Principle in Brief
In 1776, Scottish economist and philosopher Adam Smith observed that people in a civilized society always require the cooperation and assistance of others. We obtain what we need by providing others with what they want. This simple idea, which today we call mutually beneficial exchange, when widely practiced, has lifted much of the world’s population out of poverty and subsistence.
Mutual benefit is foundational to the role of business in society and Koch’s Vision. We seek to understand the needs of our constituencies, starting with providing products and services our customers value more than their alternatives. When we do this while consuming fewer resources, our profit is a result of benefiting our customers and society.
Some people believe that exchange is zero-sum – for one side to win, the other side must lose. This can be the case – such as when one party benefits at the expense of the other party through involuntary extraction. Whether legal (government bailouts, subsidies, mandates and tariffs) or illegal (fraud and theft), these win-lose approaches are always harmful to society.
Exchange is a positive-sum endeavor when it is voluntary and mutually beneficial. Both parties cooperate to get more of what they value and will only transact if both believe it will make them better off. This win-win approach respects each party’s right to choose whether or not to transact. It is the only way to ensure value and good profit are created.
When companies are allowed to profit through extraction and exploitation, they avoid the constructive competitive pressure to innovate and create value for others. When companies can only profit through voluntary cooperation, they have a strong incentive to innovate and anticipate ways of satisfying customers.
At Koch we strive to apply a win-win philosophy in all we do. That is why we pursue mutually beneficial relationships with all core constituencies – employees, customers, suppliers, partners, communities and governments. We seek to understand what they value and then cooperate with them to achieve mutually beneficial outcomes. Trust is the foundation for such relationships.
Contribution-motivated employees are essential to applying a philosophy of mutual benefit. They are collaborative, build trusted relationships and make those they work with better.
Understand it Better
Understanding Mutual Benefit
"Thank you." "No, thank you." This video shows how mutual benefit plays out for customer and supplier.
Mutual Benefit with Employees - Unscripted
Leaders discuss how we strive for mutual benefit with employees in everything from hiring to coaching to development.
Mutual Benefit with Customers - Unscripted
Listen to leaders share why mutual benefit isn't simply "the customer is always right."
Applying Mutual Benefit to Tough Situations - Unscripted
Hear leaders talk through how mutual benefit guides us even in tough times - like downsizing.
Internal Mobility: One Company, Many Opportunities - Unscripted
Leaders share examples of applying our principles, including mutual benefit, to help employees be in the right role.
Virtuous Cycles of Mutual Benefit
This light-hearted video explores the many aspects of Virtuous Cycles of Mutual Benefit.
Examples
Part of applying mutual benefit is looking for win-win situations and avoiding win-lose situations.
- Win-Win
- Win-Lose
Supplier X shares our vision for creating value, understands our priories, and provides superior service. We pay Supplier X about 5% more than our next best alternative.
Although Greta’s supervisor, Vance, values having her on his team, he encourages Greta to pursue a role in another Koch company that will allow Greta to expand her skills and contribution.
Although Greta’s supervisor, Vance, values having her on his team, he encourages Greta to pursue a role in another Koch company that will allow Greta to expand her skills and contribution.
Theo works below his abilities so he won’t be asked to do more.
To hit their quarterly sales goals, a salesperson misrepresents the features of a new product to the customer.
To hit their quarterly sales goals, a salesperson misrepresents the features of a new product to the customer.
Give it a Try
The power of these principles happens through application. There’s no substitute for learning as you apply.
- Look at the win-lose examples and think about how, in the long-run, even the “winner” tends to lose.
- Consider all of the core constituencies for your team/business (employees, customers, suppliers, partners, communities and governments.) What does a mutually beneficial relationship look like with each of them?
- Why is mutual benefit critical for our long-term success?
- How can a short-term focus increase the likelihood of win-lose behavior?
- Share examples of times you’ve seen both win-win or win-lose behavior and the consequences.
- How are profit and mutual benefit related? (Tip: review the principle in brief)