Good Profit: How Creating Value for Others Built One of the World's Most Successful Companies Hardcover – October 13, 2015

Mark Twain is credited with saying, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."In my opinion, never does this adage hold more truth than for the all-too many people who provide negative comments about Charles Koch.Why a person should be so vilified simply for creating immense value in the marketplace, greatly improving the lives of the masses, and becoming extremely wealthy as a result is confusing enough. What's worse is that he is vilified for so much that he is not. For example, he is not a cronyist who seeks favors from government but rather eschews ALL forms of such. (In other words, he does not buy special favors from politicians but rather supports those who do *not* participate.) He is also not a "right-wing" Republican but rather a Classical Liberal (which most of us would call Libertarian). And, that’s just the tip of the iceberg of misunderstandings about this man.What he IS is a person who lives his life and conducts his business in a way we should all do our very best to emulate. Based on principles of honesty, integrity, civility, respect, and value creation in all its forms, he has led his company to becoming the second-largest private company in the U.S., employing 100,000 people, 60,000 in the U.S, alone! They've also earned more than 1000 awards including those regarding safety and environmental excellence. WOW - what a monster! (Sorry, I’m not usually sarcastic but here’s a man who regularly receives death threats from people who simply fall victim to Twain’s above quote.)Many of the other reviewers have provided excellent overviews of Mr. Koch's Market-Based Management Framework so I won't do that here. I will say that if you enjoyed his previous work, "The Science of Success" you'll enjoy and learn even more in this one.While "Good Profit" is an amazing treatise on how to lead a company to great success *as a result of* benefitting all concerned (consumers, suppliers, employees, etc.) it's really so much more than just that. It's about having a life and business philosophy that leads to living a meaningful life; one of happiness and personal fulfillment. It's also about understanding how free-market principles (people voluntarily transacting with others without involving any type of force or fraud) means you MUST focus on brining value to others IF you are going to succeed.Throughout my own business career, if I've noticed one thing, it's that: Money is simply an echo of value. Money is not the cause, it is the effect. It is not the target but rather the result of hitting the target. And, the target (in a true free-market) is to add value to the lives of others.And, when you add exceptional value to the lives of many, many people, your company will thrive and become very, very profitable. In a free-market you can *only* do this by respecting your consumer and all others involved in the process. And, when this is the case, you have earned...good profit! The author shows us, step-by-step, how to do so.To quote from the book's own writeup, it's "A must-read for any leader, entrepreneur, or student, as well as anyone who wants a more civil, fair, and prosperous society, Good Profit is destined to rank as one of the greatest management books of all time."I could not agree more!If I might suggest, make a commitment to studying, learning, and then implementing Market-Based Management in your company regardless of your company's current size. Without question, purchase this book for every single member of your leadership team. And, if you'll invest in this book for every one of your employees, as well, you'll see a substantial increase in the number of employees who not only feel great about themselves and the work they are doing, you will see an increase in their loyalty, production, and in your company's bottom line.A win for all...including those consumers who benefit from his work on a daily basis but who unthinkingly insist on hating one of America's great leaders and human beings.

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.