CHAPTER 1 EXCERPT (Pgs. 16-17)
What has remained constant since the dawn of Koch, is our commitment to MBM. The goal is unchanged: to enable a business to create more value and drive creative destruc- tion faster and better than any existing or potential competitors. After much trial and error, we organized MBM into five dimensions: Vision, Virtue and Talents, Knowledge Processes, Decision Rights, and Incentives. Each of these will be explained in its own chapter, but here’s a snapshot of all five:
■ Vision: Our vision is based on what we believe is the role of business in society: providing products and services that customers value more than their alternatives while more efficiently using resources. Consequently, we strive to profit only from benefiting both our customers and society as a whole. (Again, this is what we call good profit.)
■ Virtue and Talents: Having skills and intelligence is important, but we can hire all the brightest MBAs in the world, and if they don’t have the right values, we will fail. There- fore, we hire based on values first—then talent.
■ Knowledge Processes: One of our top priorities is impressing on new employees that not only is it permissible to challenge their bosses respectfully if they think they have a better answer, but that they have an obligation to do so. And supervisors have the obligation to create a culture that invites challenges.
■ Decision Rights: Just like owners usually take better care of their property than renters do, when an employee “owns” well-defined areas at work, she takes greater pride and re- sponsibility for outcomes. This greatly improves results— especially when the role is a good fit for her skills and abilities.
■ Incentives: At Koch, anyone can earn more than his boss if he creates more value. Our goal is to motivate all employees to maximize their contribution, regardless of the role.
Another improvement in this book is the inclusion of case studies demonstrating these five dimensions. Through these examples it will become clear that MBM utilizes these concepts differently than most management literature does. For example, “vision” for Koch is not a static, one-time statement of goals and aspirations. It is a dynamic concept, always evolving based on continual examination of how we can use our capabilities in response to changing opportunities to create the most value for our customers and society.
Adapted) from GOOD PROFIT: HOW CREATING VALUE FOR OTHERS BUILT ONE OF THE WORLD’S MOST SUCCESSFUL COMPANIES Copyright © 2015 by Charles G. Koch. Published by Crown Business, an imprint of Penguin Random House LLC.