Discovery Newsletter: The Transformation Imperative

April 1, 2017

“Do it, or we’ll end up in the dumpster.”

That’s what Charles Koch said to the leaders of Koch Industries at a landmark meeting in February. The focus of that meeting was the need to embrace technology-driven transformation across all of Koch.

“We built Koch Industries through perpetual transformation,” Koch noted, “but what we’re faced with now may be the greatest change of all — that is, a change based on the need to compete in a knowledge-based future.”

With that challenge in mind, Koch announced some significant organizational changes in March. Jim Hannan and Brad Razook were both promoted to new roles overseeing multiple Koch companies, and charged with driving the latest transformation of Koch Industries.

As Charles wrote in an email to all employees: “Jim and Brad will be responsible for driving improvements and advances in their respective businesses, including the application of technology, software and data analytics.

“Koch has invested nearly $14 billion in these areas to not only keep us at the forefront of the industries in which we operate, but to drive continual transformation.”

THE REQUIREMENT

Dave Robertson, KII’s president and COO, is emphasizing that Koch’s vision for transformation must never lose sight of results.

“We need to make sure this is a profitable transformation,” says Robertson. “Back in the 1990s, we had a strong vision for growth, but much of it ended up being unprofitable growth. We don’t want to transform just for transformation’s sake.

“What we want to do is use technology to conduct our current businesses more efficiently and effectively. We also want to use transformation in a way that gets us into new and profitable businesses, as Molex is doing with medical products.”

Both Charles Koch and Dave Robertson point to Molex and INVISTA as being technology leaders among Koch’s diverse array of companies.

“Koch bought Molex, not because we were a connector company,” says Martin Slark, its CEO, “but because we gave Koch an important toehold when it comes to technology.

“One of the important lessons we’re sharing is that we need to be integrated globally to compete. For example, combining technologies and MBM® significantly enhances collaboration, because engineers in different countries and different parts of Koch can work on the same projects in real time,” Slark said.

EMBRACING AND DRIVING CHANGE

As Charles notes in his Perspective editorial on page 8, transformations are nothing new for Koch. This one is merely the latest in a series that began in the early 1960s.

What makes this transformation different goes beyond the fact that it is technology-driven. It is also remarkable for its scope.

"Virtually everyone's role is going to change." – Charles Koch

“Virtually everyone’s role is going to change,” Koch predicts, “beginning with our roles as leaders. We must gain the tools to help our people change their roles, beginning with ourselves.

“We’ve seen this coming for some time,” Koch concluded. “One look at the current state of retail or newspapers is all you
need to confirm that technological
change is inevitable — even for education and politics.

“That’s why we all must commit to transforming ourselves before others do.

“Let’s make it happen.”