Good Profit

Good Profit

How Creating Value for Others Built One of the World's Most Successful Companies

Charles G. Koch

Publisher: Little, Brown, 2015, 276 pages

ISBN: 978-0-349-41-41158-3

Last modified: Jan. 23, 2017, 9:45 p.m.

In 1961, Charles Koch joined his father's company, then valued at $21 million. Six years later, he was named chairman and CEO. Today, Koch Industries is one of the largest private companies in the world with an estimated worth of $100 billion. But what does this company do and why is it so profitable? You won't find its name on your stain-resistant carpet, the connectors in your smartphone or your baby's ultra-absorbent nappies, but Koch makes these and many other innovations, driven by its Market-Based Management® system for generating good profit.

Good profit results from products and services that customers vote for freely with their money — products that improve people's lives. It results from a culture where employees are empowered to be entrepreneurial and customer-focused. Good profit follows whenever long-term value is created — for customers, employees, shareholders and society.

Drawing on stories from his nearly six decades in business, Koch shows how any company, industry or organisation can:

  • Thrive in spite of disruption and changing consumer values
  • Create accountability with ownership and decision rights for employees based on their comparative advantages and contribution, not job title
  • Foster a culture of knowledge-sharing that rejects bureaucracy and hierarchy
  • Offer employees compensation limited only by the value they create — not budgets or policy

A must-read for leaders, entrepreneurs, students and anyone who wants a more civil, fair and prosperous society, Good Profit is destined to rank as one of the greatest management books of all time.

  • Part I
    • Introduction: A Win-Win Philosophy
    1. The Glorious Feeling of Accomplishment
      Life Lessons from My Father
    2. Koch After Fred
      Building with Stones That Fit
    3. Queens, Factory Girls, and Schumpeter
      The Incredible (Sometimes Terrifying) Benefits of Creative Destruction
    4. Overcoming Bureaucracy and Stagnation
      Economic Concepts to Set You Free
    5. Learning from Adversity
      Koch's Major Failures in Applying MBM®
  • Part II
    1. Vision
      Guide to an Unknown Future
    2. Virtue and Talents
      Values First
    3. Knowledge Processes
      Using Information to Produce Results
    4. Decision Rights
      Property Rights Inside the Organization
    5. Incentives
      Motivating the Right Behavior
  • Part III
    1. Spontaneous Order in Action
      Four Case Studies in Market-Based Management®
    2. Conclusion
      The Real Bottom Line

Reviews

Good Profit

Reviewed by Roland Buresund

OK ***** (5 out of 10)

Last modified: Nov. 17, 2019, 2:06 a.m.

Well, the book claims to describe the "Market-Based Management" Framework, which it admittedly tries to do, but it is mostly hogwash and self-evident truths (granted, many talk the talk, but don't walk the walk).

What it really is, is a biography of the author, his family and their companies, and their guiding principles (he is a well-known right-wing Republican in the U.S., but he manages to hide it pretty well in the book).

The Koch Industries is an interesting corporate group, that has succeeded very well, so it was an interesting read from that perspective, but it was many times too personal to be enjoyable.

OK reading if you're interested, but don't expect to learn something new.

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