Charles G. Koch may very well be the most successful businessman you’ve never heard of. He is also one of the richest men in the world — Forbes ranks billionaire Koch as the 49th richest man on the planet. Rarely has such a successful businessman shared his secret formula for success.
But Koch has done just that in his newly released book, “The Science of Success: How Market-Based Management Built the World’s Largest Private Company” (Wiley). Unlike many success and self-help books that are written by experts that have never had tremendous business success, Koch has built his family’s business, Koch Industries, Inc. (KII) into what Forbes says is the “world’s largest private company.” KII is a leading maker of natural resource-based products, including gasoline, chemicals, polymers, fibers, building products, packaging, tissue, and process equipment.
You know Koch by some of its well-known brand named products, including Dixie cups, Quilted Northern tissue, Stainmaster carpets and Lycra spandex.
When Koch joined his family company in 1960, it had revenues of $70 million. Today, Koch has revenues of about $90 billion, employing some 80,000 people in 60 countries across the globe.
KII’s growth has been enormous. Consider if one had invested just $1,000 in the S&P 500 in 1960 it would be worth about $125,000 today. The same $1,000 invested in Koch Industries would have a book value of more than $2 million today!
KII is a true rarity: As a large company it has not only survived, it has grown tremendously. It continues to grow rapidly!
The answer, according to Charles Koch, is simple. It’s called MBM® or Market-Based Management.
Koch defines MBM as “a philosophy that enables organizations to succeed long term by applying the principles that allow free societies to prosper.”
He says there are five dimensions to understanding the success of free societies, five dimensions that can applied for business success.
In his book Koch reveals the five dimensions and discusses how to apply them for business success.
Koch developed MBM from his desire to build a great company and his studies of the principles that lead to prosperity and society’s progress.
“After studying history, economics, philosophy, science, psychology, and other disciplines, I concluded that the two passions were strongly, indeed intimately, related,” Koch writes.
Koch believes all business people can tap into MBM for success, but they must understand it “is a never-ending process of learning and improvement. Like the North Star, it is not a goal in itself but a guide in this instance toward greater and greater value creation.”
There’s plenty of practical advice in the book that helps you turn theory into real business success.
Here’s just some of the nuggets:
It’s OK to make mistakes and why Koch’s father gave the surprising advice: “I hope your first deal is a loser . . .” It helped make his fortune.
Progress and success require failure. Failure can be good — if you learn from it. Don’t try to eliminate failure.
Why virtues and values — like honesty — are indispensable in building a successful, prosperous, and sustainable business.
Embrace change: The marketplace is constantly replacing old ways with effective alternatives in a process called “creative destruction” — drive this process!
How self-interest works for the better good.
Grasping the importance of “subjective value” and the fact that all economic value comes from people valuing the good, not its cost. This value is revealed by people’s actions, not what they say.
Harnessing the “multiple intelligences” people have and using human capital to achieve your goals.
Discovering that a market economy is based on “useful knowledge” — and why knowledge must be plentiful, accessible, and relevant in your business life.
Why cost cutting is not always the best way to improve your bottom line and can be “shortsighted and can seriously damage future profitability.”
Thinking outside the box: Koch explains how Southwest Airlines succeeded because it ignored competitors and looked to NASCAR in figuring how to move baggage and passengers.
Jointly solve the jigsaw puzzle: The rate of discovery is highest when everyone works together in sight of each other so that every time a piece fits the others are alerted to opportunities for the next step. Apply this process to your company to unlock the discovery process and profits.
Charles Koch is chairman of the board and CEO of Koch Industries, Inc., a position he has held since 1967. Since then, the company has been transformed into a dynamic and diverse group of companies in refining and chemicals, process and pollution controls technology, fibers and polymers, minerals including fertilizers and exploration and production, commodity and financial trading, and forest and consumer products. Koch has continuously supported academic and public policy research (including numerous Nobel Prize winners) for more than 40 years and has helped build a number of market-based organizations. Koch received a bachelor’s degree in general engineering and two master’s degrees — in nuclear and chemical engineering — from the Massachusetts Institute of Technology.
The first time I talked to Mr. Mazoka was in 2000, before the presidential elections. What struck me about him was his extremely high sense of self-confidence. I was driving this day when I got a call from him and immediately decided to park by the side of the road as I heard the voice on the phone say, “Hello; This is Mazo-oka” (he pronounced his name a little differently from the English-ized way most Zambians pronounce it).
And then he started asking me to meet him and “Ambassador Mutesa” so that we – that is, Mr.Mazoka, Mr. Mutesa, and myself – could strategise over the design and launch of a new web site for his presidential campaign. He further explained to me that they did not want to launch it too soon because the MMD did not really have a manifesto yet and “they might want to simply copy ours if we put it up too soon!”
What struck me was how he seemed to just assume that I was on his side and didn’t even bother to ask! But what was even funnier was that at the time I got his call I was with my mother in the car, someone who was quite high in the MMD ranks!
I soon concluded that Mr. Mazoka had this sort of charm that he put out on people, which explains why he has had some very faithful loyalists for the longest time, even without making it into government. Because when he finished talking to me, I felt that he thought me important enough to be trusted with such secret strategies (even though it was nothing, really!) and of course, I kept the conversation from the MMD ‘enemy’ I was with in the car!
A close friend of mine Victor, confirmed my assessment of Mr. Mazoka’s charm when he met him quite recently over some non-political professional matter. Like me, Victor is not a member of any political party, but – “I could not believe he told me so many things – how did he know I was not in the intelligence or something?” an evidently shocked Victor told me after their meeting at Mr. Mazoka’s house. I was not surprised.
There are too many lessons we can learn from the life of such a great man. Perhaps we all need a little extra charm to make it in life, especially if we choose careers that require dealing with a lot of people. In fact, there is no one who can succeed without knowing how to deal with people.
Wherever he got it from., Mr. Mazoka’s leadership secret seems to have been his ability to make other people feel important. One way you make other people feel important is by trusting them with information; information that is supposed to be known only by very important people in the system!
Mr. Mazoka might have learned this from his job as Anglo American Corporation (Southern Africa) president. Or it could have been even earlier as Managing Director of Zambia Railways. Wherever he learnt it from, he perfected it and made it a natural, probably unconscious, part of him.
Mr. Mazoka’s illustrious career is impossible to cover in one article. One might need to write a whole book, if not two volumes. You do not find such a life even in the most developed world: a totally self made man both in his corporate career and his political life. He always seemed to fight against all odds to emerge as a surprising achiever in all fields.
His political party, the United Party for National Development (UPND), was started when he failed to get a small position in the ruling Movement for Multi-Party Democracy (MMD) – branch chairman of a simple constituency – due to resistance from people higher than him who felt threatened by his involvement in the party.
Using his brilliant leadership and management skills, he managed to build another party that quickly became the strongest threat to the ruling party, managing to grab almost half the seats in parliament from them only in his first election, himself losing very narrowly (by about 2 per cent) to the candidate of the incumbent party under extremely controversial circumstances. It took over a year for the Supreme Court to controversially decide that Mr. Mazoka had indeed lost that election, although a large portion of the Zambian population remain unconvinced to this day.
Mr. Mazoka’s party looked bound to fail when he just formed it, as it carried the stigma of being a tribal party. The UPND’s stronghold was clearly in the Southern Province, Mr. Mazoka’s tribal home. But Mr. Mazoka managed to penetrate even areas where no one expected him to win a single vote due to this tribalist stigma. He managed to “charm” tribes that were told he was a passionate tribalist against them!
In the Northern Province, for example, where this message of his tribalism was fervently preached by almost all other parties to tarnish his name, Mr. Mazoka managed to beat many candidates who come from there, including such ‘deep’ Northerners as Michael Sata, Nevers Mumba and B.Y. Mwila in almost all the constituencies. Some people think this shows that Northerners are not tribalists; I think it shows that Anderson Mazoka was a genius!
What a fighter. It was not just the stigma of tribalism that he had to fight against, but even the stigma of his alleged “deep” involvement in the “satanic rituals” of the Free Masons, something which no one even remembers this day because he fought it and totally overcame it. His final and hardest battle was with his own failing health. He fought this battle the hardest, coming out from what everyone thought was his deathbed so many times, and continuing with his political ambitions with undaunted passion.
He decided to convince the public that he was still fit to lead and he managed to win even this battle by convincing the people in his own party to stop trying to remove him from the presidency. But after winning this last battle with public perception, his body finally betrayed him. His spirit was willing, but his flesh was weak, as the Bible says.
Mazoka’s death marks an indelible dent in Zambia’s history. The so-called ” Third Republic” in
Zambia’s political history will henceforth be divided between the Pre-Mazoka and Post-Mazoka eras, for everything changed when he started his political party, and everything will change upon his death. All the political parties, including the ruling party, will have to immediately convene in their circles to analyse what this means for them, and those who are most irrational will mis-interpret this momentous event to their own destruction.
But for those of us less politically involved, this will just be a time of reflection: how could a single man achieve so much, alone, through his simple initiative, in such a short time. How could a simple Zambian with an extremely humble background, develop such a persuasive, magnetic personality that even the most skeptical white corporate directors would entrust him with top management over their most treasured assets. And how could such a man, upon retiring from his corporate career, enter into a new field where he had no experience, no background, and yet manage to shake up the entire structure and face of its very parliament.
What a man!
May his soul rest in peace.
(Mr. Anderson Mazoka died on 24th May, 2006 around 01:00 hours. The Author is founder and president of Zambia Online).
Charles Koch (pronounced “Koke”) is perhaps the most successful business leader you’ve never heard of. In 1960 he joined the family business, then with $70 million in revenue. Today he is chairman and CEO of Koch Industries Inc., “the world’s largest private company,” according to Forbes, with revenues of about $90 billion, and employing 80,000 people in 60 countries.
Koch Industries is one of the leading makers of natural resource-based products, including gasoline, chemicals, polymers, fibers, building products, packaging, tissue, and process equipment. But you likely know Koch by such well-known brand-name products such as Dixie cups, Quilted Northern tissue, Stainmaster carpets, and Lycra spandex.
Now Mr. Koch is sharing his secret formula for success.
Market-Based Management® –
there really is a science behind success
Already a bestseller on Amazon.com, Mr. Koch’s ground-breaking book reveals the unique management methodology behind his company’s phenomenal success: Market-Based Management (MBM). MBM is a scientific approach Mr. Koch developed over 50 years through trial and error and applying the insights of great thinkers in the fields of economics, political science, psychology, and philosophy. It is, he says, “a philosophy that enables organizations to succeed long term by applying the principles that allow free societies to prosper.”
Five Dimensions of the Science of Human Action:
Keys to continuous transformation and positive growth
MBM is rooted in the Science of Human Action, and is defined by five dimensions. These dimensions are essential to understanding the success of free societies as well as businesses, and Mr. Koch devotes an entire chapter to each:
Vision – Determining where and how the organization 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 organization.
The Science of Success illustrates each of these vital dimensions and shows you how to apply them to business success.
10 Guiding Principles of MBM – “Nice guys do finish first”
Exploring further, you’ll examine 10 Guiding Principles that compose the core of Market-Based Management. Principles that champion personal freedom, responsibility, and accountability –
Mr. Koch takes these familiar terms and turns them into empowering values that you can use to transform the way you live and conduct business. He shows you the long-term value of practicing “intellectual honesty,” and encourages you to “constantly seek to understand and constructively deal with reality.”
A sampling of Mr. Koch’s practical advice
and real-life examples
The Science of Success also contains plenty of no-nonsense advice, anecdotal insights, and case studies. Here are just some of the revelations you’ll encounter:
It’s OK to make mistakes and it’s why Koch’s father gave the surprising advice: “I hope your first deal is a loser.” Failure can be good – if you learn from it.
How to harness the “multiple intelligences” people have, and use human capital to achieve your goals.
Discovering that a market economy is based on “useful knowledge” – and why knowledge must be plentiful, accessible, and relevant in your business life.
Cost cutting is not always the best way to improve your bottom line. It can be “shortsighted and can seriously damage future profitability.”
Thinking outside the box: How Southwest Airlines succeeded because it ignored competitors and looked to NASCAR in figuring how to move baggage and passengers.
You and any organization – corporation, small business, nonprofit, or government agency – can apply these proven principles and benefit. When applied in the integrated manner Mr. Koch reveals, they can create continuous transformation and positive growth in exponential ways.
Order The Science of Success today and start applying its secrets for better success in your personal life and business. And get another copy for a business associate or family member. They’ll love you for it.
… it is highly unconscionable to say the least when one looks at the repercussions of the British Court ruling against the Zambian Government. While it might be legally amoral for the ruling to be right based on Zambia’s contractual obligations, it is highly unscrupulous because most of these private “vulture funds” are simply predatory venture capitalists.
In their predatory mode, they wine and dine government officials days before contracts are signed and the poor governments end up with obligations they could have otherwise not entered into had their dignitaries been sober. They also use unacceptable deceptive lending practices that are illegal in their own countries of origin.
While the end result, is a legally binding contractual obligation on the part of debtor that can legally be challenged based on a number of circumstantial grounds, the burden of proof lies in substantiation which is hard given the fact that most such governments change officials without notice and proper handover modus operandi.
Special Report The World’s Richest People
Edited by Luisa Kroll and Allison Fass 03.08.07, 6:00 PM ET
It has been a busy year for Forbes’ team of fortune hunters. Strong equity markets combined with rising real estate values and commodity prices pushed up fortunes from Mumbai to Madrid. Forbes pinned down a record 946 billionaires. There were 178 newcomers, including 19 Russians, 14 Indians, 13 Chinese and 10 Spaniards, as well as the first billionaires from Cyprus, Oman, Romania and Serbia.
Ingenuity, not industry, is the common characteristic; these folks made money in everything from media and real estate to coffee, dumplings and ethanol. Two-thirds of last year’s billionaires are richer. Only 17% are poorer, including 32 who fell below the billion-dollar mark. The billionaires’ combined net worth climbed by $900 billion to $3.5 trillion. That equates to $3.6 billion apiece.
The average billionaire is 62 years old, two years younger than in 2005. This year’s new billionaires are seven years younger than that. Of list members’ fortunes, 60% made theirs from scratch.
Within the ranks are simmering rivalries. Microsoft (nasdaq: MSFT – news – people ) founder Bill Gates, the world’s richest man for 13 years, and his pal Warren Buffett, who holds the No. 2 spot despite enormous charitable donations, are quickly losing ground to Mexico’s most-monied man, Carlos Slim Helú. Helú’s net worth is up an astonishing $19 billion this year–the single biggest one-year gain in a decade–and is now just $7 billion shy of Gates and $3 billion less than Buffett. In Europe, Russia’s mostly young, self-made tycoons are catching up to Germany’s often-aging heirs and heiresses. Russia now has 53 billionaires (2 shy of Germany’s total), but they are worth $282 billion ($37 billion more than Germany’s richest). After a 20-year reign, Japan is no longer Asia’s top spot for billionaires: India has 36, worth a total of $191 billion, followed by Japan with 24, worth a combined $64 billion.
India’s rich are also marching toward the top of our rankings. Brothers Mukesh and Anil Ambani, who split up their family’s conglomerate in 2005, join Lakshmi Mittal, who heads the world’s biggest steel company, Arcelor Mittal, among the world’s 20 wealthiest. India now has three in the upper echelons, second only to the U.S.
But even in such a prosperous year, 44 people dropped off the list for various reasons.
All our numbers are based on a snapshot of balance sheets taken on Feb. 9, the day we locked in stock prices and exchange rates. So the five executives who took their Fortress Investment Group (nyse: FIG – news – people ) public at 9:30 a.m. on that morning made the cut. Also on the list is Ernest Gallo, founder of E.&J. Gallo Winery, who died on March 6. But our numbers don’t reflect the volatility that shook the markets three weeks later. Between Feb. 9 and March 2 the world’s stock markets, as measured by the Morgan Stanley All Country World Local Index, fell by 3.7%. Some fortunes (those based on private accumulations of real estate, for example) didn’t feel a blip. But some suffered severe damage. One big loser was a Spaniard, Enrique Banuelos, whose fortune fell 30% in four days.
Are there billionaires we don’t know about? Surely, yes. For instance, we didn’t uncover Ireland’s Denis O’Brien, who pocketed $800 million in a junk bond offering, until 13 days after we’d locked in fortunes, so he is not reflected in the rankings.
Acknowledgments Monir Barakat, Wafra Investment Advisory Group; J. M. Degen & Co.; Andriy Dmytrenko, Dragon Capital, Kiev; Euromonitor; Alaric Hu, Bank of America; Ignatov & Co. Group; John S. Mason, Stephen Mason Associates; Millennium Capital; S&J, Korea; Planet Retail, London; Renaissance Capital; Edward W. Townshend, Colliers Jackson-Stops; Jim Wagoner, United Country Lambert Realty; Zawya Research Database; Finn Øystein Bergh, Kapital magazine; Ketil Skjak, real estate analyst, SEB Enskilda
Reported By Cristina von Zeppelin, Chaniga Vorasarun, Tatiana Serafin, Devon Pendleton, Megha Bahree, Helen Coster, Kerry A. Dolan, Russell Flannery, Suzanne Hoppough, Megan Johnston, Naazneen Karmali, Maxim Kashulinsky, Matthew Miller, Kiyoe Minami, Forbes Russia, Kirill Vishnepolsky
Additional Reporting By Maggie Chen, Chandrani Ghosh, Lea Goldman, Evan Hessel, Steven Lee, Burak Mavi, Hulya Odemis, Jessica Ramakrishnan, Matthew Rand, Kemal Sen, Matthew Swibel, Forbes Turkey, Nathan Vardi
Research By Heidi Brown, Forbes Israel, Forbes Poland, Josephine Lee, Theo Albrecht Germany Deborah Orr
It is unbelievable what one gets when they get into the psyche of former President Chiluba and his new witching hunting schemes on Dr. Kenneth Kaunda our first republican president. All this new talk about how that President Kaunda stole this and that while he was in office is to say the least bordering on mere childishness.
When Dr. Kaunda left office, Dr. Chiluba instigated fraud charges on the founding father and went out of the way to hire the famous Scotland Yard. They investigated Kaunda for almost two years and he was actually exonerated of all the purported charges. This was the first time we actually had a foreign law enforcement entity investigate a former head of state in
President Mwanawasa also called on a foreign entity, in this case a London Court in a civil liability suit for FTJ Vs. The People of the Republic of Zambia. In the later, the accused was found guilty and ordered to restitute. What is more ironic however, is the way KK took the case with a grain of salt and even after being proven innocent showed great non-minacity as a statesman.For all intents and purposes Dr. Kaunda has engaged in serious work for fellow men and women and has a lot of work to do. Unlike others who would only operate on selective expedience, Dr. Kaunda needs to be left alone. After all even Scotland Yard found no wrong doing in comparison to Dr. Chiluba.
Please, please leave the founding father alone he has a lot of work to do, as can be seen in the video above, than be bogged down with trivialities from simple minds. God bless Dr. Kaunda, long live KK, a few good men left standing and he is one of them … thanks a trillion
Flashback: Former president Chiluba (r) chatting with First Republican Dr Kaunda
Dr Kenneth Kaunda has described as “damn right rubbish” second Republican president Frederick Chiluba’s attacks and allegations of fraud and corrupt practices against him.
President Chiluba needs to look at all the scorn he brought on himself and not shift blame to any one else. It is pathetic that very scare resources were misappropriated when serious needs existed at the time he was head of state. Imagine what all those millions of dollars could have done for the poeple of Kantolomba below … thanks a trillion