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“We…look at business through a win-win mind-set, which was the guiding philosophy behind the MBM® framework we began to develop in the mid-1960s. This framework has enabled Koch to grow tremendously; indeed, it was essential to turning a company valued at $21 million in 1961 into one valued at $100 billion in 2014.”

The Revolutionary Management System Behind One of the Most Successful Companies of Our Time

Legendary CEO Charles Koch shows managers, entrepreneurs, leaders, students, innovators, and employees of all kinds — and in any field — how to apply the principles of his revolutionary Market-Based Management® system to generate good profit in their organizations, companies, and lives.

In 1961, Charles Koch joined his father’s Wichita-based company, then valued at $21 million. Six years later, following his father’s death, he was named chairman of the board and CEO of the company. Today, Koch Industries’ estimated worth is $100 billion — making it one of the largest private companies in the world. Koch exceeds the S&P 500’s five-decade growth by 27-fold, and plans to double its value on average every six years. 

What exactly does this company do and why is it so remarkably profitable? Koch’s name may not be on your stain-resistant carpet, stretch denim jeans, the connectors in your smart phone, or your baby’s ultra-absorbent diapers, but it makes all of them. And Charles Koch’s Market-Based Management® system is what drives innovations like these – and many more.

Based on five decades of interdisciplinary studies, experimental discovery, and practical implementation across Koch businesses worldwide, the core objective of MBM is as simple as it is effective: to generate good profit. Good profit results from products and services that customers vote for freely with their dollars; products that help improve people’s lives. It results from a culture where employees are empowered to act entrepreneurially to discover customers’ preferences and the best ways to satisfy them. Good profit is the earnings that follow when long-term value is created for everyone — customers, employees, shareholders, and society.

Here, drawing on revealing, honest, and previously untold stories from his nearly six decades in business, Koch walks the reader step-by-step through the five dimensions of MBM to show how any reader can apply its framework to generate more good profit in any business, industry, or organization of any size. Readers will learn how to: 

  • Craft a vision for how a business can thrive in spite of increasingly rapid disruption and ever-changing consumer values.
  • Select and retain a workforce possessing both virtue and talent (the first of which is more important for long-term success). 
  • Create an environment of knowledge sharing similar to a community of scientists — rejecting bureaucracy and hierarchy in favor of a culture that prizes (and even demands) respectful challenges from everyone in the company, at every level.
  • Award employees with ownership and decision rights based on their comparative advantages and proven contributions, not job title.
  • Motivate all employees to maximize their contributions by effectively structuring incentives so employees’ compensation is limited only by the value they create — not budgets or company-wide policy.

A must-read for any leader, entrepreneur, or student, as well as those who want a more civil, fair and prosperous society, Good Profit is destined to rank as one of the greatest management books of all time.

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About the Author

Charles Koch is chairman of the board and CEO of Koch Industries, Inc., a position he has held since 1967. He is renowned for growing Koch Industries from just $21 million in the early 1960s to its current estimated value of $100 billion. Mr. Koch has supported academic and public policy research (including many Nobel Prize winners) for more than 50 years, and helped build a number of organizations focused on research, policy, and education to advance the understanding of the free society, including the Cato Institute, the Institute for Humane Studies, and the Mercatus Center. He supports numerous nonprofits through the Charles Koch Foundation and the Charles Koch Institute, including an organization called Youth Entrepreneurs, which teaches at-risk high school students the values and skills they need to succeed in life. The Charles Koch Foundation provides funding for more than 400 research and education programs at about 250 colleges and universities.

Mr. Koch holds a bachelor’s degree in general engineering as well as two master’s degrees in nuclear and chemical engineering from MIT. He and his wife Liz have been married 43 years.  They have two children and two grandchildren.

Praise

  • His new book, “Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies”, goes further, blending biographical tidbits and company history with case studies on how he’s applied his principles to Koch Industries. Along the way, he quotes everyone from the Buddha and his father and company founder, Fred Koch, to psychologist Abraham Maslow and free-market economists, such as Friedrich Hayek.

    Fredreka Schouten

  • Charles Koch’s “Good Profit: How Creating Profit for Others Built One of the World’s Most Successful Companies” defends the free and prosperous commonwealth against cronyism (aka ‘bad profit’). But more than that, the author presents insights about economic freedom to set up his business management ideal, Principled Entrepreneurship.

    Robert Bradley Jr.

  • Although “Good Profit” is primarily a guide for business owners and entrepreneurs, his book does offer advice for investors. Koch warns against overconfidence in making predictions, relying too much on experts and counting “sunk costs” based on past decisions (thinking “I’ll stay with this bad investment until it turns around and I get my money back”). According to Koch, investors should beware of “confusing random events with patterns that are really unpredictable.” Technical or charting analysis can lead you astray when they go contrary to sound fundamentals about a company.

    Mark Skousen

  • The process of creative destruction can be competitive and sometimes messy and imperfect. But the real story of “Good Profit” is how a great American family is striving to do well by doing good.

    Carrie Sheffield

  • The book—a blend of biography, social theory and management advice—also sheds light on the system of beliefs that guide Mr. Koch, both in business and in politics. His overarching view is that society benefits when people are free to pursue work they love, making them more productive. In “Good Profit,” Mr. Koch holds up his company as the living example of those ideals, from its emphasis on an employee’s values over his résumé to a relentless drive to question everything Koch Industries does and to strive for new ways to be more efficient. He cites the company’s growth—it has added 85,000 employees since just 2004—as evidence that these methods work.

    Patrick O’Connor

  • In ‘Good Profit,’ Mr. Koch outlines the methods by which he has built a business that is now worth more than $100 billion and has created a thriving institution—a place where, as the management guru Peter Drucker once wrote, each member is encouraged to reach an ‘intellectual and moral growth beyond a man’s original capacities.’

    Joseph Maciariello

  • Charles Koch’s new book, Good Profit, is written for two different kinds of readers. The first is the entrepreneur who wants to build up a firm, as Koch did in spectacular fashion. So much so that an investment of $1,000 in the company back in 1960 would be worth $5 million today (if dividends had been reinvested in the firm). I’m not that kind of reader, alas. I’m the second kind, who wants to know how a company that foreswears crony capitalism can thrive, as Koch Industries did.

  • Charles Koch’s new book, “Good Profit, How Creating Value for Others Built One of the World’s Most Successful Companies,” is a must-read for anyone seeking to understand the management philosophy of one of America’s great business leaders. The story of Koch Industries’ success, recounted in detail in this book, is so enormous and astonishing that at first glance, the reader might mistake it for a work of fiction.

    Christopher Ruddy

  • Charles Koch has written an excellent book, Good Profit, exploring how and why Koch Industries has been so successful. In the book… he defines “good profit” as that from which a business makes from products and services that consumers freely choose to buy. Simple? Yes, but it’s surprising how many companies forget that truth.

    Michael C. Carnuccio

  • His Market-Based Management system draws on those same insights at the level of the individual organization, and an exposition forms the meat of the book. In essence, it is a framework for encouraging effort and creativity by devolving authority and rewarding entrepreneurship and ‘prudent’ risk-taking.

    Ed Crooks

    Financial Times

  • Good Profit is as much a course in ethics as one in business management, and Koch is a business icon with the soul and inclination of a philosopher. For example, he attributes much of his company’s success to his Market-Based Management (MBM) system, which he spent years developing and refining. The core tenets of MBM are vision, virtue, talent, knowledge processes, decision rights, and incentives. These aren’t just a set of feel-good slogans, but a philosophy of management that pervades all of Koch Industries.

    William Bennett

  • In his new book … Charles Koch details the business practices and management framework he used to turn the name Koch into one that means so many things: wealth, business success, politics and untold influence.

    Josh Fatzick

  • It was page 243 that really summed it up for me – the point that brings it all together. Of course, what am I talking about? I recently read a book that anyone in business, nonprofits or any type of organization for that matter should consider reading. While the book takes experiences from one of the largest and most successful companies in the world, the principles behind that business can be used anywhere.

  • This book is Charles Koch’s attempt at explaining the principles that he used to take his father’s company from a 1961 valuation of $21 million to one worth $100 billion in 2014. Put another way: Someone who invests $1,000 in Koch Industries in 1960 would now be holding $5 million in wealth. That’s a return 27 times greater than the average investor would have turned on the S&P 500 index.

    Phil Elliott

  • I believe Charles Koch’s integrity and professional leadership are representative of the founding principles of America. This book is an excellent tool for entrepreneurs focused on achieving great things in a principled manner.

    Diane Hendricks

    Chairperson, Hendricks Holding Co., INC.

  • Writing about Charles Koch has become a cottage industry but, until now, there’s been little from the man himself. Read his new book, Good Profit, and you can learn directly from him what he thinks and how he has built one of the biggest and most successful businesses in the world.

    Michael L. Lomax

    Ph.D., President and CEO, United Negro College Fund (UNCF)

  • The ultimate “how to” book on running a successful business. Charles Koch’s approach is extraordinarily thoughtful and comprehensive, reflecting his more than 50 years of experience in growing Koch Industries to the second largest private corporation in America. His emphasis on the key role that values play in his leadership and management model is especially important in today’s business environment. A must read for those who want to take their enterprise to the next level.

    Richard B. Myers

    General, USAF, Ret., 15th Chairman of the Joint Chiefs of Staff
  • Here is a clear example of the American dream and how our country benefits when successful entrepreneurs create new jobs while providing the golden egg for philanthropic efforts. The real story behind this book is not just Charles Koch’s secret to success – it is the remarkable path he and his brother took in becoming two of America’s most generous philanthropists. Their recipe for creating ‘good profit’ has enabled them to grow their businesses, reward their employees and still have plenty left over to invest in important charitable groups and institutions supporting America’s freedom. It is a worthwhile read!

    Charles R. Schwab

    Chairman and Founder, Charles Schwab & Co. Inc.

  • Good Profit is an exploration into the mind and philosophy of one of America’s most extraordinary businessmen. Charles Koch explains – through example, anecdote, and impressive analysis – how Market-Based Management has enabled Koch Industries to create real, sustainable value for consumers and businesses alike. He’s as candid about his failures as he is his successes, and willing to expose both in the interest of the greater good.

    Leslie Rudd

    Entrepreneur, Winery Owner, former owner of Dean & DeLuca
  • Charles Koch is a genuine patriot, and his lifelong mission is to make America as strong and free as she can be. He believes the principles of economic opportunity that have guided America are worth protecting. This book will teach us how.

    (Papa) John Schnatter

    CEO Papa John’s Pizza
  • Charles Koch is right, there is a difference between good profit and bad profit. And this book helps show you the way to good profit – whether you work for an international supermarket chain, a medium-sized regional business, or your own start-up.

    John Mackey

    Co-Founder and Co-CEO Whole Foods Market
  • A must read for any businessperson or serious student of business. As a transformative leader of Koch Industries, Koch the author delivers not just business wisdom but the economic punch of decision-making at the margin and Market-Based Management. The book, like Koch’s management tools, bridges theory and practice masterfully. But the title’s engine says it best: ‘Good profit’ arises from delivering value to customers. And Koch Industries’ spectacular success over the past half century shows that good profit creates great value.

    Glenn Hubbard

    Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School

Charles Responds to Your Questions About Good Profit

The Glorious Feeling of Accomplishment

At the core of Good Profit is the story of a young man who strived to achieve the success that his father had wished for him, through a disciplined approach to business and life.

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About Koch

Wichita, Kansas-based Koch Industries, Inc. began as Wood River Oil & Refining Co. in 1940. Koch Industries’ estimated worth is $100 billion — making it one of the largest private companies in the world. With a presence in more than 60 countries, Koch companies employ more than 100,000 people worldwide, with about 60,000 of those in the United States. From January 2009 to present, Koch companies have earned more than 1,000 awards for safety, environmental excellence, community stewardship, innovation, and customer service.

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