Discovery Newsletter: Perspective, John Pittenger and Steve Daley

July 1, 2017

The essence of Koch Industries’ Vision is to create greater value for our customers more efficiently and improve faster than our competitors. This is the approach — grounded in MBM® — that has helped make Koch successful for decades.

For many years we have improved our rate of value creation through continuous improvement driven by innovation. As a result, we have enjoyed attractive returns and substantial growth.

But in today’s hyper-competitive environment of constant change, entire value chains are being transformed. In some sectors — such as retail, distribution, the media, communication, transportation and entertainment — changes have occurred so quickly that former industry leaders are realizing they must reinvent themselves if they are to have any hope of survival.

Given this environment, continuous improvement is not enough; we also need to drive transformation. At the very least, Koch companies need to find new, more powerful ways of creating value for customers.

That is why we are so committed to our pursuit of technology- driven transformation across Koch. Slow and steady progress will not win this race. It will require creative destruction.

EASY VS. HARD

In order to make this radical approach a reality, we need the help of cutting-edge information systems, data analytics, modeling, process controls and decision tools.

Whether you’re a coordinator or an analyst, an operator or an engineer, you must be willing to adopt new mental models, refuse to settle for the way things are today and always be willing to learn. When new technology transforms your role, you not only need to embrace those changes, but think of other ways your role could be made more effective.

Finding good technology — such as that created by Molex and INVISTA, or our newly acquired companies EFT and Infor — is usually the easy part. What’s hard is changing the way we do our jobs.

No, we’re not expecting everyone to become a tech guru. But we are expecting everyone to raise their expectations and — as always — be accountable for results.

To help employees with the challenge of transformation, our MBM and innovation capability teams are working together to upgrade existing training content, and create new tools and educational materials. They are also providing additional guidance for the RR&E process — including how we should think about every employee’s expectation of personal transformation.

We are using an experimental discovery approach; improving what has worked in the past while testing new and better methods.

SUPERVISORS FIRST

In the April issue of Discovery, Charles Koch said, “I expect leaders and supervisors to be the examples for making this [transformation] happen.”

For years, Koch leaders have used a tool called “The Role of the Supervisor” to help them do a better job. That framework, which has evolved many times, has proven to be an important tool in the application of MBM.

We have already started to revise that framework (never settle for the status quo, remember?) with a goal of emphasizing the changes necessary for realizing the full value of our human resources and helping employees adapt and continue to succeed.

That may seem daunting, but the concept is simple: leaders not only need to set expectations, promote MBM culture, drive innovation and make sure we have the right person in the right role, they also need to be good examples themselves.

All of us have a responsibility to embrace the changes — whether incremental or transformational (because we need both) — that will create greater value, which is the best pathway to personal fulfillment.

TRUE FULFILLMENT

Around the world, many businesses and their employees are having a hard time. They realize what used to be sufficient is no longer good enough. Products and processes that seemed time-honored and true are being improved and transformed at a pace that seemed impossible just a few years ago.

Faced with challenges like these, can we ever win? Is it really possible to stay ahead of the tide of creative destruction?

At Koch, we believe true fulfillment is achievable, but it does not come from some idealized end state. It comes from being engaged in the never-ending process of creating real value for our customers, company and society as a whole.

There is always going to be a better way of doing everything, so it’s up to each of us to constantly strive to find those breakthroughs and discoveries.

As Charles Koch mentioned in the last issue of Discovery, we have already been through four transformations as a company and are now entering our fifth. Those transformations not only resulted in a better, stronger company, they created more value for customers and greater opportunity for employees.

We know our environment is challenging, but we also know we can master it. The changes we are making, the transformations we are promoting and the roles we are rethinking are all part of our commitment to continuing to succeed for decades to come.