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

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9780470139882: The Science of Success: How Market-Based Management Built the World's Largest Private Company

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 Pickens

"A must-read for entrepreneurs and corporate executives that is also applicable to the wider world. MBM is an invaluable tool for engendering excellence for all groups, from families to nonprofit entities. Government leaders could avoid policy failures by heeding the science of human behavior."
—Richard L. Sharp, Chairman, CarMax

"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."
—Rob Walton, Chairman, Wal-Mart

"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."
—Vernon Smith, 2002 Nobel laureate in economics

"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."
—William B. Harrison Jr., Former Chairman and CEO, JPMorgan Chase & Co.

"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."
—Verne Harnish, founder, Young Entrepreneurs' Organization, author of Mastering the Rockefeller Habits, CEO, Gazelles Inc.

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From the Inside Flap:

Charles Koch may very well be the most successful businessman you've never heard of. Under his leadership, Koch Industries has become a dynamic and diverse enterprise that Forbes called "the world's largest private company."

This groundbreaking book includes the same material used by the leaders and employees of Koch companies to apply Market-Based Management (MBM) to get results. In it, Charles Koch outlines the unique management methodology developed and implemented by Koch Industries. Koch credits MBM for its 2,000-fold growth since 1967, with today having 80,000 employees in 60 countries and with $90 billion in revenues in 2006. MBM is a scientific approach to management that integrates theory and practice, and provides a framework for dealing with the ongoing challenges of growth and change. There really is a science behind success, and it can be applied to any organization.

MBM is rooted in the Science of Human Action, and is defined by 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 measuring 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—can apply these proven principles.

In addition to an in-depth discussion of MBM's five dimensions, this book also draws on Koch's candid examples of his company's successes and failures. Born out of a life-long study of economics, science, philosophy, psychology, political theory and history, MBM is essentially a practical business application of the principles that have led to innovations and the most prosperous, peaceful, robust economies in history. Let this book show you how to apply the same management philosophy that has served Koch Industries so effectively. MBM will benefit you, your company, your customers and your employees. For more information about Market-Based Management, visit www.mbminstitute.org.

About the Author:

CHARLES G. 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, fibers and polymers, commodity and financial trading, and forest and consumer products. Familiar Koch company brands include STAINMASTER carpet, LYCRA spandex, Quilted Northern tissue, and Dixie cups. 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 mechanical and chemical engineering—from the Massachusetts Institute of Technology.

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