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

By Peterson, William H. | Freeman, March 2008 | Go to article overview

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


Peterson, William H., Freeman


The Science of Success: How Market-Based Management Built the World's Largest Private Company by Charles G. Koch Wiley * 2007 * 201 pages * $22.95

Reviewed by William H. Peterson

The Science of Success and its remarkable author bring to mind a sonnet strategy of Shakespeare: "Let me not to the marriage of true minds

Admit impediments."

Meet then corporate thinker, entrepreneur, investor, hard-headed visionary, and impediment overcomer, Charles G. Koch. Koch, CEO of Koch Industries, Inc., with his rule of highly principled direction, has built the world's largest private firm, a mainly energy enterprise of 80,000 employees and $90 billion in annual sales, one that invested $21 billion in 2005 to purchase the publicly traded paper and wood giant Georgia Pacific.

Koch thinks and usually creates successful long-run company outcomes. His vision includes running an entrepreneurial meritocracy, a fused individual and team effort, and shrewd reinvesting of earnings for growth. He has been phenomenally good at that, and this book is all about his philosophy that has made it possible.

He calls his system Market-Based Management (MBM), a unique scientific approach to business management rooted in what our author describes as "the Science of Human Action." The system has five dimensions:

* Vision: Determining where and how the business 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 business. (He turns Marx around by proposing the maxim "From each according to his ability, to each according to his contribution.")

What Koch has done is to take key insights about what works for an economy and apply them to his business ventures. The MBM prowess of our author on the firing line is in outthinking and so staying ahead of competition, thanks in part to a team of profound manager-thinkers bent on creating "the greatest longterm value." By establishing a corporate climate that rewards efficiency and innovation-as the larger economy should do-Koch has seen his enterprises grow and prosper.

His ideas did not emerge out of a vacuum. Koch cites as particularly important two great books whose authors were both closely associated with FEE. One was F. A. Harper's Why Wages Rise; the other, Ludwig von Mises's Human Action.

Harper's book is hailed for spotting the causes of real, sustainable wage gains. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

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

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.