Arnold Kling  

Austrian Economics in Business

PRINT
The Presumption of Elasticity... Lawrence Katz on Inequality...

The Science of Success, by Charles G. Koch, takes an "Austrian" approach to business. Nick Schulz liked it.


Koch has published a new book that provides people who care deeply about business and politics something important to think about - the role that exit plays in ensuring quality and success.

...In his book Koch provides a list of over 40 businesses they exited, from pizza dough to tennis court surfaces to air quality consulting. It is clear that Koch's management is proud of its ability to identify areas they should exit and take the steps to do so. Exit is often a painful and difficult process and there are significant obstacles to its realization - sentiment, bureaucracy, loss of business vision. But exit is nonetheless crucial for success.


I was less impressed.

specific examples and pitfalls are few and far between. As with its other chapters, the chapter in SOS on knowledge processes insults the complexity and subtlety of the topic by its short, breezy treatment.

...For anyone writing a business book, let me offer my own aphorism:

The biggest secret knowledge in business is the stuff that ought to work, but doesn't.

Articulating what works, even for someone as successful as Charles Koch, can have surprisingly little value. Taken out of context, what works will seem obvious. What readers need to know is the larger context, especially what ought to work, but doesn't.

For SOS to be useful to middle managers, the writing needs to be more compelling and memorable. The ideas need to be fleshed out with more details and examples -- each of the five dimensions deserves close to 100 pages. Above all, it needs more anecdotes that would enable the reader to distinguish what works from what ought to work, but doesn't. In my view, SOS as written exemplifies the latter.


A while back, Peter Klein raised questions about how well Koch might be able to articulate the trade-offs involved in decentralizing management.


Comments and Sharing





COMMENTS (2 to date)
eric writes:

I've been in business for a while. Every successful idea I have been involved has been simple, something that was not only obvious once you knew it, but everyone knew it but merely thought it not important. So I guess valuable knowledge is mainly prioritization.

Bill Tierney writes:

Yes, Koch could have and should have written a longer book. That said, what he did write is pure gold. His approach to applying free market principles to the management of a business is pretty revolutionary. I don't know if Koch is the next William Edwards Deming, but he might be. The results from the application of his management principles at Koch Industries have been astonishingly positive.

Comments for this entry have been closed
Return to top