December, 2009

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A Nice Wrap Up

Tuesday, December 1st, 2009

I think Charles Koch’s Science of Success was an excellent book to sum up our semester. As Dr. Fawson stated, Koch has synthesized the various aspects of the foundations of posterity and attempted to explain how they interconnect to create value that is based on the science of liberty. His book addresses all the various topics we have studied this semester and he has demonstrated why each is important to “creating” value. He examined self- interest, spontaneous order, the embracing of change, experimental discovery, innovation, visions, and virtues. He also went beyond these basics to explain that Market Based Management draws “lessons” from various fields and studies, thus illustrating that a successful business that brings value involves more than just managing.

Is the “science of liberty” necessary for the “science of success”? Obviously. As Koch explains, liberty is essential for success because it is the individuals’ liberty that drives the innovation, change, knowledge, and virtue that brings about creative innovations. Koch explains that the theory of MBM is “rooted in the Science of Human Action” (p 25). Thus, self-interested individuals can “create” more in a society that values liberty and freedom and makes it possible for individuals to create and compete. (I liked Kip’s example in this respect).

Crystals in a Jar

Tuesday, December 1st, 2009

Mr. Koch has compiled a great picture of The Science of Success. I can not see much that Mr. Koch has left out. One area in which I feel he has added or perhaps stated more clearly than we have seen before in our readings is “virtue and talents.”

I really appreciated reading Ender’s Game because I felt that the foundations of “virtue and talents” can be found there, and “decision rights” for that matter. But, besides that, the social aspects of liberty were often absent from our discussions. For that reason I appreciate the additions and explanations that we have gained from Mr. Koch.

A crux of this question is obviously that if we state that Mr. Koch has articulated these 5 principles that are “the Science of Human Action” then where is the evolution or innovation? It is imperative that we constantly remind ourselves that there does exist base organizational principles in which a society, business, or individual can and does grow and prosper most effectively. I must revert again to the crystal in the jar. Innovation and creative destruction were never meant to be holistic. Everything is not meant to be innovated or destroyed and replaced with something new or better. The structure that frames the most prosperous and free society must stay intact and unchanged. You may think this is a stasist statement, but it is perfectly consistent with what Postrel and Hayek have said in our readings.

Mr. Koch has outlined the model for success, but it can only be applied to a society when that society is ready for such responsibility. Any top down model, wether oppressive and tyrannical, or liberating and democratic, cannot work until the people of that society are ready for it.

The end

Tuesday, December 1st, 2009

I thought that The Science of Liberty was a good culminating work for drawing together many of the concepts we’ve read about over the course of the semester. I read it over the summer, and liked it, but it was more interesting in context with the other readings.

The five dimensions identified by Mr. Koch did a pretty good job of creating a holistic system of values and concepts that could be applied at multiples levels of analysis.

The interdisciplinary basis of MBM appealed to me: economics, ethics, social philosophy, psychology, sociology, biology, anthropology, management, epistemology, and the philosophy of science.

He sure had some time on his hands to absorb all that plus running a business.

My favorite dimension was decision rights, because I saw a lot of applications to jobs that I’ve worked in. Some of the most enjoyable jobs were ones where I knew my role and expectations and knew who I was answerable to. I’ve discovered that I am frustrated when I don’t know what my RR&Es are. Some of the most dysfunctional working environments were where those were not clear. In fact, Even with non business relationships, RR&Es can be helpful: group projects, relationships with friends and family.

A Matter of Practicality

Tuesday, December 1st, 2009

The Science of Success was a great summary and application of all of the ideas we’ve gained from the readings this semester. In trying to find an aspect of wealth creation Koch hadn’t addressed, I’ve come up dry. I don’t think this book introduced many ideas I wasn’t already familiar with, but Koch’s strength is in establishing a holistic system, which applies fundamental principles of economic theory in a relatively practical way. I use the term “relatively” because I still have a hard time seeing how all of Koch’s ideas can really be put to use. I am not familiar with the organization of Koch Industries (beyond what is briefly mentioned in the book), but it seems like it could turn into a fairly convoluted system in a hurry. With managers constantly reassessing the comparative advantage of each employee and adjusting roles and positions accordingly, it seems as though an enormous amount of effort would have to be exerted to constantly get “the right people in the right roles.” Also, is it not a contradiction to attempt to structure spontaneous order within an organization? I understand that such an environment can be fostered by allowing flexibility within general principles/guidelines, but is it really spontaneous?

The “science of liberty” IS absolutely crucial to the “science of success.” Although a few individuals are “wealthy” in societies that lack freedom, the wealth is not created, but rather transferred. Only in free societies are individuals given the knowledge (or at least the opportunity to gain it) and the possibility to take the risks required to succeed. The origin of all wealth can be traced back to some person recognizing an opportunity and having the ability (freedom) to take a chance on it. Without the amount of freedom required to take the risk, there would have been no possibility of wealth-creation. I’m sure there were plenty of people in the Soviet Union who thought, “I’ll bet I could make a lot of money selling comfortable boots in different sizes.” The problem certainly wasn’t a lack of entrepreneurial spirit, or any default on the part of the people, but rather a threatened and repressive government, which thwarted any possibility of individual wealth creation.