i s c o v e r yTHE QUARTERLY NEWSLETTER OF KOCH INDUSTRIES

April 2007

this issue...

Science of Success Pg 2 Economics in One Lesson Pg 7

Floating Tanks Pg 3 Q&A with Charles Koch Pg 8

Flint Hills Resources ispreparing to make itslargest chemicals acquisi-

tion ever: the purchase ofHuntsman's North Americanpolymers and base chemicalsassets.

The sale, expected to closethis summer, includes fivemanufacturing facilities, 600miles of pipeline and about900 employees.

Three of those assets are inTexas. The other two are inIllinois and Michigan.

Vision “Our vision is focused on

refining, chemical and relatedprocess industries,” said BradRazook, FHR’s president. “Sothis is a natural extension ofour petrochemical manufactur-ing and marketing capabilities.”

The acquisition also fits wellwith FHR’s vision of value cre-ation and growth.

“We already have a well-established aromatics busi-ness,” Razook explained, “but

VolatilityCommodity chemical produc-

ers face plenty of change, suchas new competition from China,Iran and the Middle East.

According to Tony Sementelli,FHR’s chief financial officer, “thepast few years have been someof the best commodity chemicalmarkets we’ve seen in a longtime. However, these marketsare very volatile, which helpsexplain why Huntsman, whichis now a public company, want-ed to divest.”

Sementelli also believes thathaving the Port Arthur facilityout of commission helped create a unique sales process.“We know other companies hadan interest in these assets, butthe fact we could move quicklyand pay cash was a real com-petitive advantage for us.

“Our vision calls for investingin assets that are advantaged orundervalued by public markets.You could say Huntsman quali-fies on both counts.”

Sementelli believes the acqui-sition has significant potential.

“FHR gains some key assets,Koch Pipeline will become thenew operator of the pipelinessupporting Port Arthur, and GP and INVISTA can look for-ward to enhanced supplyagreements.

“That is a lot of potentialvalue for a lot of Koch compa-nies.”

The Right Chemistrythis will give us a totally newplatform for growth in theolefins segment.”

Olefins, such as ethyleneand propylene, are the buildingblocks for many of the world’smost popular plastics. Theyare also some of the biggestglobal commodities in thechemicals industry.

“This business already sellsquite a bit of polyethylene toGeorgia-Pacific and is a majorcyclohexane supplier toINVISTA.”

Familiar turfFollowing the acquisition,

Jeff Ramsey will be commer-cial leader for the new assets.

“The olefin crackers are operated much like our CorpusChristi facility and the polymerplants are very similar to ourplant in Joliet,” Ramsey said. “Sothis is a great opportunity forapplying our core capabilities.”

FHR also looks forward tonew technical, product applica-tion and marketing capabilities.

The most significant asset inthe transaction is the olefincracker at Port Arthur, Texas.That unit suffered a major firelast April and has been underrepair ever since.

FHR’s acquisition is contin-gent on a successful rebuild andstart-up of the cracker. If allgoes as planned, the unit willbe operational this summer.Odessa, Texas – This polymer plant is included

in the FHR acquisition.

opposite. They tend to containlots of instantly forgettableconsultant-type nonsense, butvery little insight or valuableknowledge.

Lucas Wilk Marketing manager John Wiley & Sons Toronto, Ontario

The Science of Success will be afeatured title throughout Mayat all Barnes & Noble stores.

Wiley, the publisher of Koch’sbook, recently sold the rightsfor an audio version, availablein 2008.

The Science of Success reached#34 on Amazon.com beforethat site ran out of copies. Thebook has been widely reviewedby publications such as Forbesand the Wall Street Journal.

own making.A virtuous manwithout talentat least has asolid foundationof character tostand upon.

Rodney Miller, Dean College of

Fine Arts Wichita State

UniversityWichita, Kan.

What is the drawing on thefront of the book? Is it byLeonardo da Vinci?

Dick Anderson Flint Hills Resources Wichita, Kan.

Yes, it is. Leonardo’s drawingof light reflected from a mirror(above) was chosen for thecover by the publisher.

Last week I read CharlesKoch’s book, The Science ofSuccess, and must say Ienjoyed it very much. I likehow the author distills histhoughts and ideas in a waymost people would find easyto grasp.

Not surprisingly, many man-agement titles are the exact

Editorial BoardRich Fink Charles KochJeff Gentry Jim MahoneyDale Gibbens Dave RobertsonMary Beth Jarvis Katie Stavinoha

Cover photos: Chris Lee, courtesythe NSO; Huntsman Chemicals.

Questions? Comments? Reprints?Contact: Rod Learned

(316) 828-6136learnedr@kochind.com

Publication design: Richard Bachman

Koch Creative Group

©2007, Koch Industries, Inc.http://www.kochind.comhttp://www.kochehs.comKoch is an EOE. M/F/D/V

Thank you for the signedcopy of The Science of Success.I have read it several times.

As I have said to you before,I am only sorry that you didnot come along sooner in mycareer. I can only imaginehow much better an executiveI would have been with thebenefit of your teachings.

Pete Correll Retired chairman and CEO Georgia-Pacific Corp. Atlanta, Ga.

Yesterday our plant managergave employees a copy of Mr.Koch’s book.

When I got home last night,my nine-year-old told me thelibrarian at his school wastalking about a book byCharles Koch. (I’m not sure how she knew.)

My boy proudly told her "Mydad works for him!" and pro-ceeded to get plenty of atten-tion in class.

My son was amazed to seethat I actually had a copy ofthe book. He took it with himto his sister’s basketball gameand showed it to parents,explaining that his dad worksfor the man that wrote it.

He also requested that I give it to him next Wednesdayso he can show the librarian.

I live in a very small commu-nity, so if the middle schoollibrarian knows, the word isdefinitely out.

Craig Doelling KCBX field supervisor Chicago, Ill.

I am enjoying your recentlypublished book. Your con-cepts are clear, concise andsimple. That is always theway wisdom presents itself.

The concept of “virtue andtalents” has resonated withme. A talented man withoutvirtue will find himself down apath of destruction that is his

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i s c o v e ryAPRIL 2007 VOLUME 13 NUMBER 2

Letters may be edited for length or clarity

2

On the Cover:Leonard Slatkinconducting the

NationalSymphonyOrchestra.

The Fred C. and Mary R. Koch

Foundation spon-sored the NSO’sfirst-ever Kansas

residency inMarch. The

Foundation andKoch Industriesalso hosted anNSO reception

March 17 at theKennedy Centerin Washington,

D.C.

Wichita – Charles Koch at an employee book-signing event March 5. Whenever possible, Mr.

Koch will also sign books at other Koch company locations. These employee events will be

announced in advance.

tank is like owning an optionon any of the activities thatcan be performed in the tank,”Cook said. “That includesblending and storage, but alsothe option to participate fartherup and down the value chain.”

KS&T decided to lease sev-eral storage tanks being builtin Singapore, even thoughthose tanks were not sched-uled for completion until ayear later.

How could KS&T speed upthat timeline and increase thesize of the experiment?

By thinking of tanker shipsas floating storage tanksinstead of just transportation.

“We time-chartered a180,000-ton vessel for floatingstorage at the end of 2006.”That charter enabled KS&T toimplement its new tank strate-gy on a larger scale and morequickly.

This innovative tactic hasalready yielded unexpectedbenefits.

“Instead of trying to createvalue by predicting marketprices, we’ve found the spotmarket will price the most-val-ued tank activity for us,whether it’s storage, blendingor whatever. We simplyrespond accordingly.”

Improved information flowhas also improved KS&T’sability to understand the driv-ers of supply and demand.“That has helped us improveour paper trading activities.”

As far as KS&T presidentSteve Mawer is concerned, the

INTERNATIONAL NEWS

innovation is just beginning. “Our trading activities

around all of this will continueto evolve,” Mawer said, “butwe’re already very pleasedwith what we’ve learned andwith the performance so far.”

Quebec - Tulsa-based JohnZink Co. has acquired CoenCo., a combustion supplierwith operations in Quebec andnear Mexico City as well asjoint venture interests in Indiaand the Netherlands.

John Zink has also acquiredEEC-Luxembourg, a companythat services vapor controlproducts throughout Europe.Those systems are a majorproduct category for John Zink.

Privately held Coen wasfounded in 1912 and is basedin Woodland, Calif. Its 270North American employeesdesign, manufacture and serv-ice burner equipment andcombustion systems.

Coen is best known for itsindustrial boiler burners. Itsultra-low NOx watertube boilerburners are especially popularwith utility companies.

According to SouthernCalifornia Gas Co., a Coen customer, industrial boilersthat produce steam are thesingle largest energy consumerin the U.S.

John Zink, the world leaderin combustion technology, iswholly owned by Koch Chem-ical Technology Group, LLC.

Singapore - What shouldyou do when a well-estab-lished, profitable businessbegins to decline? In his newbook, Charles Koch suggests aone-word solution: innovation.

“Innovation,” writes Koch,“is the key to long-term success.”

In keeping with that advice,Koch Supply & Trading hasdeveloped an innovativeapproach for its fuel oil business in Asia.

“KS&T had distinguisheditself by delivering qualityproducts, on time at a compet-itive price,” said Brady Cook,managing director of Far Easttrading. “But margins weredropping, so we started to re-think how to serve that market.”

KS&T began by investigatingthe possibilities of leasing stor-age tanks and adding a blend-ing capability.

Unfortunately, there was notank space available for imme-diate lease. Even if there hadbeen, KS&T soon realized thatleasing tanks solely for blend-ing was uneconomical.

As it started reworking itsmental models, the groupbegan thinking about adaptingKS&T’s successful model for Gulf Coast crude oil andgasoline markets.

“Gulf Coast and Singaporemarkets are comparable inmany ways. Both rely onimports, have similar logisticchallenges and tend to havemore demand than supply.And their supplies often fail tomeet customer specifications.”

The team began thinkingabout a tank strategy in broad-er terms. “Having access to a

3This 180,000-ton vessel serves as a stationary, floating storage tank.

The largest acquisition inthe history of KochIndustries – the $21

billion purchase of Georgia-Pacific – was completed Dec.23, 2005.

GP exceeded expectationsduring its first full year as aKoch company and is off to astrong start in 2007, despitechallenging markets.

In the past 16 months, GPemployees have faced plentyof challenges and changes.

The change to private own-

ership, for example, has pro-vided greater access to capital.

Even more important, GPnow has a leadership teamfully focused on creating long-term value rather meetingquarterly expectations.

As for challenges, GP’sbiggest challenge probably hasbeen – and still is – getting upto speed with an entirely newmanagement philosophy: MBM®.

“There has been a steeplearning curve regarding MBM.Changes in the compensationframework, development of an

“This progress is just the beginning,” Koch said,“because we view GP as morethan just a high-quality invest-ment. We view it as a wholenew set of growth platforms.

“Our vision is to generate thesame kind of growth for GPthat KII has enjoyed over thelast 40 years.”

GP platformsIn keeping with Koch’s

expectations, Jim Hannan, GP’spresident and COO, sees sever-al promising indicators ofgrowth and value creation.

“Earlier this year, weacquired five significant sitesfrom International Paper,”Hannan said. “As a publiccompany, we wouldn’t haveacquired those assets when wedid, with building productsmarkets in a down cycle,because of the effect it wouldhave had on our stock price.”

Hannan also points to therecent acquisition of Insulair –maker of a patented triple-walled cup – as an example ofhow much today’s GP valuesinnovation.

“GP’s historical approachwas to be a fast follower inmost markets. Now, we wantto accelerate and drive innova-tion so we can be a leader inour markets.

“We’re in the process ofimplementing a framework,somewhat similar to those atother Koch companies, whereideas come not only from ourpeople, but more diversesources outside the company.”4

open challenge cultureand learning how weapply our DecisionMaking Framework arenot small things,” saidJoe Moeller, GP’schairman and chiefexecutive officer.

DifferencesMoeller sees some

important differences betweenthe acquisition of GP and KII’ssecond-biggest acquisition,INVISTA. Moeller was presi-dent and chief operating offi-cer of KII when INVISTA waspurchased from DuPont for$4.2 billion in 2004.

“The biggest difference wasbuying all of GP versus just apart of DuPont. GP has nearlythree times as many employ-ees and at least 250 moreplant sites than INVISTA.

“Plus, we had just threemonths to prepare for GP and integrating Cellulose.Consequently, we’ve got workto do on our vision develop-ment process.”

As part of that process,Moeller is insisting on morethan just extending GP’s exist-ing businesses. “We also wantto leverage and broaden theunderlying platforms.”

Visions for successIn an April 16 speech to

Atlanta’s Rotary Club, CharlesKoch, KII’s chairman and CEO,reiterated the reasons foracquiring GP and his confi-dence in its future:

“Given our capabilities andguided by MBM, we saw theopportunity to change the wayGP competed and, thereby,greatly improve its profitability.

“As a private company thatreinvests 90 percent of itsearnings, we have the flexibili-ty and resources to pursuestrategies and opportunitiesthat Georgia-Pacific couldn’t as a public company.

Sales of popular GP building products such asPlytanium® are affected by changes in the

rate of new housing construction.

Atlanta – Georgia-Pacific headquarters.

Growth Rings

brands such asLotus® in Franceand Colhogar® inSpain.

“We decided tokeep the busi-ness,” Moellersaid, “and itsresults beganimproving in the second halfof last year. Thatpositive trendhas continuedinto 2007.”

Moeller isespecially eager

to leverage trading knowledge– a core capability of Kochcompanies – at Georgia-Pacific.

“As we work through ourpoint of view on internationalmarkets, we are likely to iden-tify even more opportunities,especially in trading.”

Trading capabilityMoeller believes many of

the same concepts that helpedbuild Koch Mineral Services’successful physical commoditytrading organization can beapplied to GP’s products suchas plywood. This emphasis ona trading mentality is a newapproach for most of GP.

“We also have a new energy-trading capability to help usbetter understand our posi-tions and to think aboutoptions and the risks associat-ed with our energy contracts,”Moeller said.

“This is a new way of think-ing that can help us optimizeour assets here in the U.S. andmake the most of our opportu-nities overseas.”

ForecastMoeller and Hannan see a

mixed bag for GP in 2007. “Our consumer products

business is still very strong,”Hannan said. “We feel verygood about where we aretoday in our markets.

“The packaging business isunder some pressure due tocurrent economic trends, but it

continues to performwell. And, as Joementioned earlier, ourinternational con-sumer products busi-ness is improving.”

GP’s building prod-ucts business, which ishighly cyclical, facesseveral challenges andis more of a concern,though solidly prof-itable. “Housing startshit a 10-year low inJanuary,” Hannan said,“so this will be atougher year for usthan we expected.

“The good news is,overall, our first yearwas better than weexpected and we’reconfident we can dealwith the deep cyclicaldownturn in buildingproducts.”

Perhaps the bestforecast of GP’s futurecomes from CharlesKoch, who concludedhis Atlanta Rotary Clubremarks by saying:

“GP’s growth willcontinue to be drivenby our philosophy ofPrincipled Entrepre-neurship™: Maximizelong-term profitabilityby creating real valuein society while alwaysacting lawfully andwith integrity.”

InvestmentsHannan points out that GP is

making significant investmentsin much-needed equipment forits existing businesses.

“We’ve committed morethan $200 million to add pre-mium air-dried paper capacityat our Wauna, Ore., mill. Thatinvestment supports our pre-mium towel strategy forimportant customers such asWal-Mart and Costco.”

GP is also spending $120million to expand its Savannah,Ga., gypsum plant, allowingfor further growth in sales of its popular ToughRock®,DensArmor® and DensGlassGold® products.

“Many of our biggest andbest customers want to seecertain changes to our prod-ucts,” Hannan said.

“Those changes, innovationsand improvements can only bedelivered by making thesekinds of investments.”

The financial ability to makesuch investments is especiallyimportant in today’s environ-ment of industry consolidation.

“That consolidation is onlygoing to increase,” Moellersaid, “which is good news forus, because we’ll probably seemany more opportunities, givenour ability to invest and grow.”

Seeing overseasLast year, GP considered

selling its international con-sumer products division, whichmakes and markets popular

GP’s high-visibility sponsorships include four-timeNASCAR Cup Series champion Jeff Gordon and the

Extreme Stunt Show at Disney-MGM Studios.

Joe Moeller (left) and Jim Hannan at GP’s 2007kickoff for the Komen Race For The Cure.

5

GP at a glance

HQ: Atlanta, Ga.

Employees: 50,000

Locations: 300

Annual production:10 billion square feet of structural panels (plywood and orientedstrand board)

6.5 billion square feet of gypsum wallboard

4 million tons of tissue

4 million tons of containerboard (liner and medium)

2.3 billion board feet of lumber

2 million tons of paper (communicationand kraft paper, bleached board)

Major customers: Wal-Mart, Costco, Target, Home Depot, Sam’s Club, Lowe’s, Kroger, General Mills,Proctor & Gamble

6

Team Up To Clean Up

The southeast section ofWashington, D.C. hasbeen called one of the

most impoverished and pollut-ed neighborhoods in America.

There, the Anacostia River is often cluttered with trash,ranging from wastepaper andgarbage to discarded furniture.

Four years ago, KochIndustries took the lead insponsoring a cleanup effort of the Anacostia and PotomacRivers in Washington, D.C.That event, called Capital River Relief, was based on thesuccess of a similar projectnear Pine Bend refinery inMinnesota two years earlier.

“Capital River Relief is a pri-vately funded, all-volunteercoalition of local and nationalenvironmental groups, busi-nesses, government and com-munity organizations,” saidMatt Schlapp, executive direc-tor of federal affairs for KII.

“These groups work withLiving Lands and Waters,which coordinates efforts on the ground, and KochIndustries, lead sponsor for the event, to help clean upthese rivers every year.”

LogisticsAs it has been from the

beginning, Koch Industrieswas lead sponsor for thisyear’s event. And once againit was Living Lands and Water,led by Chad Pregracke, thatprovided the barge that even-tually is piled high with trashbags full of items removed therivers and their riverbanks.

affairs in Washington. “Over the years we’ve had

everything from sunshine andcherry blossoms to freezingrain and snow.”

Rain or shine, it was easy tospot many of the 800 volun-teers working their way up anddown the rivers.

The trash they collected wasbagged and loaded onto a 135-foot barge provided by LivingLands and Waters.

Celebrating successAt a closing ceremony on

Earth Day, April 22, manyCapital River Relief volunteersgathered to celebrate anothersuccessful cleanup.

As usual, there were storiescomparing the most unusualitems found in the river,including prosthetic limbs, anATM and a surprising number

of messages in bottles.Although final num-

bers are not yet avail-able, at least 60,000pounds of trash wereremoved this year.

“Those are great results,”Schlapp said, “but they’re real-ly just a beginning.

“Our next challenge is to finda way of making the cleanupof these rivers sustainable,rather than just a once-a-yearevent.”

During the second week ofthe cleanup, Pregracke cele-brated the publication of hisbook, From the Bottom Up,published by NationalGeographic. Chapter nine ofthat book is devoted to CapitalRiver Relief.

This year’s cleanup ran fromMarch 27 to April 22 andinvolved dozens of volunteergroups. The many participat-ing sponsors included theAlice Ferguson Foundation and the Anacostia WatershedSociety, organizations devotedto cleanup of the ChesapeakeBay and Potomac River watersheds.

Getting dirtyWithout question, it is volun-

teers who make Capital RiverRelief a success. Since theevent takes place in the spring,

those volunteers can experi-ence some tough conditionsout on the water.

“As if wading through muckand dealing with trash isn’tchallenging enough, theweather is often the biggestchallenge volunteers face,”said Catherine Haggett, KII’sassociate director of federal

During the four years of Koch-sponsored Capital River Relief,volunteers have removed almost400 tons of trash.

Last year, volunteers removed more than 2,600bags of trash from the Anacostia

and Potomac Rivers.

Koch company volunteers find that discarded tires are surprisingly common along the riverbanks of Washington, D.C.

with Rock Island, supervisingthe company’s ranches andworking in crude oil gathering.

Varner was elected presidentand chief operating officer ofKoch Industries in 1974. Heretired from that role in 1987,but has remained active on theKII board.

David Koch was not yet anemployee of the companywhen he became a director.David worked in engineeringroles for other firms in NewYork and Cambridge, Mass.,before deciding to join KochEngineering in 1970.

David Koch is now chairmanand chief executive officer ofKoch Chemical TechnologyGroup, LLC, and an executivevice president of KochIndustries. He and his brother,Charles, own more than 80percent of the company.

In accepting their election tothe board of directors, Carey,Koch and Varner acknowl-edged their new responsibili-ties by agreeing “to perform…to the best of our ability andin accordance with the …lawsof the United States.”

The performance of KochIndustries ever since that special meeting has been atestimony to the integrity andcommitment of these leaders.

This year marks the40th anniversaryof one of the most

important board meet-ings in the history ofKoch Industries. Backthen, the company wasknown as Rock IslandOil & Refining.

On Nov. 22, 1967, aspecial meeting of theRock Island board washeld in Wichita. Fivedays earlier, Fred C.Koch, the company’schairman, had suffered afatal heart attack while hunting in Utah.

By unanimous consent, 32-year-old Charles Koch waselected as the company’s newchairman, filling the vacancycreated by his father’s untime-ly death.

But there was also anothervacancy to fill. Fred’s widow,Mary R. Koch, had tenderedher resignation as a directorand vice president of the com-pany, effective that same day.

Mary Koch’s position wasfilled by Tom Carey, the com-pany’s chief financial officerand board secretary. Careyserved as a director for 20 ofthe next 22 years, retiring fromKoch Industries and its boardin 1989.

Lasting valueOther agenda items at that

special meeting included amotion to increase the numberof directors. After approvingthe motion, the board unani-mously elected three newmembers.

Two of those new members,Sterling Varner and DavidKoch, have served on theboard ever since. Sterling was47 at the time, David was 27.

By then, Varner had alreadyspent most of his adult life

LOOKING BACK

A Meeting With Meaning

7

Economics in One Lesson- Henry Hazlitt.

This book, a modern classic,is subtitled “the shortest andsurest way to understand basiceconomics.”

That’s a tall claim, but thebook really is simple, straight-forward and easy to read. Nowonder it is enormously popu-lar with college students andthose who are just coming togrips with economic theory.

On the other hand, it hasalso received high praise fromthe economically sophisticated.Nobel Laureate and economistF.A. Hayek called it “a brilliantperformance.”

Hazlitt summed up his mas-terwork by warning against thefallacy of isolation:

“In studying the effects ofany given economic proposalwe must trace not merely theimmediate results but theresults in the long run, notmerely the primary conse-quences but the secondaryconsequences, and not merelythe effects on somespecial group butthe effects oneveryone.” (pg. 103)

Those arewords to remem-ber as lawmak-ers discuss policies rangingfrom ethanolproduction andtrade barriers toclimate change and so-called“excess profits” taxes.

Noteworthy

Too

True “Government has noth-

ing to give [you] withoutfirst taking it away fromsomebody else – or from[you].”

—- Henry Hazlitt

Paris – David Koch, in 1960, age 20.

lack of authority to controlresources.”

Any supervisor worth theirsalt is interested in results, soa good starting place is show-ing your supervisor how you’regetting – or could get – resultsby applying Market-BasedManagement®.

Don’t be adversarial.Instead, show how MBM canhelp you create value. If thisdoesn’t work with your super-visor, go to others for help andsupport.

* * * *Q: What is the biggest chal-

lenge in learning to applyMBM?

A: I believe there are threerequirements for successfullyapplying MBM. A gap orshortcoming in any one ofthese will hinder your success.

The first requirement is con-ceptual. We must develop an

understanding ofthe principlesunderlying MBM.

Second, based onthat understanding, we mustdevelop or acquire the MBMtools from these principles thatare suitable for our responsi-bilities.

Third, we must develop theart of applying those tools toget results. This, as I men-tioned earlier, is an iterativeprocess of trial and error.

If you’re having troubleapplying MBM, determinewhich gaps are holding youback.

While it is true that, fromlong experience, some of ouremployees have learned tointuitively apply MBM to getresults, it is more effective toconsciously know where andhow we are applying it.

That understanding enablesyou to both improve your abili-ty and to coach others to getresults.

www.kochscienceofsuc-cess.com

PERSPECTIVE

Charles Koch,KII chairman

and CEO, at arecent book-

signing event inWichita.

The following areCharles Koch’s answersto some employee ques-tions about his newbook, The Science ofSuccess.

Q: Don’t you have to bebrilliant to understand andapply MBM®?

A: Certainly not. I’m notbrilliant. I had plenty ofcollege classmates whowere much smarter. But Ihave tried to work harder.

Success in applying MBMdoesn’t require brilliance, itrequires passion – the passionto get results from MBM.

Passion drives us to makethe most of our time andopportunities. When I’m on aplane, for example, I takealong work or other beneficialreading material.

In Personal Knowledge,Michael Polanyi wrote thatbecoming engrossed in a prob-lem “is in fact the mainspringof all inventive power.”

Polanyi quoted Pavlov’sadvice to admiring studentswho wanted to be like him:“Get up in the morning withyour problem before you.Breakfast with it. Go to thelaboratory with it. Eat yourlunch with it. Keep it beforeyou after dinner. Go to bedwith it on your mind. Dreamabout it.”

I am constantly thinking tosolve problems, even whenI’m not officially working.

Einstein (who really wasbrilliant) had absorbed himselfin developing the theory of rel-ativity for many, many months,but it was on a walk with afriend that the final piece ofthe puzzle fell into place.

Don’t believe anyone whotells you KII’s success is all dueto me. No person, no matterhow brilliant, can direct 80,000employees in 60 countries.What I’ve done is provide aframework that has helped ourpeople become more produc-

tive, creative and fulfilled.

* * * *Q: What is the best way to

learn more about MBM? A: The true measure of

understanding MBM is beingable to apply it to get results.That understanding begins at aconceptual level. We all haveto learn concepts before wecan begin to apply them.

If you haven’t already, I sug-gest you start by reading mybook. Take notes so you canask questions of your supervi-sor or others. Discuss MBMwith your co-workers. Visitthe MBM site on D-Net. If pos-sible, attend one of our manyMBM seminars.

The next step is to identifyhow and in which of youractivities MBM can be appliedto bring about the greatestresults. Then, experiment withapplying it. This iterative

process of learning conceptsand applying them will gradu-ally enable you to gain trueunderstanding.

You will know you are mak-ing progress when your contri-butions increase.

* * * *Q: What do I do if my super-

visor seems to have little inter-est in MBM?

A: Any shortcomings asupervisor may have are noexcuse for inaction.

As I wrote in Chapter 6:“Those without the authorityto make certain decisions arenot exempt from entrepreneur-ial initiative. They can stillcreate value.”

Entrepreneurs often “mustpersuade investors, lenders,suppliers, customers and oth-ers to fund or otherwise sup-port their vision for a newventure. Successful entrepre-neurs are not deterred by their

“To be successful, we all mustthink and act like entrepreneurs.”