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Usually ships in 1 business days | | | | | | 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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| | Product Details | | Author: | Charles G. Koch | | Hardcover: | 208 pages | | Publisher: | Wiley | | Publication Date: | February 26, 2007 | | Language: | English | | ISBN: | 0470139889 | | Product Length: | 8.97 inches | | Product Width: | 5.49 inches | | Product Height: | 0.78 inches | | Product Weight: | 0.84 pounds | | Package Length: | 8.6 inches | | Package Width: | 5.7 inches | | Package Height: | 1.0 inches | | Package Weight: | 0.85 pounds | | Average Customer Rating: |  based on 83 reviews |
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| | Customer Reviews | Average Customer Review: ( 83 customer reviews )
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42 of 45 found the following review helpful:
 Best Management Book Since Drucker Mar 07, 2007
By John Whitney
The Science of Success is the most important book about governance, leadership and management since Drucker's magnum opus in 1974. This statement is not a casual claim but is the result of my close study of Charles Koch's Market Based Management during the past six years. MBM ® was an integral part of my course, Managing in a Market Economy at the Columbia Business School and has been the focus of my academic research as well as my service as a consultant and director of several public corporations. The book is short and seems deceptively simple but that is also true of the United States Constitution. Every sentence in the Constitution and every concept in The Science of Success evokes profound thought: it is based on principles rather than prescriptions - not "how to do" but rather "how to decide".
The age-old arguments about decentralization, delegation, incentives, acquisitions, divestitures, sunk costs, opportunity costs, vision - indeed almost every quandary a manager faces - are cast in a bright new light. Make no mistake, however. Even though Charles Koch might seem short on prescriptions he is strong on principle. He has synthesized his study of history, political science, psychology, philosophy and economics (augmented by his 40 years leading Koch Industries, the world's largest and one of its most successful private companies) into a clearly articulated applied science. He draws heavily on the work of the "Austrian School" economists - Menger, von Mises, Hayek, as well as Schumpeter and Drucker. These were the men who most clearly articulated the immutable laws of markets based on their observation of humans in action rather than esoteric mathematical models. Their articulation of marginal utility put the human being at the center of economics which, in turn, established the concept of free and open markets and provided a foundation for individual liberty rather than autonomous authority.
My admiration for Charles Koch's book is not based solely on my academic experience. I was a lecturer, course chairman and Associate Dean at the Harvard Business School, and for 18 years was Professor of Management Practice at the Columbia Business School. However, half of my professional career has been in the business world as COO, CEO and Chairman of start-ups and turnarounds, public and private, large and small. I am convinced that if, early in my career, I had read, understood and applied the principles in The Science of Success I, too, would be in Fortune Magazine's list of the world's richest men.
65 of 73 found the following review helpful:
Rare Opportunity Mar 06, 2007
By Wayne Gable
The Science of Success is a rare opportunity to learn how Charles Koch built one of the most successful companies in history. Think about it. This company:
1. Didn't have a sexy product or build a national image
2. Didn't get jump-started with a technological breakthrough, or create a new industry
3. Didn't rely on political connections or Wall Street gurus to help sell its products
4. Didn't, as a privately held company, have access to expansion capital from stock sales, and
5. DID face stiff competition from some of the largest and most competitive companies in the world.
Yet under the guidance of Charles Koch, Koch Industries grew from a relatively small company to the largest privately held firm in the country, along the way building a record of profitability that leaves most companies you thought were successful in the dust.
If you haven't heard of Koch Industries, you're not alone. This story really hasn't been available to the public until now. How did Koch do it? With Market-Based Management, the business philosophy he lays out in this book. The book includes a thorough discussion of what MBM is and how it was used to create phenomenal value for the owners, employees and customers of Koch Industries.
I'm usually highly skeptical of books "written" by successful businessmen. How many truly successful people are really willing to share their secrets? How many really take the time to write a book? But I have some experience with Koch Industries (I'm a former employee and still do some consulting for the company), and I can verify that these are the same concepts Charles Koch has been teaching his employees, from top management on down, for at least 20 years.
Obviously Charles Koch, as a billionaire, doesn't need money from book sales. He truly believes in the principles and applications in this book, and he's genuinely interested in sharing them with anyone who will take the time to read and learn.
Again, a rare opportunity to learn from a master.
31 of 33 found the following review helpful:
The Power of "Principled Entrepreneurship" May 02, 2007
By Robert Morris
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.
21 of 21 found the following review helpful:
Is the next business paradigm shifting from Omaha to Wichita? May 20, 2007
By M. Skousen
"author of 'The Compleated Autobiography, by Benjamin Franklin"
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."
25 of 26 found the following review helpful:
Measurable results for businesses in the real world Mar 05, 2007
By William Tierney
There are thousands of business books published each year, many of them by authors with little or no personal record of producing positive, measurable results for businesses in the real world.
This is not the case with author Charles Koch. Since becoming Chairman and CEO of Koch Industries in 1967, Koch has transformed the company from a small concern to a behemoth with 80,000 employees and $90 billion in revenues. Koch Industries stock value has advanced 2000% in book value during his tenure, despite the fact that it operates in mature industries (such as commodities) where competitive pressures typically result in narrowing margins.
Koch's book, "The Science of Success: How Market-Based Management Built the World's Largest Private Company" details the management approach behind Koch Industries stunning success. Drawing on a variety of disciplines, Koch's "Market-Based Management" approach takes the same dynamics, incentives and mechanisms that propel successful free market economies and retools them to manage business organizations.
The book is a fascinating read and offers valuable, actionable insights for business leaders. It deserves a place on every executive - and entrepreneur's reading list.
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