With the release of his latest book “Good Profit,” Charles Koch talks about the inspiration behind his second book, recounts his greatest business risk (and reward!) and discusses how he celebrated his 80th birthday.
First, why was it important for you to write your latest book “Good Profit?”
I wrote “Good Profit” for several reasons. for starters, I was blessed, early on, to learn some principles and values that transformed my life. They’ve enabled me to accomplish more than I ever dreamed possible. They’re not just a way to do business — these principles can be applied to parenting, to relationships with other people, even to interactions in society. And so, in my remaining time I want to spend a good part of my life in giving other people the same opportunities. I also hope “Good Profit” will convince many more businesspeople that the way to succeed long term is not by trying to rig the system with corporate welfare, but by creating value in society. Lastly, I wanted to do a better job of communicating our principles to our employees than I did in “Science of Success.” So I wrote this book quite differently with stories, anecdotes and examples.
Tell us about the title, why did you name it “Good Profit?”
Good profit comes from creating superior value for your customers while consuming fewer resources and acting lawfully and with integrity. Good profit comes from making a contribution in society – not from corporate welfare or other ways of taking advantage of people. These days, Washington is too often choosing the winners and losers in the economy. That is corporate welfare, and it’s the opposite of freedom and good profit. I have spent a lot of energy and resources speaking out about the dangers of profit by coercion. That’s really the opposite of our Market-Based Management philosophy, which we use to generate good profit.
How does this book differ from your previous books on Market-Based Management?
The process of writing “Good Profit” was quite different from “Science of Success.” I wrote “Science of Success” by myself, with only some style editing help. With “Good Profit,” I applied one of our mental models, the Republic of Science. I would write a chapter, and then I’d think, “Who can give me the best input on this topic? Who can provide better examples? Who can help me explain it better?” I would then send that chapter to 15 or 20 people who I felt would give me the best input. At that point, I would consider all their suggestions and rewrite it. I also had an outside editor for “Good Profit.” She pointed out that I had written “Science of Success” as a scientist or an engineer would. I started each chapter with a theory and then provided examples and applications to demonstrate that theory and help people apply it. But that’s not the way people read. To draw people in, you start with a story that illustrates the concept you’re trying to communicate, then you can dive deeper into the theory and the application. I rewrote “Science of Success” 32 times but this one I only rewrote 12-13 times.
Who needs to read this book?
I believe “Good Profit“ can help anyone who truly wants to succeed in anything. You don’t start out asking “what’s in it for me,” or “how do I maximize profit,” you have to start by asking “how do I create value for others?” If you don’t create value for your customers, they’re not going to buy from you. They’re going to buy from somebody else. If you’re not creating value for your employees, they’re going to go work somewhere else. If you’re not creating value for your suppliers, they’re not going to want to sell to you. And if you’re not improving quality of life in your community, then the community is not going to want you there. So to me it’s obvious that creating value for others is necessary for long term success.
Is writing another book in your immediate future?
I’m thinking about writing a book that would focus more on my philosophy of life and how people can best live and work together. It would expand the application of these ideas and values beyond business, which, of course, is the focus of “Good Profit.” My wife Liz told me that if I decide to write another book, it will be with my new wife. After 48 great years together, that is just her way of saying spending all my free time writing “Good Profit” made me a real pain.
Aside from your own book, what is the last good book you have read?
I recently finished “The Upright Thinkers: The Human Journey from Living in Trees to Understanding the Cosmos” by Leonard Mlodinow. This is a beautifully told story of the heroes who transformed our lives by having the vision and courage to challenge the politically correct myths that have held back human progress at every point in our history. our future depends on continuing to have such heroes.
In business, there is great risk and great reward. In your 50+ years at Koch Industries, what do you believe was your great risk that eventually led to a great reward?
Our biggest risk was acquiring Georgia-Pacific for $21 billion on the assumption that our capabilities could add value to that company. That has proven true, and Georgia-Pacific’s capabilities have added value to other parts of Koch.
If you had a free afternoon to enjoy the city of Wichita, where would you go?
When I’m not at the office, I like spending time with my family. I’d probably spend it with my two grandsons. or maybe go play a round of golf.
Which Wichita State men’s basketball game are you most looking forward to watching this year?
Well, it’s impossible for me to pick just one game. I really enjoy watching the team that Gregg Marshall has put together and you can’t argue with the success they’ve had. I mention him and the Shocker basketball program in “Good Profit.”
Why have you chosen to keep Koch Industries headquartered in Wichita?
People have good values here, including a great work ethic. We can recruit people that grew up the way I did, having to work all the time. If you don’t milk the cows, you don’t have any milk. If you don’t sow the seeds and bring in the crop, you have no income. There is much less sense of entitlement in Wichita than most other places. There is the realization that if you want to get somewhere you’ve got to create real value. We’ve been very successful in Wichita as a result of these values.
You found a note that your father left you to read after his death, in it he said ‘adversity is a blessing in disguise and is certainly the greatest character builder,’ what kind of advice will you leave the next Koch generation?
That letter from my father is full of great advice. He also wrote about the “glorious feeling of accomplishment,” which, to me, is so important in achieving success and happiness in life. That is what I want for my children and grandchildren. I encourage everyone to focus on areas for which they have an aptitude and a passion.
You just celebrated your 80th birthday, what is the best gift you received?
My kids organized a fabulous birthday celebration that included our Wichita employees, my family and friends. Having so many people together who mean so much to me was very moving. I can’t think of a better gift than that.
Watermark Books & Café has signed copies of "Good Profit" in stock. They can be purchased at the bookstore or online at, http://www.watermarkbooks.com/signed-editions.