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

Although I found the success story to be most interesting, I was a bit uncomfortable with the dogmatic, almost religious, flavor of their successes.
The business story seemed formulaic as if their way was and is the only way. Sign up and follow the prescribed way that we have tested or leave the organization. Hard to argue with their successes over a tried and true career. However, I think the intent was prescriptive. As a bit of a nonconformist, I had to keep asking myself if this was the only way. I think not. I could not imagine working in this type of organization.

A comprehensive systematic approach to business that does honor to the organization, employees, and their customers. Thinking win, win, win creates an organizational structure that provides all stakeholders with a deeply personal motivation and a commitment to work collaboratively for the business to thrive. In an age of outsourcing, offshoring, and insulated ownership, Good Profit offers America with a roadmap that can return capitalism's moral compass.

Well written, some very good ideas for leaders in business. When I was studying for the C.P.A. exam, I had lots of people
telling me how to pass the test. I replied "when YOU PASS THE EXAM, I will listen". There is much to be learned from
successful people (democrat or republican). Forget politics, this should be a text book for colleges teach business.

Well written, some very good ideas for leaders in business. When I was studying for the C.P.A. exam, I had lots of people
telling me how to pass the test. I replied "when YOU PASS THE EXAM, I will listen". There is much to be learned from
successful people (democrat or republican). Forget politics, this should be a text book for colleges teach business.

Loved the stories in the book about him, his father and brothers. Too much of an over-emphasis on his pet management techniques though. They may be good, but they are cliche driven and not helpful. He would have done better to tell the story through examples. Mostly, I skipped over the management stuff and read the historical parts. Then it was enjoyable and informative. A very smart man.

After watching Megyn Kelly’s October 16, 2015 interview with Charles Koch, I purchased Good Profit to learn more about the man and his approach to business. The book provided excellent insight to both.

I have recommended Good Profit to my friends and I recommend it to you if you are interested in learning why Charles Koch does what he does. Also how Koch Industries achieves the success it does using the Market-Based Management (MBM) approach that Koch developed through forty years of trial and error.

To get the most out of the explanation of the MBM it’s important that you understand it’s a philosophy, not a set of rules. The following two paragraphs, taken from the book’s conclusion, make this clear.

The first is…

When people are first exposed to the overall foundation and philosophy of MBM, their tendency is to become overly focused on the words, the terminology and definitions. What works much better (after a broad introduction) is persuading them to take the time to understand a few concepts that are particularly relevant to their role, and then have them apply those concepts to real problems, followed by prompt feedback.

And the second is…

What works best is learning by doing. Yes, training is important, but only to get started. It cannot take the place of continual learning by trial, error, and feedback. We don’t progress if we are afraid of making mistakes. Real-world experience is what creates deep, tacit knowledge regarding the effective application of MBM.

In fact, reading the conclusion first would help put the entire book in context.

The book caused me to think back to a Business Ethics class at Marquette University where the professor, Perry Roets, taught that successful businesses must consider the needs of their employees, the community they operate in, and their customer as much as they consider their shareholders in all their undertakings. The success Koch Industries has achieved, as a result of addressing those four constituencies, validates what I was taught.

Each person who reads this book will take something different away from it. In my case it challenged me to identify ways a very small company, one with far fewer resources than Koch Industries, could utilize the MBM approach to improve their overall results. At times I found it difficult to understand Koch because he was describing what was done and not how the result was accomplished. As I continued reading I had to keep telling myself he’s describing a philosophy, not a playbook. When I reminded myself of that fact, I began developing a better understanding of MBM.

Even knowing that, I’m still struggling with two of the concepts embodied in the approach—Decision Rights and Incentives. In particular I’m struggling with his reference to the appropriateness of some professional athletes earning more than their coaches. Using his philosophy it seems to me that the coach should have the opportunity to earn more than any of his/her players based on the success of the team and the coach’s contribution to it.

There are other quibbles I have with what I read, such as the use of the word ‘bonus.’ That word should be stricken from the book and replaced with ‘incentive compensation’ because bonus implies something that is given, not earned.
If I expressed my major concerns to him, his answer to me would be, “Try it, and learn from your mistakes,” and that is best advice any person can give to another because we learn best by doing.

I’ll end by paraphrasing Koch, “Read Good Profit and learn from Charles Koch’s mistakes. Get out there, make your own mistakes and learn as I did.” You will be glad you did because the man and his approach to business have a lot to offer a successful entrepreneur.

very interesting...the narrative of how a guy took over and ran with a business - did NOT just sit back and collect his free stuff from the government. in fact, none of his companies take gov't subsidies and they are doing just fine thru honest hard work and treating people right. great audio book !!

Charles Koch shows himself to be an intelligent, humble man in this book. He shares his family story, the growth of Koch Industries, and the underpinnings of his highly-successful Market Based Management system (MBM as he often calls it). I definitely got a much brighter picture of the Koch brothers than what I hear in the news, and it just shows the length that the liberal mainstream media (MSM if you will) goes to in order to defame a good, hard-working man just because he supports conservative causes.

This is a great book for people who want to bring a proven system of innovation into their companies, and who also just want to learn more about the Kochs.

This and the earlier Market Based Management book should be REQUIRED reading as well as STANDARD TEXTS for those enrolled in Master of Business Administration programs as well as ANY undergraduate course in business.

An excellent book filled with knowledge and insight on how to build not only a prosperous business but a prosperous country! If every business, non-profit and governmental entity would apply Charles Koch's approach the world would be a much better place. Clearly he is not the villain the media would lead us to believe.

Charles Koch has written a very interesting view of his business. It is an interesting counter point to how Warren Buffet has approached his business model. Frankly as I begin to understand how the Koch brothers have approached their business model it makes all the sense in the world. It is a longer view and quite frankly blows holes in those people who have tried to discredit the Koch brothers for political reasons. Political arguments aside it clearly is a superior business model. But it is not an easily implemented model. Clearly it is one that requires strong management and a total understanding by the employees. Excellent read.

In this book Charles Koch explains that good profit is created by creating value for customers using a lot of examples from his experience and free market literature. He also presents Market Based Management which is the management process used in Koch industries and its subsidiaries. The process is built using the main building blocks of free market such as creative destruction, free flow of information and property rights.

This is a very good book that I recommend to anyone interested in management process and free market.

Building on the Science of Success, Good Profit goes deeper into the mind and vision of Mr Koch and his efforts to build the culture of his successful company! Recommend for all in business and for all in any organization interested in Good Profits!! I have personally recommend to bankers, physicians and my friends! I am sure none will be disappointed!!

I had high expectations for this book...but alas it's a bust! I try to read 2-3 business books a year. With unknown authors I usually let the book vet itself a couple of years to get past the early cheerleader reviews. Because of my respect for Mr Koch I jumped on this book early at the tune of $14+change for the Kindle version. Bad decision. If this book were a boxer it would be covering its face the entire fight! The first two chapters dealing with the history of Koch industries were readable...good content but uneven narrative. Choppy but interesting details. As I read the following 10 chapters (12 total) my expectation was that the narrative would smooth in discussion of the present and recent past. Boy, was I wrong! Each chapter seemed to slough deeper into a trough of mind numbing explanation of the Koch holly grail MBM. I typically read in entirety and scan little. For this book I scanned a lot. Frankly, if I hadn't purchased it I wouldn't have finished it. It was a chore but the scanning did pull out a few additional nuggets. I'm an avid case study reviewer...but by the end I couldn't even enjoy the four poorly written case studies. Let me be clear, I don't disagree with the concepts in the book. They seem well thought out and time tested. I'm still a fan of Mr Koch, just not of his writing. Not a "Win/Win" Mr Koch. Wish I had my time and money back!

Absolutely Loved IT!!! Best business book since the GOAL. Tremendous incite and enough detail to keep it very informative. Would loved to have a cup of coffee with the author. How does he retain his "high quality" talent and stop them from wanting to own their own thing?

Highly recommend this read to anyone who is in business or manages people. Thanks Charles for writing it.....

Absolutely Loved IT!!! Best business book since the GOAL. Tremendous incite and enough detail to keep it very informative. Would loved to have a cup of coffee with the author. How does he retain his "high quality" talent and stop them from wanting to own their own thing?

Highly recommend this read to anyone who is in business or manages people. Thanks Charles for writing it.....

Smart, thoughtful and full of insight. This book pulls back the curtain and gives people and understanding about what makes great business leaders in America. More importantly, it punches through the media coverage of the left wing attempts to demonize the Kochs and shows how they think and what drives them on a daily basis to change the world for the better. Some may not agree with their political philosophy, but everyone should respect that Charles Koch loves America and deeply cares about his company contributing to its success.

Charles G. Koch, the much maligned entrepreneur, profiter, and businessman shows the world the secret to his success in his book, _Good Profit: How Creating Value for Others Built One of the World's Most Successful Companies._ But Koch's business model is an atypical example of a thriving business.

Koch employs what he refers to as _Market Based Management_ (MBM) which stresses "Principled Entrepreneurship over corporate welfare, virtue over talent, challenge over hierarchy, comparative advantage over job title, and rewards for long-term value creation over managing to budgets." In other words, Koch's model is unique in a business milieu that is usually selfish and pragmatic.

At the heart of _Good Profit_ is providing quality service at a low cost while all the while attracting the best employees placed in the proper role with a desire to make a difference.

The essence of Mr. Koch’s business philosophy can be described in two short sentences: “Good profit can only result from creating value for the customer. It is the manifestation of the entrepreneur’s respect for what the customer values.”

This book warrants a wider audience than it targets as a dry-ish business tome. There's some high quality thinking on how to specify a useful and flexible vision for your business with examples of processes that Charles Koch distilled from his economic values but fundamentally it is an interesting way to read and apply beautiful economic concepts in a rough and tumble world. It unleashes a reading list like no other including many of my favourite economists. I personally don't subscribe to Koch's Popperian view of science that scientists are out there trying to destroy there hypotheses until they find the truth - they are too busy organizing conferences, getting published and applying for grants in the normal course of things as Kuhn correctly described them.

But Charles Koch's notion of a rugged make things and work them hard until they break is exceptionally suited to business in the 21st century with increasingly demanding customers who live many lives at once - online, mobile, global, local and blurring the lines between work and play spoilt for choice and hungry for meaning and connection. Working back from the customer's rapidly transformative needs to building an organisation that is nimble enough to respond and anticipate is no mean feat and I particularly enjoyed the chapter on Decision Rights and how to guard against conservatism. I feel they are able to achieve all this by staying private and one of my favourite lines in the book is "I'd counsel any entrepreneur to do everything possible to keep her company private, no matter how big it grows." for the feminine pronoun - this is really good stuff and it may get unread because it's masquerading only as a business practices book replete with case studies - there's half a chapter on Monty Python - nuff said.

Normally, I would avoid the works of the Koch brothers who are the primary beneficiaries of the horrible Supreme Court's "Citizens United" decision which declared that corporations are people too and entitled to free speech which frees the Koch brothers to spend millions on advertising by political action committees trumpeting the cause of the "right" and the horrors of the "left".

However, "Attention must be paid to such a person." I believe the saying goes and as the 4th richest person in the country he obviously must be doing something right so decided to pay attention when I came across this book. I must admit that it would have been interesting to work in a company that that truly embraces what Charles dubs "Market Based Management" which encompasses the following principles - Integrity, Compliance, Value Creation, Principled Entrepreneurship, Customer Focus, Knowledge, Change (creative destruction), Humility, Respect and Fulfillment. At first I was impressed when he referenced some of the classic economic thinkers and some business research and as much as I like the ideas, the book quickly degenerated into a sea of platitudes and generalities. While he presents "case studies" the results throughout the book tend to lack detail and specificity. If there was ever a cry for numbers, this was it but it is sadly lacking in that regard. Must be a case of "I want to show you how I did it, but not too much!"

Charles describes how human nature functions in this world.... this book is more useful than even the Bible, and I have a masters in theology....
Do you want to succeed and make others succeed and have everybody content in the process? Well, get this book under your skin...
If I had the power, I would have every human read it...
This is a 100 billion star book!!!

First part of the book is essentially an autobiography. Rest is a "how to implement" the management system (MBM) which Mr. Koch attributes to the amazing success of Koch Industries (5000x increase in market cap if my math is correct . $21M in 1961 to $100B in 2015). If the autobiographical portion is true, he is as good and great a man as I thought he was. I asked a friend whose family knows Mr. Koch well. She assured me that it is accurate.

Every Fortune 500 CEO should absorb the principles in this book, and inspire others to embrace them.

Focusing on profits only, regardless of how the profits are made – a deadly mistake.

After decades of hard work, you realize you've been working on the wrong thing. The 1st priority should be creating value for others. And it should be guided by your own internal sense of right and wrong.

If you watch Mr. Koch's interview by Peter Robinson/investor archive on YouTube, you will learn a lot more as well. His simplicity, humility, and openness will blow your mind. It blew my mind for sure.

You have to read about Charles Koch to believe that integrity at this high level of business still exists in America. He is a truly a remarkable man that has the kind of character that I pray my own children one day will exhibit in their businesses and their private lives. You will get a picture in Good Profit why his company went from $61 million annually in the 60s to over $110 billion today. His firm boils down to how he picks his employees-- values over talent. He turns down the most capable seekers if they do not treat people with the utmost of respect and show great levels of humility. This is rare stuff in business these days. Just think where our nation could be if more business owners would be more old fashioned like this rare gem. You will get a picture in his book of how generational ethics comes down from his father who wrote a touching letter to him as he gave him a significant sum of money sharing with his son that he will consider it a mistake to have given him this money if he steals the glory and pride of accomplishment. Read Koch and you will want to be more like this gentle giant!

Heavy on buzzwords, but full of good examples and case studies.

I certainly wish more American businesses were run this way.

Chapter 11, the case studies, is excellent reading.

The chapters on decision rights and incentives are clear and logical and fit into the mangement system.