This began to change during the 2000s, however, and it changed dramatically in late 2005 when Koch Industries bought Georgia-Pacific and its warehouses that lined the Willamette River.
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As the warehouses and their timber mills were sold over and over again, Dennis Trimm came to know the chain of CEOs who ran the company in succession: from Crown Zellerbach, to James Goldsmith, to Fort James, and then to Georgia-Pacific. Out of all of the leadership teams, he was most impressed with Georgia-Pacific’s. The CEO, Pete Correll, often visited the warehouse to look the place over and talk with the management team. Correll was a lanky, personable man worth at least several million dollars, but also willing to talk with the local supervisors as if they were valued members of his team. Georgia-Pacific installed a special satellite system in all its facilities so they could receive quarterly broadcasts in which Correll talked about the company’s goals and strategy. Trimm and his colleagues gathered in a conference room in the warehouse in 2005 to watch one final broadcast from Correll. Their CEO informed them that they would soon have new owners.
After Koch Industries bought the warehouse, Charles Koch never visited—at least, not as far as Trimm was aware. Instead, Koch Industries began to flood the supervisors with online training seminars and worksheets. Trimm usually spent his day out on the warehouse floor, driving among the stacks in a small cart to make sure that everything was running smoothly. But now he found himself in his office for long periods of time, watching training videos that were uploaded from Wichita. This is when Trimm began to hear for the first time about Market-Based Management. He learned about the five dimensions and the Ten Guiding Principles. About roles and responsibilities and mental models. And this is how he came to know Charles Koch.
In one video, produced by Koch Industries, Charles Koch can be seen sitting in front of a black screen. He wasn’t speaking into the camera but was looking past it, sideways, as if at an interviewer. Charles Koch’s thick hair was neatly combed and parted, but it still possessed its unruly waves, once blond, now thoroughly white. Koch wore thin-framed glasses and a blue button-down shirt with no tie or jacket. He looked like a kindly professor, or the dean of an economics school, perhaps. In the video, he didn’t just talk about business goals and strategy. He talked about philosophy, the laws of the market, and the nature of humankind. He also talked about his father.
“My father considered work ethic—attitude toward work—as critically important for developing yourself, and, in fact, being healthy and happy through your life,” Koch said. “The values that were most important to him, I would say, were integrity, humility, work ethic, experimentation, entrepreneurship, thirst for knowledge.” Charles Koch continued: “I would say those are all key elements in Market-Based Management and all parts of our guiding principles.”
Koch’s voice was rich and deep but also understated, slowed by a midwestern drawl that never seemed to be in a rush to get to the next sentence. It was clear to Trimm that Charles Koch wasn’t just explaining some kind of training manual. This was an all-encompassing philosophy. Managers like Trimm, then, were either all in or all out.
Trimm learned that watching Koch’s online videos, and completing the related worksheets, was mandatory. If he didn’t keep up with his scheduled viewing, someone from the human resources department e-mailed him with a reminder to stay on track. About a year after Koch took over the warehouses, Trimm was informed that he would attend a three-day seminar to further his education in Market-Based Management. The event was held in a hotel near the Georgia-Pacific mill in Camas, Washington.
On the day the seminar began, Trimm sat down at a table with a large group of other supervisors, and even one or two unionized workers.II Almost from the beginning, Trimm realized that the three-day session was not going to be a relaxing corporate retreat. The seminar began with an address from an MBM trainer named Benjamin Pratt, who had flown in from Atlanta. Pratt presented himself as someone who carried secret knowledge, directly from inside Koch’s Tower in Kansas. The attendees were expected to pay close attention to his lessons.
“It was like watching a German war movie,” Trimm recalled. “He was very direct. He told us: ‘You will have homework. You will complete it before the next morning.’ ”
The crowd was shown more videos of Charles Koch, who talked about the guiding principles and his family’s history. They were given a copy of Charles Koch’s 2007 book, The Science of Success, which was something like an owner’s manual for anyone practicing MBM. They were given worksheets and pamphlets that broke out specific elements of the philosophy. They were told that it would be smart to keep a copy of Charles Koch’s book near their desk to consult periodically.
During a question-and-answer session, some of the employees expressed their concerns about recent management decisions. Over the previous years and months, Georgia-Pacific left many job positions open as people left the company, slowly trimming the workforce through attrition. This accelerated once Koch took over the company. “They went through like a hot knife through butter and started getting rid of people right and left,” Trimm said. The remaining managers had more work on their plates. Some people found that they were staying at the office ten, twelve, or even eighteen hours a day just to complete their assignments. Many of them had assumed that the workload was temporary. Surely, they thought, there was a hiring binge waiting just around the corner. But the new hiring never seemed to materialize. Some of them started to worry that it never would.
Toward the end of the three-day seminar, an employee raised his hand and asked Pratt: Would Koch be hiring to beef up the workforce? The employee complained that people were working punishingly long hours just to finish their basic job requirements.
Pratt replied that if they didn’t like the hours, they could look for employment elsewhere.
“That silenced the room,” Trimm recalled.
* * *
Increasing the bottom line became Trimm’s prime directive. Supervisors were told to maximize efficiency across the warehouses (or the “assets,” as they were called in the parlance of private equity). Several billion dollars in debt were hanging over Georgia-Pacific’s operations, and that debt could only be serviced by squeezing every possible new dollar in profits out of the mills and warehouses. It fell to supervisors like Trimm to figure out how to do it.
Trimm adapted to the Koch Industries ecosystem. He began to understand the meaning of his new “role and responsibility.” He was a property owner, and he needed to make his piece of land more profitable. He drew up a plan to rearrange parts of the product stacks in a way to speed up forklift routes from the dock to the loading bay. The plan was rejected, but he kept trying to act like an entrepreneur, coming up with money-saving techniques and plans. Trimm quickly discovered that the best way to cut costs was the simplest: he had to find ways to get more work out of each forklift driver while they were on the clock. In 2006, Trimm had a new tool that would let him do that in ways that were previously unthinkable.
Just when Koch bought Georgia-Pacific, the company was using a newly installed software system in its warehouses that was designed to boost the productivity of its workers. It was called the Labor Management System. The groundwork for the system had been laid before Koch arrived, with a series of odd time trials that Trimm and his associates ran on the workers. The strange tests had been conducted with little fanfare. They seemed like a curious experiment at the time, and there is little indication that anyone in the warehouse paid much attention to what was happening. Dennis Trimm joined a group of supervisors on the warehouse floor and assembled a team of lift drivers. They told the drivers to run a series of routes through the warehouse without picking up or dropping off any cargo. They were simply to drive from point A to point B—say, from the loading bay back to bay B-1. Then, the drivers were asked to go from point A to point B again, dozens of times. Trimm and the other managers recorded the time it took to drive between locations and entered the numbers into a database. The drivers went on circuitous routes all throughout the warehouse, tracing the time it took to go down different lanes and around different corners, creating a rich map of how long it took to drive just about anywhere in the facility.