fact, MBM is dumb and could not actually be responsible for any success.
The book contains endless statements like “Koch’s reality-grounded MBM mental models, customer focus, and innovation have made us one of the largest and most successful private companies, generating exceptional long-term performance.” These tiresome statements alternate with philosophical nods to Schumpeter’s creative destruction, while ignoring it is not Pareto optimal, claiming for example that a factory girl who loses her job will, herself, have a higher standard of living as a result, which is self-evidently false. Then there are odd claims, such as that MBM is a free-market model directly analogous to a sovereign country with a free market. But nowhere is the actual success of Koch Industries shown to derive from or be related in any concrete way to these philosophical positions.
Anyway, as to the organization and substance of the book. The first third of the book is a brief, mildly interesting but neutered recitation of the history of Koch Industries. In this telling, Fred Koch started a successful oil business; in the 1960s his sons expanded into related business areas. Then they bought some big companies, like Georgia Pacific and Molex. Now they’re very big. The end (so far). The second two-thirds is about MBM.
In all of this, there is lots of rambling talk, such as how “virtuous cycles” lead to Koch “spotting new opportunities to deliver value to our customers.” There is talk about how instead of “grand plans,” Koch has a “practice of exiting businesses with limited potential for us and focusing on ones with greater potential.” None of this is wrong, but it’s obvious as advice, and none of it tells us how Koch decided to make acquisitions, what obstacles they encountered, how they overcame those obstacles, etc. No, instead, this two-bit philosophy instead magically leads to mostly good choices, good results, and “good profit” for Koch (i.e., profit generated without government handouts).
MBM itself is an incoherent five-part system of “Vision,” “Virtue And Talents,” “Knowledge Processes,” “Decision Rights,” and “Incentives.” As far as “Vision,” did you know that “to succeed in the long term, a business must innovate and improve at least as fast as its most effective competitor”? Yes, so did I. On the other hand, “Koch’s Vision is different from most because it’s focused on value creation and people.” Ummmm . . . . sure. Whatever, Charles.
“Virtues And Talents” are apparently synonymous with Koch’s “MBM Guiding Principles,” which are ten, including such exciting and original gems as “Integrity, “Value Creation,” “Customer Focus,” and “Change.” Also, it is apparently important that employees have talents, and did you know that some employees have more talents than others? Among other startling conclusions, “feedback should be designed to actually help employees improve their performance.”
In other MBM pearls of wisdom, “Knowledge Processes” need to be developed to allow measurements, because apparently everyone else but Koch uses haruspices. And “Decision Rights” must be allocated to allow good decisions, while of course avoiding overconfidence, bad framing and anchoring. Finally, “Incentives” are important, and unlike everyone else, Koch Industries attempts to execute incentives not by random guessing, but by evaluating the value created by the employee.
None of this is wrong. All of it can be found in an undergraduate level business class. None of it is remotely informative to actually running a business, much less growing a business to a giant size. It is worthless.
The reality is that building a business is a Hobbesian gutter struggle, where the key element is simply getting things done and driving forward, forward, always forward, adapting, overcoming and improvising. Nothing in MBM would be helpful to a real businessperson. Anything true in it is subsumed in what a successful businessperson is already doing. I still don’t know what the real personality of Koch Industries is. I still don’t have the slightest idea why Koch Industries has been successful. I suspect it’s because the Kochs got handed an excellent core business, struggled in ways that are not revealed in this book, got lucky in some things, and here they are today. But this book says nothing about the real story of Koch Industries. It is a waste of time.
September 22, 2020
21 June 2018
Just started skimming this - some great references to Mises and Hayek - and could not put it down till I finished the meaty Introduction. Fascinating. Really looking forward to continuing with this.
17 Sept. 2019
Just finished this yesterday and am sorry I had not gotten to it earlier, since it was so good. Now I want to read Charles Koch's first book "The Science of Success" for sure!
For people who want to know how Charles and David Koch made their money.
For people who want to know how Charles views the world.
For people who want to know the ethics of Charles Koch and most(?) employees of Koch Industries Inc. (KII).
For people who want to know the key principles and many applications of Charles Koch's Market Based Management (MBM) techniques/philosophy.
For people who want to know about how Koch Industries got started and some key things about it's founder Fred Koch, Charles and David's father.
For people who want some very real perspective on the huge amount of vitriol spewed about the "Koch Brothers" or "Koch Industries." THEN you can decide for yourself which picture seems more in tune with reality.
Taking a company valued at about $20 million in the early 1960s and building it via voluntary transactions to over $110 Billion less than 60 years later is an incredible feat. I loved finding out about how it was done.
I loved hearing how a primarily (but far from exclusively) oil-centered business morphed into one additionally handling consumer textiles, electronic components, paper products and more, so profitably and sustainably.
I loved finding out about how Charles Koch integrated the key economic concepts, primarily marginal analysis and opportunity cost, into his management philosophy. Some economics teachers/professors can make those concepts real for some students, but this book is the first management focused one that taught the importance and helpfulness of those concepts to me... in spades.
I loved seeing great little quotations and summaries of important ideas from the likes of Bastiat, Mises, Hayek, Schumpeter, Einstein, Hobbes, Michael Porter, Michael Polanyi, etc. etc. weaved throughout the book.
I have much more to say about this book.... but no time right now.
Just started skimming this - some great references to Mises and Hayek - and could not put it down till I finished the meaty Introduction. Fascinating. Really looking forward to continuing with this.
17 Sept. 2019
Just finished this yesterday and am sorry I had not gotten to it earlier, since it was so good. Now I want to read Charles Koch's first book "The Science of Success" for sure!
For people who want to know how Charles and David Koch made their money.
For people who want to know how Charles views the world.
For people who want to know the ethics of Charles Koch and most(?) employees of Koch Industries Inc. (KII).
For people who want to know the key principles and many applications of Charles Koch's Market Based Management (MBM) techniques/philosophy.
For people who want to know about how Koch Industries got started and some key things about it's founder Fred Koch, Charles and David's father.
For people who want some very real perspective on the huge amount of vitriol spewed about the "Koch Brothers" or "Koch Industries." THEN you can decide for yourself which picture seems more in tune with reality.
Taking a company valued at about $20 million in the early 1960s and building it via voluntary transactions to over $110 Billion less than 60 years later is an incredible feat. I loved finding out about how it was done.
I loved hearing how a primarily (but far from exclusively) oil-centered business morphed into one additionally handling consumer textiles, electronic components, paper products and more, so profitably and sustainably.
I loved finding out about how Charles Koch integrated the key economic concepts, primarily marginal analysis and opportunity cost, into his management philosophy. Some economics teachers/professors can make those concepts real for some students, but this book is the first management focused one that taught the importance and helpfulness of those concepts to me... in spades.
I loved seeing great little quotations and summaries of important ideas from the likes of Bastiat, Mises, Hayek, Schumpeter, Einstein, Hobbes, Michael Porter, Michael Polanyi, etc. etc. weaved throughout the book.
I have much more to say about this book.... but no time right now.
March 19, 2024
2024 Review
I challenged myself in 2024 to re-read the books that impacted me most in my 20s.
As my earier review demonstrates, I loved this book when I first read it. I was 22, straight from college, and working for a nonprofit organization that deeply believed in Market Based Management. Good Profit expounded on everything I already knew and loved about my job.
But others didn't really seem to share my enthusiasm. I bought this book for my assistants...and they either never spoke of it or returned their unopened copies when they left. I recommended it to friends who read it...and didn't really like it.
Over time as I moved on in my career, I started to think that maybe I overhyped the book. I picked it up for this re-read challenge with an eye towards knocking it out and moving on as fast as possible. At most I expected to find remnants of 22-year-old Amy in it.
I did not expect to find my current self in it. And yet there she is.
I kept highlighting sections and exclaiming, "I HAD THIS VERY DEBATE WITH HUMAN RESOURCES JUST TWO MONTHS AGO."
Or:
"THIS IS WHY I CARE SO MUCH ABOUT THIS PART OF OUR OFFICE CULTURE."
It appears I didn't just drink the Kool-Aid. I embedded it into my DNA.
2015 Review
Easily one of the most impactful books of 2015 and an instant favorite for me. Charles Koch provides an accessible vision of the principles that lead Koch Industries and the power of the free market. Definitely a must-read for anyone in a supervisor role.
I challenged myself in 2024 to re-read the books that impacted me most in my 20s.
As my earier review demonstrates, I loved this book when I first read it. I was 22, straight from college, and working for a nonprofit organization that deeply believed in Market Based Management. Good Profit expounded on everything I already knew and loved about my job.
But others didn't really seem to share my enthusiasm. I bought this book for my assistants...and they either never spoke of it or returned their unopened copies when they left. I recommended it to friends who read it...and didn't really like it.
Over time as I moved on in my career, I started to think that maybe I overhyped the book. I picked it up for this re-read challenge with an eye towards knocking it out and moving on as fast as possible. At most I expected to find remnants of 22-year-old Amy in it.
I did not expect to find my current self in it. And yet there she is.
I kept highlighting sections and exclaiming, "I HAD THIS VERY DEBATE WITH HUMAN RESOURCES JUST TWO MONTHS AGO."
Or:
"THIS IS WHY I CARE SO MUCH ABOUT THIS PART OF OUR OFFICE CULTURE."
It appears I didn't just drink the Kool-Aid. I embedded it into my DNA.
2015 Review
Easily one of the most impactful books of 2015 and an instant favorite for me. Charles Koch provides an accessible vision of the principles that lead Koch Industries and the power of the free market. Definitely a must-read for anyone in a supervisor role.
February 13, 2017
Charles Koch provides an in-depth look at Market Based Management and how it works toward earning a "good profit."
Good profit is earned by achieving value for consumers instead of just profiting for the sake of profit or by receiving taxpayer funds through subsidies, exemptions, and credits.
By sticking with this principle throughout their companies, they continue to earn good profits and succeed.
This same commitment should be made in non-profits, the private sector, and even in limited government functions for the betterment of society.
Good profit is earned by achieving value for consumers instead of just profiting for the sake of profit or by receiving taxpayer funds through subsidies, exemptions, and credits.
By sticking with this principle throughout their companies, they continue to earn good profits and succeed.
This same commitment should be made in non-profits, the private sector, and even in limited government functions for the betterment of society.
September 12, 2019
Менеджерская мудрость от одного из ныне живущих титанов американской промышленности. Любопытный подход сравнительных конкурентных преимуществ людей в менеджменте. Есть и противоречащие общему консенсусу в менеджменте взгляды - например упор на индивидуальные, а не командные достижения и вознаграждения
August 7, 2016
Normally, I would avoid the works of the Koch brothers who are the primary beneficiaries of the horrible Supreme Court's "Citizens United" decision which declared that corporations are people too and entitled to free speech which frees the Koch brothers to spend millions on advertising by political action committees trumpeting the cause of the "right" and the horrors of the "left".
However, "Attention must be paid to such a person." I believe the saying goes and as the 4th richest person in the country he obviously must be doing something right so decided to pay attention when I came across this book. I must admit that it would have been interesting to work in a company that is based that truly embraces what Charles dubs "Market Based Management" which encompasses the following principles - Integrity, Compliance, Value Creation, Principled Entrepreneurship, Customer Focus, Knowledge, Change (creative destruction), Humility, Respect and Fulfillment. At first I was impressed when he referenced some of the classic economic thinkers and some business research and as much as I like the ideas, the book quickly degenerated into a sea of platitudes and generalities. While he presents "case studies" the results throughout the book tend to lack detail and specificity. If there was ever a cry for numbers, this was it but it is sadly lacking in that regard. Must be a case of "I want to show you how I did it, but not too much!"
However, "Attention must be paid to such a person." I believe the saying goes and as the 4th richest person in the country he obviously must be doing something right so decided to pay attention when I came across this book. I must admit that it would have been interesting to work in a company that is based that truly embraces what Charles dubs "Market Based Management" which encompasses the following principles - Integrity, Compliance, Value Creation, Principled Entrepreneurship, Customer Focus, Knowledge, Change (creative destruction), Humility, Respect and Fulfillment. At first I was impressed when he referenced some of the classic economic thinkers and some business research and as much as I like the ideas, the book quickly degenerated into a sea of platitudes and generalities. While he presents "case studies" the results throughout the book tend to lack detail and specificity. If there was ever a cry for numbers, this was it but it is sadly lacking in that regard. Must be a case of "I want to show you how I did it, but not too much!"
November 22, 2015
Great book by one of America's foremost billionaires. People will see through the Left's lies and realize Mr.Koch is a decent human being. Although a bit terse and technical at times, "Good Profit" is a great read on how entrepreneurial-minded people can learn to cultivate and aspire to earn good profit.
September 16, 2016
To listen to the loony left Charles Koch is the devil incarnate. I wanted to read this book because under his leadership Koch Industries has grown from a $22 million to a $100 billion company. What as always amused me about the left's demonization of the Koch Brothers is that they don't seem to have the same contempt for George Soros. Koch Industries is a diversified manufacturer and Soros is a currency manipulator. Go Figure.
Koch is an engineer who also took it upon himself to become well read in philosophy and economics - and all that reading (which in Economics seems to have run the gamut from Marx to Schumpeter and Hayek and was similarly broad in philosophical writing) seems to have influenced the way he approaches business which led him to create what he calls Market Based Management. The book demonstrates that he is well familiar with the writings of Smith and Hume - both of whom are called moral philosophers. This book explains MBM in clear detail and then presents four case studies to better understand the approach. Koch is a big believer in subsidiarity - responsibility for actions in his company does not come top down. He is a strong opponent of crony capitalism. Based on several stories in the book he has also led the company to operate at the highest standards of ethics. He is a skeptic of a lot of different management philosophies - one of the best lines in the book came from Einstein - Not everything that counts can be counted and not everything that can be counted counts. He intensely dislikes corporate welfare and while Koch produces ethanol he would just as soon see the subsidy go away.
Some of the left argue that Koch works in industries they do not favor like oil and gas - and indeed they do but they are constantly trying to operate at the highest standards, which often exceed the ones established in regulations.
Koch gets knocked on the left because of the political causes he supports. Indeed, in addition to his support of a number of endowed chairs and institutes, he and his brother have funded numerous charitable causes and have funded a lot of research especially in issues related to cancer.
The book is worth the read on both counts - if you want to understand how Koch operates its business AND if you want to understand his philosophical approach to life.
Koch is an engineer who also took it upon himself to become well read in philosophy and economics - and all that reading (which in Economics seems to have run the gamut from Marx to Schumpeter and Hayek and was similarly broad in philosophical writing) seems to have influenced the way he approaches business which led him to create what he calls Market Based Management. The book demonstrates that he is well familiar with the writings of Smith and Hume - both of whom are called moral philosophers. This book explains MBM in clear detail and then presents four case studies to better understand the approach. Koch is a big believer in subsidiarity - responsibility for actions in his company does not come top down. He is a strong opponent of crony capitalism. Based on several stories in the book he has also led the company to operate at the highest standards of ethics. He is a skeptic of a lot of different management philosophies - one of the best lines in the book came from Einstein - Not everything that counts can be counted and not everything that can be counted counts. He intensely dislikes corporate welfare and while Koch produces ethanol he would just as soon see the subsidy go away.
Some of the left argue that Koch works in industries they do not favor like oil and gas - and indeed they do but they are constantly trying to operate at the highest standards, which often exceed the ones established in regulations.
Koch gets knocked on the left because of the political causes he supports. Indeed, in addition to his support of a number of endowed chairs and institutes, he and his brother have funded numerous charitable causes and have funded a lot of research especially in issues related to cancer.
The book is worth the read on both counts - if you want to understand how Koch operates its business AND if you want to understand his philosophical approach to life.
September 5, 2016
Quantify, simplify, prioritize! The MBM system is inspiring to me in that the largest privately held company applies this in every function of it's operations. It's the secret sauce that is common sense and pure. This book has taught me to think a Tad bigger and wrap my brain around the idea of leveraging peoples efforts via beneficial incentive systems. This book is a win because it has inspired me to not miss the opportunity to acquire high quality assests and to always begin with the end in mind. The principles I learned from Mbm have me brainstorming a new vision for my business that will revitalize and tranform the way I do business.
December 30, 2015
This really should have been 2 books. The first about the Koch family and business history, which is fascinating, and scattered throughout the book. And the second, a text book covering the Market Based Management philosophy that has served Koch Industries so well, with lots of case studies.
November 7, 2016
Should be required reading for anyone going into business or management. Even if you don't end up agreeing with Koch's approach & system, he makes eloquent points that every business owner should at least consider.
November 23, 2015
Good ideas lead to good profits. Read it.
February 8, 2021
More than anything this book reminded me why I don't enjoy reading business books. Sorry, Amy.
First, the good: Koch is clearly pro-capitalism, pro-family, hard work, honesty, respect, and so on. Heartland values. Middle-America values. I appreciated that.
Now moving on...
I guess it's got some good advice. But with so much focus on big-picture, big-idea stuff, I didn't find anything to be actually helpful. Hire people with virtue. Create value. Innovate. Focus on the customer. Let the workers provide ideas for improvement. Incentivize your employees by paying them. Don't take government handouts to prop up failing parts of your business. Most of the advice in here is extremely vague or blatantly obvious.
The second half of the book finally does get into some specifics. He actually describes the kinds of virtues you should look for in hiring people. He gives some real-life examples of how he re-structured a team or encouraged a factory to reduce workplace accidents. But it was all still too vague for my tastes.
Having read this entire book, I still couldn't define for you what market-based management actually is. Either I failed the book, or the book failed me.
Koch talks a lot about measuring the ways an employee brings profits in for the business, and paying them in proportion to that. That's fine for sales people, but what about your average QC person or secretary who doesn't have a way to quantify that kind of thing? I work in operations, and much of what I do is about improving quality and finding efficiencies. I struggle to describe the ways I help make revenue for my company, because my tasks don't have a one-to-one correlation with direct income. All I can say is that I keep people from yelling about problems. There's no easy way to quantify that. Just because I might suck at my job doesn't mean the client will leave my business and money will be lost. Just because I might do my job well doesn't mean the client will stay and my company will directly profit.
This review says there's nothing in this book which you couldn't pick up from some basic undergraduate businesses classes. Though I wasn't a business major myself, I tend to believe him. See this review here: https://www.goodreads.com/review/show...
I'm taking The Science of Success: How Market-Based Management Built the World's Largest Private Company off my list.
First, the good: Koch is clearly pro-capitalism, pro-family, hard work, honesty, respect, and so on. Heartland values. Middle-America values. I appreciated that.
Now moving on...
I guess it's got some good advice. But with so much focus on big-picture, big-idea stuff, I didn't find anything to be actually helpful. Hire people with virtue. Create value. Innovate. Focus on the customer. Let the workers provide ideas for improvement. Incentivize your employees by paying them. Don't take government handouts to prop up failing parts of your business. Most of the advice in here is extremely vague or blatantly obvious.
The second half of the book finally does get into some specifics. He actually describes the kinds of virtues you should look for in hiring people. He gives some real-life examples of how he re-structured a team or encouraged a factory to reduce workplace accidents. But it was all still too vague for my tastes.
Having read this entire book, I still couldn't define for you what market-based management actually is. Either I failed the book, or the book failed me.
Koch talks a lot about measuring the ways an employee brings profits in for the business, and paying them in proportion to that. That's fine for sales people, but what about your average QC person or secretary who doesn't have a way to quantify that kind of thing? I work in operations, and much of what I do is about improving quality and finding efficiencies. I struggle to describe the ways I help make revenue for my company, because my tasks don't have a one-to-one correlation with direct income. All I can say is that I keep people from yelling about problems. There's no easy way to quantify that. Just because I might suck at my job doesn't mean the client will leave my business and money will be lost. Just because I might do my job well doesn't mean the client will stay and my company will directly profit.
This review says there's nothing in this book which you couldn't pick up from some basic undergraduate businesses classes. Though I wasn't a business major myself, I tend to believe him. See this review here: https://www.goodreads.com/review/show...
I'm taking The Science of Success: How Market-Based Management Built the World's Largest Private Company off my list.
January 22, 2021
"Good profit can only result from creating value for the customer. It is the manifestation of the entrepreneur's respect for what the customer values."
I gained much appreciation for the thoughtful process Charles Koch has used to strengthen and elevate his business over those of his competitors. There is no doubt that his vision to create value for his customers drives his success and has resulted in his business generating billions of dollars worth of revenue.
That being said, reading this book felt like eating sawdust. Charles' editor should have advised him against the mind-numbing use of acronyms which destroyed the effect of the book, in my mind, and caused great confusion.
I gained much appreciation for the thoughtful process Charles Koch has used to strengthen and elevate his business over those of his competitors. There is no doubt that his vision to create value for his customers drives his success and has resulted in his business generating billions of dollars worth of revenue.
That being said, reading this book felt like eating sawdust. Charles' editor should have advised him against the mind-numbing use of acronyms which destroyed the effect of the book, in my mind, and caused great confusion.
January 8, 2016
This book has some good approaches to conducting business such as an owner, CEO.
However, the author comes from a wealthy family, runs a private conglomerate, so there isn't a 1:1 correlation between his business statesman cum capitalist versus a head of a public run company, which has different challenges. There's still value when read in the context of a purely insular economic experience.
The introduction is the only place where the author states a political view of non-government involvement and espouses complete deregulation. He doesn't provide how that would solve the abuses of non-regulation such as over fishing, extinction of the dodo and passenger pigeon, love canal, s&l debacle and junk bonds of the eighties, the housing and market crash in the 2000's or how to handle the Bernie madoffs of the world. He does contradict himself in stating the "tragedy of the commons" which is when a resource is destroyed due to overuse. Regulation is the entire point of preventing that.
There is no free market. The karate is creates by the government which creates rules and regulations which allow for fairness but still promote innovation and motivation via compensation. The areas the government provides this is via rules and laws on: property, monopolies (degree of market share,) contracts, bankruptcy, and how that is enforced.
When rules are set to be fair it's an equal playing field. When rules or changed or enforcement is weakened malfeasance is able to be introduced. That is generally where all the scandals and crashes come from - changing (controlling or rigging the system.)
For more reading about this I recommended Saving Capitalism by Robert Reich, and Anyang by Paul Krugman and David Cay Johnston.
I haven't seen any books that explain in detail why the above author's analysis and viewpoints are wrong. If you know of any please let me know. Bill O'Reilly and Glen Beck, I don't think count - but hey, if you think they have good analysis pass it along.
However, the author comes from a wealthy family, runs a private conglomerate, so there isn't a 1:1 correlation between his business statesman cum capitalist versus a head of a public run company, which has different challenges. There's still value when read in the context of a purely insular economic experience.
The introduction is the only place where the author states a political view of non-government involvement and espouses complete deregulation. He doesn't provide how that would solve the abuses of non-regulation such as over fishing, extinction of the dodo and passenger pigeon, love canal, s&l debacle and junk bonds of the eighties, the housing and market crash in the 2000's or how to handle the Bernie madoffs of the world. He does contradict himself in stating the "tragedy of the commons" which is when a resource is destroyed due to overuse. Regulation is the entire point of preventing that.
There is no free market. The karate is creates by the government which creates rules and regulations which allow for fairness but still promote innovation and motivation via compensation. The areas the government provides this is via rules and laws on: property, monopolies (degree of market share,) contracts, bankruptcy, and how that is enforced.
When rules are set to be fair it's an equal playing field. When rules or changed or enforcement is weakened malfeasance is able to be introduced. That is generally where all the scandals and crashes come from - changing (controlling or rigging the system.)
For more reading about this I recommended Saving Capitalism by Robert Reich, and Anyang by Paul Krugman and David Cay Johnston.
I haven't seen any books that explain in detail why the above author's analysis and viewpoints are wrong. If you know of any please let me know. Bill O'Reilly and Glen Beck, I don't think count - but hey, if you think they have good analysis pass it along.
August 3, 2017
"I certainly don't claim to lead an ascetic life, but neither accumulating material goods nor amassing a big pile of money has ever been an incentive for me to work.
My motivation to work hard has always been my need to lead a life of meaning-a fulfilling life. I want to do my best to make a difference in the world. I would rather die for something than live for nothing. Making a good profit-earned by economic means instead of political ones-is a measure that tells me people value my contribution." (Charles Koch, Good Profit, Page 193)
Charles Koch is the 8th richest person in the world and he credits the success of his companies to this his Market-Based Management ("MBM") Framework. He says in this book that he wished all companies would use this framework, so value to customers would improve and businesses could make a good profit. He says relying on government handouts is not good profit.
The basic foundation of this MBM framework are:
* Vision
* Virtue and Talents
* Knowledge Processes
* Decision Rights
* Incentives
The first step he says an organization can do to introduce this framework in their culture is to get senior management to read this book and then provide training to senior management and then lists other steps. It's all about creating a culture based upon this philosophy.
For a man whose net worth is 48.5 billion dollars as of this writing, perhaps, he knows something we don't about running a successful business and he credits this all to his MBM framework.
My motivation to work hard has always been my need to lead a life of meaning-a fulfilling life. I want to do my best to make a difference in the world. I would rather die for something than live for nothing. Making a good profit-earned by economic means instead of political ones-is a measure that tells me people value my contribution." (Charles Koch, Good Profit, Page 193)
Charles Koch is the 8th richest person in the world and he credits the success of his companies to this his Market-Based Management ("MBM") Framework. He says in this book that he wished all companies would use this framework, so value to customers would improve and businesses could make a good profit. He says relying on government handouts is not good profit.
The basic foundation of this MBM framework are:
* Vision
* Virtue and Talents
* Knowledge Processes
* Decision Rights
* Incentives
The first step he says an organization can do to introduce this framework in their culture is to get senior management to read this book and then provide training to senior management and then lists other steps. It's all about creating a culture based upon this philosophy.
For a man whose net worth is 48.5 billion dollars as of this writing, perhaps, he knows something we don't about running a successful business and he credits this all to his MBM framework.
December 5, 2017
This was a poor biography and a poor business book. I don't disagree with the general sentiments. It just stays at the vague level.
He says things like how we need to have better foresight about our industries than our competitors. He then shares a couple of times they saw big shifts coming and a couple of times they didn't. But he didn't say how to have better foresight. And he didn't share any details about how they used that foresight to beat their competitors during the transition.
I could share more examples, from talking about hiring to expanding based on your core competencies (rather than your industry). Again and again, it's a laudable concept, but vague.
He says things like how we need to have better foresight about our industries than our competitors. He then shares a couple of times they saw big shifts coming and a couple of times they didn't. But he didn't say how to have better foresight. And he didn't share any details about how they used that foresight to beat their competitors during the transition.
I could share more examples, from talking about hiring to expanding based on your core competencies (rather than your industry). Again and again, it's a laudable concept, but vague.
May 18, 2017
I listened to Good Profit on my commute to and from work, so admittedly, I wasn't always tuned into the content of Good Profit like I would have preferred. Nevertheless, I did learn about principled entrepreneurship, market based management and hopefully took away some pointers that I can use in my own business. I think that I'll have to revisit the print form of this book, to gain a deeper understanding. I would recommend this book for others looking to expand their business knowledge and grow their respective business.
May 23, 2016
This book was... ok. The Kochs are underrated, and this book should help remedy that at the margin. But I'm still looking for a thorough history of Koch Industries, and this is not it. He throws in some anecdotes about the business, but not enough. He never really explains the nuts and bolts of Market Based Management--if he'd at least done that, the book might be worth the effort.
November 16, 2015
Anyone who is in business or is thinking of going into business should read this book. It explains how to be a good, moral and ethical company without government help and make good profit.
August 31, 2021
If I had a drink every time I rolled my eyes while reading (listening) to this book, I’d have been drunk for the past week.
On the management theory side, none of the ideas are new yet Koch manages to deliver them with such a pretentious air it’s like he thinks he invented business.
On the philosophy side, his pseudo-moral high minded claims would be inspiring if they weren’t so blatantly hypocritical and ignorant of reality.
Yes, I agree that hiring ethical people is a good idea and encouraging them to profit by making the lives of others better is noble. But what about the years when Koch rewarded its employees for systematically stealing oil from the Osage tribe? Or participated in market manipulation that caused rolling blackouts in the heat of summer across California? Or sidestepped regulations to poison the environment? (And these are just examples I can think of off the top of my head.)
It infuriated me to hear his theory about how the government shouldn’t manipulate consumer choice about renewable energy with subsidies; that the consumer should be able to express their preference between renewables and traditional oil & gas on their own. Meanwhile, Koch spent 20+ years funding grassroots efforts to misinform consumers about climate change — so much for free choice.
This entire book is basically an unoriginal lecture put together by a man in his tower in Wichita who hasn’t stepped down to check in on the real world in years.
(Emily, I hope you’re not reading this and if you are I’m sorry!)
On the management theory side, none of the ideas are new yet Koch manages to deliver them with such a pretentious air it’s like he thinks he invented business.
On the philosophy side, his pseudo-moral high minded claims would be inspiring if they weren’t so blatantly hypocritical and ignorant of reality.
Yes, I agree that hiring ethical people is a good idea and encouraging them to profit by making the lives of others better is noble. But what about the years when Koch rewarded its employees for systematically stealing oil from the Osage tribe? Or participated in market manipulation that caused rolling blackouts in the heat of summer across California? Or sidestepped regulations to poison the environment? (And these are just examples I can think of off the top of my head.)
It infuriated me to hear his theory about how the government shouldn’t manipulate consumer choice about renewable energy with subsidies; that the consumer should be able to express their preference between renewables and traditional oil & gas on their own. Meanwhile, Koch spent 20+ years funding grassroots efforts to misinform consumers about climate change — so much for free choice.
This entire book is basically an unoriginal lecture put together by a man in his tower in Wichita who hasn’t stepped down to check in on the real world in years.
(Emily, I hope you’re not reading this and if you are I’m sorry!)
February 1, 2024
This book, Good Profit, is an application of an inductive theory- Market Based Management (MBM) in the Koch conglomerate. Proposed by one of the promoters of the Koch Industries, Charles G. Koch, the book expounds on the five dimensions of the theory and what are its guiding principles. I picked up this book after I read the book on Kochland by Christopher Leonard and watched several YouTube videos of Charles Koch’s interviews.
While reading this book, I was continuously thinking whether this MBM can be successfully applied in countries other than the USA, especially in India. Though there are references of its application in other countries such as Italy where there are plants of the Koch Industries, I would certainly like to know how these principles and MBM theory faring in their businesses that are operating in India. I have my doubts.
I am not a business graduate and there were certain passages in the book that were incomprehensible for me, nevertheless, the book is well written and especially Chapter 11 of the book. In this chapter the author illustrates the application of the five dimensions of the theory with examples and it’s a good read. I recommend this to anyone who is interested in knowing how one of the largest privately held companies is run in the world. I give it 4 stars.
While reading this book, I was continuously thinking whether this MBM can be successfully applied in countries other than the USA, especially in India. Though there are references of its application in other countries such as Italy where there are plants of the Koch Industries, I would certainly like to know how these principles and MBM theory faring in their businesses that are operating in India. I have my doubts.
I am not a business graduate and there were certain passages in the book that were incomprehensible for me, nevertheless, the book is well written and especially Chapter 11 of the book. In this chapter the author illustrates the application of the five dimensions of the theory with examples and it’s a good read. I recommend this to anyone who is interested in knowing how one of the largest privately held companies is run in the world. I give it 4 stars.
July 25, 2021
Vision: Koch companies constantly seek opportunities, in any industry, for which their capabilities will create superior value
Virtue and talents : Integrity, humility, teamwork, intellectual honesty and the desire to create real value are necessary values for a free society to function properly. Talented people who embody these virtues are an important driver in an organization’s success.
Knowledge processes: A key driver of prosperity is understanding what people value and how to satisfy those values. Thus, Koch companies strive to create a culture and the measures necessary to build the relevant knowledge.
Decision rights: Creating superior value requires that decisions be made by those who have demonstrated the ability to get results. Therefore, authorities are set more by comparative advantage than by hierarchy.
Incentives: Koch companies try to reward their people like entrepreneurs, paying them a portion of the long-term value they create.
Virtue and talents : Integrity, humility, teamwork, intellectual honesty and the desire to create real value are necessary values for a free society to function properly. Talented people who embody these virtues are an important driver in an organization’s success.
Knowledge processes: A key driver of prosperity is understanding what people value and how to satisfy those values. Thus, Koch companies strive to create a culture and the measures necessary to build the relevant knowledge.
Decision rights: Creating superior value requires that decisions be made by those who have demonstrated the ability to get results. Therefore, authorities are set more by comparative advantage than by hierarchy.
Incentives: Koch companies try to reward their people like entrepreneurs, paying them a portion of the long-term value they create.
July 18, 2020
MBM or Market Based Management makes a ton of sense as explained by Charles Koch. While this was not an implementation guide, there were many clear distinctions between how MBM works compared to the more traditional models. I would love to see this in action.
August 6, 2017
An important business book, proudly crafted and polished with care, by a smart and effective businessman. I hate what Koch has done to American politics, but I respect this book, and fear its all too likely implications.
He runs the largest private company in America, which produces with upmost efficiency and profit, most of the essential materials for modern life. The company values include an aggressive earnings growth target, and the determination never to go public. (so profits continue to accrue to a few tight owners, from ever more industries.)
His values are so internally consistent. If you put profit above everything else, he and his work have a great value, and also science and knowledge of great value. Unfortunately the market gives power in society only to people who have money, in proportion to how much money they have, and it really is his fantasy that these assets are a proxy for how much value these people are created in society! (except where government corrupted the process)
It is amazing to me that such a smart man could have such huge blind spots, on such obvious social issues, as well as on anthropomorphic climate change.
Managing internally by profit (as detailed) is unique, and probably attractive to many high performers. Standing against him for the inefficiency of "make work jobs programs" or even the value of "equal pay for equal work" is not simple.
An important book, but needs to be read in context of so much more. He is in fact wrong about so much, but it takes a broad knowledge base to understand this, and the effort required to refute him would be tremendous.
Economism, by Kwak, is a great antidote to this biased perspective, bringing you back to the actual real world.
He runs the largest private company in America, which produces with upmost efficiency and profit, most of the essential materials for modern life. The company values include an aggressive earnings growth target, and the determination never to go public. (so profits continue to accrue to a few tight owners, from ever more industries.)
His values are so internally consistent. If you put profit above everything else, he and his work have a great value, and also science and knowledge of great value. Unfortunately the market gives power in society only to people who have money, in proportion to how much money they have, and it really is his fantasy that these assets are a proxy for how much value these people are created in society! (except where government corrupted the process)
It is amazing to me that such a smart man could have such huge blind spots, on such obvious social issues, as well as on anthropomorphic climate change.
Managing internally by profit (as detailed) is unique, and probably attractive to many high performers. Standing against him for the inefficiency of "make work jobs programs" or even the value of "equal pay for equal work" is not simple.
An important book, but needs to be read in context of so much more. He is in fact wrong about so much, but it takes a broad knowledge base to understand this, and the effort required to refute him would be tremendous.
Economism, by Kwak, is a great antidote to this biased perspective, bringing you back to the actual real world.
January 18, 2018
The first few chapters had repetitive emphasis on the importance implementing free-markets in societies and governments. It was a little tiring to read. It focused more on Market-Based Management after the early chapters, in which I have found to be extremely beneficial for my company.
The book has changed many of my management philosophies. It’s focus on value and the many techniques to use to create a valuable culture within an organization is astounding. I for one will be using Market-Based Management to manage my company.
A highly recommended read.
The book has changed many of my management philosophies. It’s focus on value and the many techniques to use to create a valuable culture within an organization is astounding. I for one will be using Market-Based Management to manage my company.
A highly recommended read.
April 21, 2018
“The process of discovery begins when we observe, often vaguely, a gap between what is and what could be. Our intuition tells us something better is just beyond the range of our mind’s eye. To build a culture of discovery, we must encourage, not discourage, the passionate pursuit of hunches (no matter their origin).” ~ Charles G. Koch
October 12, 2023
Very good book about disruptive innovation and business philosophy.
Mr. Charles Koch has a good sense about USSR Stalin repression political system and the horror it delivered on it's own people, not considering the countries it invaded including Lithuania, Latvia, Estonia, Poland, Ukraine, Georgia and others.
Mr. Charles Koch has a good sense about USSR Stalin repression political system and the horror it delivered on it's own people, not considering the countries it invaded including Lithuania, Latvia, Estonia, Poland, Ukraine, Georgia and others.
May 7, 2017
An interesting read with some good ideas- id love to ask the author about how some of these ideas work out in practice. Quite a bit of bragging but given that Koch is one of the most successful companies in America, they must be doing something right.
May 7, 2017
Excellent book by one of the great but underrated business minds of the past 50 years. Written in a simple plain-spoken style, the book offers solid, proven, and practical business tactics and integrates them into a brilliant strategy. This book should be required reading for anyone in business.
Displaying 1 - 30 of 112 reviews