Luke Mullins offers a helpful account of the Crane-Koch struggle. A snapshot:
Charles Koch began pushing for Cato to adopt a management philosophy he had developed, Crane says. The approach—which Koch called “market-based management”—aims to improve performance by creating market forces within a company. Koch was proud of market-based management, Crane says. For many years, he personally taught it to Koch Industries’ executives in front of a blackboard. His 166-page book, The Science of Success, spells out the philosophy, and he even trademarked the phrase “market-based management.” Sometime in the mid 1980s, engineers from Koch Industries arrived at Cato to teach the staff market-based management. As the engineers clicked through a PowerPoint presentation, Cato staffers were puzzled by their recommendations. For example, Crane says, the engineers said they could improve performance by stopping every 15 minutes to write down everything they had done.
“We’re all just looking at each other like, ‘What the hell is this about?’ ” Crane says.
“These guys were engineers, and you could tell that they didn’t even understand what they were supposed to be teaching.” After the engineers left, Crane told Koch he wasn’t adopting market-based management at Cato. “I knew that would be your reaction,” Koch replied, according to Crane. Crane now thinks his rejection of market-based management may have offended Koch more than he realized at the time. “Charles has always been fascinated with academics,” Crane says. “He likes to hang out with them, he funds them, and it may well be that he wanted to be one of them and that he thinks his contribution to academia was market-based management.”
Earlier thoughts on the contretemps here, here, here and here.
The Dish 