I spent Wednesday to Friday at a seminar sponsored by the Charles G. Koch Charitable Foundation's market-based management initiative. The seminar was in Wichita. It was a first rate experience. Without exception, the speakers, mostly Koch executives, were enlightening. The audience was made up of talented libertarian academics from around the country.
On the first full day Mr. Koch spoke with a panel of executives. It was thrilling to listen to a business genius. He has built a medium size oil services firm into a $100-billion-in-sales nimble behemoth, the largest closely held corporation in America, using the principles outlined in his book, The Science of Success. Koch Industries' management style is more advanced than other corporations'. In contrast to billionaires like George Soros who live off the Fed and immiserate the public, Koch makes money by producing value. The legacy media therefore libels Koch.
Richard Fink, a former Rutgers economics professor and president of the Charles G. Koch Charitable Foundation, gave several talks about economic freedom. Charles's son Chase spoke on Friday morning about how one of the firm's subsidiaries applies market based management. As well, we heard from finance, operations and HR executives about how the firm implements Charles's market based management model. Besides being an innovative competitor Koch displays ethical standards that are beyond anything I have witnessed in academia or in the New York business community. Koch Industries is MORE ETHICAL than most higher education institutions.
The culture shock of going from upstate New York, which is devoid of industry, to Wichita, which has numerous thriving businesses including Coleman Lanterns, Cargill, and Koch, made me reflect on the reasons for New York's economic failure. In New York, state and local government spend 23.3% of gross state product while in Kansas state and local government spend 18.17%.
This was a great opportunity because academia excludes and discriminates against libertarian professors. The Koch seminar provided me with an introduction to colleagues who share my views. As well, I enjoyed learning about state of the art management practice.
Showing posts with label charles g. koch charitable foundation. Show all posts
Showing posts with label charles g. koch charitable foundation. Show all posts
Saturday, July 23, 2011
Sunday, July 3, 2011
Charles G. Koch's Market Based Management
I was pleased to receive an invitation to a market based management program hosted by the Charles G. Koch Charitable Foundation. In preparing for the conference I am taking a few days to read the materials the organizers have provided. Among these are Michael Polyani's essay "The Republic of Science," chapter two from Hayek's Law, Legislation and Liberty entitled "Cosmos and Taxis," Hayek's essay "Use of Knowledge in Society" (which I assign to my senior seminar students), and an excerpt from Bastiat's essay "The Law."
Also included in the materials is Koch's book The Science of Success: How Market-Based Management Built the World's Largest Private Company. The book is engaging and eminently readable. Koch describes the history of his firm and how he built his father's small oil industry services firm into the largest privately held company using basic principles of economics (specifically including the Austrian economics of Ludwig von Mises) and his philosophy of market based management. Koch is perhaps too kind to his competitors. Few large firms are run using principles of economics, and big business tends to be inefficient and suppressive as a result. Most of America's larger firms would not survive a competitive economy; if you doubt that, witness what happened to the automobile industry once faced with foreign competition.
Koch's market based management philosophy includes five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives. Koch's focus and hard nosed thinking, which he attributes to his philosophy and to application of economics to management decision making, have enabled his firm to grow into a $100 billion (in sales) superstar, a nimble, huge company that keeps on growing. His recent acquisition of Georgia Pacific for $23 billion has been a success, and success is rare in the area of mergers and acquisitions.
I am looking forward to the Koch conference. The attendees are a very impressive group and the material promises to be of great interest.
Also included in the materials is Koch's book The Science of Success: How Market-Based Management Built the World's Largest Private Company. The book is engaging and eminently readable. Koch describes the history of his firm and how he built his father's small oil industry services firm into the largest privately held company using basic principles of economics (specifically including the Austrian economics of Ludwig von Mises) and his philosophy of market based management. Koch is perhaps too kind to his competitors. Few large firms are run using principles of economics, and big business tends to be inefficient and suppressive as a result. Most of America's larger firms would not survive a competitive economy; if you doubt that, witness what happened to the automobile industry once faced with foreign competition.
Koch's market based management philosophy includes five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives. Koch's focus and hard nosed thinking, which he attributes to his philosophy and to application of economics to management decision making, have enabled his firm to grow into a $100 billion (in sales) superstar, a nimble, huge company that keeps on growing. His recent acquisition of Georgia Pacific for $23 billion has been a success, and success is rare in the area of mergers and acquisitions.
I am looking forward to the Koch conference. The attendees are a very impressive group and the material promises to be of great interest.
Subscribe to:
Posts (Atom)
