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PRINCIPLES OF HUMAN PROGRESS

What are Principles of Human Progress?

Principles of human progress are principles that have been proven throughout history to promote peace, civility, opportunity, fulfillment and progress.

Years ago, Charles Koch believed an organization could benefit from applying these principles as well. We have learned from decades of experience that we have succeeded to the extent we have correctly applied them and failed when we haven’t. As the company grew, it became necessary to document and organize these principles so they could be used by everyone. Today we call this Principle Based Management.

At Koch, principles of human progress guide everything we do. The better we understand and apply these principles, the more we prosper by benefiting others.

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Accountability

Bearing the consequences (good or bad) of your decisions or actions.

Alignment of Incentives

The strategic objective of ensuring the goals of different parties coincide and lead to mutually beneficial outcomes.

Bottom-Up vs. Top-Down

Conditions that respect the inherent worth of each person and unleash their gifts and knowledge to tackle problems and pursue opportunities, governed mostly by general principles rather than detailed rules.

Capabilities

Distinctive, durable and broadly applicable organizational or team attributes that result in long-term competitive advantage.

Challenge/Scientific Method and Challenge

Based on the scientific method which strives to disprove or find flaws in a theory rather than defend it, challenge is continual questioning and brainstorming to find a better way.

Changing Paradigms

A paradigm is a shared set of assumptions, theories and methods that guides the work of individuals and groups. Changing Paradigms means challenging and adjusting them when they are flawed or become ineffective.

Closing Gaps

Envisioning and striving to move from the current state (even if we are doing well) to fully applying our principle-based framework.

Contribution Motivated

The drive to make a positive difference in the lives of others in ways that help you grow and succeed.

Creative Destruction

The inevitable process of new and better things being developed (creative), displacing those that are less effective (destruction).

Division of Labor by Comparative Advantage

Organizing people and work responsibilities in a way that maximizes total value created, not simply assigning tasks based on who can do them best.

Economic Thinking

Economics is the study of choice in using scarce resources that have alternate uses. Good economic thinking seeks to understand these trade-offs, so the greatest value can be created.

Empowerment

People having the freedom and support they need to fully contribute and realize their potential; it is not about granting power or authority.

Experimental Discovery

Seeking better results in an ever-evolving world by continually experimenting, learning and improving.

Headwinds and Tailwinds

A principle that helps a business understand the powerful, sustained factors that affect the competitive landscape for each of its products and services.

Humility

Being intellectually honest and stiving to understand and accept yourself, your situation, and others as they really are so you can constructively deal with reality.

Integrity

Being committed to and living by a beneficial moral code.

Knowledge

More than data, facts or information; it's about applying understanding and know-how profitably to improve results.

Life of Meaning and Synergy

Meaning is the sense of purpose you experience by contributing to things beyond yourself that deeply matter to you. Synergy resolves the false choice between self-interest and helping others — your success becomes tied to theirs.

Marginal Analysis

Evaluating the costs and benefits of a specific change.

Measures

Quantitative or qualitative means to monitor or assess the extent, quality, value or effect of something.

Motivation

From the Latin word meaning “to move,” it is what prompts us to act.

Mutual Benefit

We obtain what we value by providing others what they value.

Openness

Actively seeking, sharing, and considering diverse perspectives, and sharing ideas freely to accelerate learning, innovation, and progress.

Options

Having the ability or right, but not the obligation, to take an alternative course of action.

Our Values

Eight principles of human progress foundational to our (Koch’s) culture that define who we are as an organization.

Overcoming Entropy and Bureaucracy

When a system is closed from new energy and knowledge, the system tends toward disorder and decline (entropy). Bureaucracy is an organization's response to entropy that uses control and conformity to achieve order.

Partnerships

Two or more parties with complementary capabilities joining together to achieve mutually beneficial outcomes.

Personal Knowledge

The know-how developed by merging conceptual understanding and application to get results.

Principle-Based vs. Rule-Based

A principle-based approach relies on principles of human progress to guide people’s actions and decisions, whereas a rule-based approach relies on top-down detailed rules, directives and control.

Principled Entrepreneurship™

Practicing entrepreneurship — the innovative, experimental act of identifying and pursuing new and better products or services or ways of doing things — while consuming fewer resources and always acting lawfully and with integrity.  

Property Rights

A person’s individual right of ownership over themselves and the things they’ve made or lawfully acquired, including the freedom of how to use, control or transfer their property so long as doing so does not violate the rights of others.

Republic of Science

A decentralized system of knowledge generation in which individuals, guided by general standards, pursue problems and discoveries according to their own judgment, mutually adjusting in light of one other's efforts.

Requirements for Human Action

Individuals only act when they experience unease with the status quo, a vision of a better future, and the belief that their actions can successfully bring about the change.

Respect

Valuing and treating everyone as individuals and with dignity, honesty and sensitivity.

Risk

Recognizing that something unpleasant or unwelcome could happen while also recognizing that meaningful progress requires taking risks to innovate, solve problems and create value.

Self-Actualize

Realize your potential by discovering, developing, and applying your gifts and passions to contribute toward things you find meaningful.

Stewardship and Compliance

Stewardship is recognizing our obligation to act in a manner that respects the rights of others and to manage resources responsibly. Compliance is a specific part of stewardship that involves adhering to all laws and regulations.

Talents

Abilities you can discover, develop into skills and apply to create value.

Time Preference and Long-Term Focus

The relative value individuals place on receiving benefits now versus later.

Transformation

Fundamentally rethinking and reinventing how we create value. Not just improving what already exists but doing things in entirely new ways.

Virtuous Cycles of Mutual Benefit

The on-going process of creating value for others and ourselves by continually building and leveraging capabilities.

 

THE REMARKABLE SUCCESS OF KOCH AND ITS EMPLOYEES HAS ALWAYS BEEN ROOTED IN PROVEN PRINCIPLES OF HUMAN PROGRESS

Charles Koch