Principles in Brief
Entrepreneurship is the innovative, experimental act of identifying and pursuing an opportunity. It can take any number of forms, such as creating a new business, product, service, process, method or type of organization. It involves risk because the future is always changing in unpredictable ways.
Principled Entrepreneurship™ is the discipline of always practicing entrepreneurship in a principled manner. Our Vision is to create good profit long term by providing products and services customers value more than their alternatives, while consuming fewer resources and always acting lawfully and with integrity. Good profit is earned by making a contribution in society – not from corporate welfare or other ways of profiting by taking advantage of people.
Since creative destruction is a driving force in a market system, we continually strive to improve the value we create for customers and society faster than our most effective competitors. This entails not only a better understanding of what customers want now, but what they will want in the future. It is especially difficult because very few customers are aware of what they would prefer until they are shown a better alternative. Identifying and satisfying these unmet needs is essential to successful entrepreneurship.
We depend on the entrepreneurial contributions of our employees. If it is easier or more beneficial for employees to practice entrepreneurship elsewhere, we will inevitably fall behind. This is why we are dedicated to empowering employees to become principled entrepreneurs.
Independent entrepreneurs seek to create new and better products or services and ways of doing things. But they rarely have the necessary resources, requiring them to develop their ideas well enough to access capital. The same is true inside Koch. To be a principled entrepreneur, you cannot let the need for approval stifle your initiative. Our principled entrepreneurs develop their ideas by seeking the knowledge and challenge leading to proposals that will earn approval.
A top-down, bureaucratic approach crushes entrepreneurship. We strive to create a bottom-up environment of empowerment that unleashes the entrepreneurial spirit and initiative of contribution-motivated employees. Such employees continually identify and close the gaps between what they are and what they could be accomplishing.
Supervisors at every level are responsible for building an environment that encourages and supports Principled Entrepreneurship. This includes: establishing a clear understanding of what Principled Entrepreneurship looks like; enhancing the pursuit of knowledge through experimental discovery and knowledge sharing; eliminating waste and bureaucracy; and establishing an appropriate risk tolerance for trying something new. We expect supervisors to fight the complacency and inertia that develop over time – particularly when we have been successful; build a commitment to stewardship and compliance; and align the interests of employees with the company’s.
Understand it Better
Preferred Partnerships - Unscripted
Leaders explain what it takes to become and remain a preferred partner with customers and suppliers.
Virtuous Cycles of Mutual Benefit
This light-hearted video explores the many aspects of Virtuous Cycles of Mutual Benefit.
Examples
Principled Entrepreneurship takes many forms. Here are some examples.
- Solving Problems Creatively
- Identifying Potential Opportunities
- Eliminating Waste
- Taking Initiative
While trying to solve a system stability issue, Fiona read how Artificial Intelligence is helping other areas of the business detect problems. She finds an AI specialist in the company to explore what’s possible. Together they figure out how to use a new technology that helps identify and resolve issues before the whole system goes down.
William is a customer service specialist. During a support call, a customer mentioned their company is considering a significant expansion. William realizes this could be an opportunity to expand our relationship and assist this customer with technical consulting services, so he shares this news with the relationship manager for this customer.
Calla discovered that three people had independently reviewed the same reliability and maintenance reports to suggest the next planned downtime. She recognized the need to clarify responsibilities to prevent wasteful duplication of efforts.
Employees have been complaining about the expense report process for as long as Yolanda can remember. It’s happening again during today’s team meeting. Yolanda speaks up, “You know, we are 100% responsible for and able to make this process better. Do you think improving it should be one of our current priorities? If so, I’d love to work on it.”
Give it a Try
The power of these principles happens through application. There’s no substitute for learning as you apply.
Reflect: Think about current problems and complaints. How can you reframe those to be opportunities for improvement and value creation?
Talk to some of your core constituencies. Ask questions and listen for ways you might partner with them to create value. Talk to your supervisor and/or team about what you learned and how you might pursue some of the opportunities.
How would you describe the “principled” part of Principled Entrepreneurship? What principles are we expected to uphold?
What have been some recent acts of Principled Entrepreneurship in our team/facility/business?
Which core constituencies does your group affect or engage with the most: customers, employees, suppliers, communities, others? How can you become a preferred partner to each?
Why do you think Principled Entrepreneurship includes, “Continually seek to identify and close the gaps between what you are and what you could be accomplishing if you were fully applying Principle Based Management”?