Koch's MBM

The Science of Success: How MBM built the world’s largest private company, by Charles G Koch.

An ambitious name, no doubt. “How MBM built the world’s largest private company”

So, is it worth it’s salt?

The book starts off with a brief history of the Koch’s including their immigration, history, business background, education and current achievements. It’s a very fortunate list, and definitely a very attractive appeal to the rhetorical ethos. He tells the story of entering into the family business after earning advanced engineering degrees from MIT. After restructuring the business, adding complimentary services, and expanding the customer base; turning the company profitable again. From there, the rest is history.

The Koch’s business is astoundingly massive. Easily in the top ten on the billionaires list, Charles and his brother David each are worth north of $30B. Growing the family business to a 2000-fold increase since entering it in 1961; a chart of the growth looks like an exponential function graph. Currently employing 60,000 people, and generating nearly $110B in revenue or approximately $18.3M/employee. Not too bad. The products owned vary widely in industry, and size. Of note: Georgia Pacific, Stainmaster(formerly of DuPont), and lycra. They are active in mining, forestry, paper, oil, refining, and agriculture.

Now, I know he’s probably smart. But there is no way he is top-dog-know-it-all in all those fields. Which means Charles’s talent in his ability to navigate to profitable ventures, and management of staff. That is where this book comes in. It also lends credence to his ability to instruct on the subject matter.

The formulation for MBM is rooted into Ludwig von Mises and F.A. Hayek's most famouse works in Austrian economics. Often quoted and always apparent.

The gist of the principle is to create a thought process for employees and to align their motivations with that of the corporations, and the cultivation of talent. MBM is specifically broken down into these components Vision, Virtue and Talents, knowledge processes, decision rights, and incentives.

Vision is the most obscure in nature. I don't believe this can be helped, as it is a strategic element that is going to be very industry specific. The rest of the principles are better explained, and more insightful. Even then, there is a large amount of vagueness throughout the book. It does a good job of creating a framework of management, but it is hardly weatherproof. However, to go much deeper, the book would have to get much more technical, and resources regarding those particulars are readily available. Once again, the book lending itself to the policies and procedures, and less towards the mechanical aspects of ROI, P&L, capital allocation, and risk management. In fact, rubrics are only used in passing, and never elaborated on.

It is thought provoking, and challenges alot of norms seen in todays business. Especially that of the tyrannical CEO micro-managing the minute details of each facet of the business. However, the framework Charles is trying to established seems lost at times in the lack of some detail.

Ultimately, if you're in management, whether public or private, the this book can probably serve you in some form. It's also not a very long read, maybe 200 pages, making eat fairly easy to digest. At worst you'll gain some insight, if not appreciation for the world's largest private business, and at best it may help you become the next Charles Koch.

The Koch's stay fairly active politically and philanthropically through various foundations and publications including Cato, Charles Koch Institute, and various other activities. They are some of the more famous libertarian leaning individuals involved in politics, and a great asset in the promotion of liberty. We need more men like the Koch's, active in politics, with a foundation in libertarianism and the Austrian business cycle.