Market-Based Management®

Market-Based Management®

What is Market-Based Management?

Market-Based Management (MBM®) enables organizations to succeed in the long term by applying the principles that allow free societies to prosper. Just as upholding values such as free speech, property rights, and progress is important to a healthy, growing society, it is also pivotal in fostering a healthy, growing organization.

By applying the components of a free-market society to Koch Industries through this management philosophy, Charles G. Koch was able to build a successful, multinational company. Over the last 40 years, Koch Industries has grown to have a presence in about 60 countries and currently employs about 100,000 people worldwide. MBM’s proven success in the business world can provide great value to non-profit organizations because, at its essence, it focuses on creating real, sustainable value for society.

There are two main components to MBM: the eight Guiding Principles and the five dimensions.

What are the MBM Guiding Principles?

The eight Guiding Principles are key to the internal culture of an organization. They are integrity, stewardship and compliance, Principled Entrepreneurship™, transformation, knowledge, humility, respect, and self-actualization. When put into action, these principles combine to create a dynamic and positive culture.

An organization’s culture is the foundation of success, and a healthy, thriving workplace is a prerequisite to being able to solve problems using the five dimensions of MBM.

What are the Five MBM Dimensions?

Viewing organizations through the five different dimensions allows problems to be more easily diagnosed and remedied. The dimensions are vision, virtue and talents, knowledge processes, decision rights, and incentives. Each of these dimensions provides a lens through which to understand and overcome complex obstacles that organizations face.

List of MBM Guiding Principles

  1. Integrity: Have the courage to always act with integrity and in harmony with our vision.
  2. Stewardship and Compliance: Act with proper regard for the rights of others. Honor donor intent in a manner that advances our vision. Comply with all laws and regulations. Stop, think, and ask.
  3. Principled Entrepreneurship™: Practice a philosophy of mutual benefit. Demonstrate to people of all backgrounds and perspectives that this philosophy will improve people’s lives. Attract, motivate, and empower as many people as possible to become social-change entrepreneurs dedicated to advancing a society of mutual benefit.
  4. Transformation: Transform yourself, your organization, and our efforts. Seek, develop, and utilize the vision, strategies, and methods that will enable us to demonstrate a better way to help people improve their lives and encourage rapid adoption across society.
  5. Knowledge: Acquire the best knowledge from any and all sources that will enable you to improve your performance. Share your knowledge proactively. Provide and solicit challenge consistently and respectfully.
  6. Humility: Be humble, intellectually honest, and deal with reality constructively. Develop an accurate sense of self-worth based on your strengths, limitations, and contributions. Hold yourself and others accountable to these standards.
  7. Respect: Treat everyone with honesty, dignity, respect, and sensitivity. Embrace different perspectives, experiences, aptitudes, knowledge, and skills in order to leverage the power of diversity.
  8. Self-Actualization: Be a lifelong learner, develop your aptitudes into skills that create value and help you realize your potential which is essential for fulfillment. As you become increasingly self-actualized, you will better deal with reality, face the unknown, creatively solve problems, and help others succeed.

MBM® and Market-Based Management® are registered trademarks of Koch Industries, Inc. in the United States and Principled Entrepreneurship™ is a trademark of Koch Industries, Inc. © 2018 Koch Industries, Inc. All rights reserved.

Charles Koch speaking in a library

Charles G. Koch

Charles G. Koch is chairman of the board and CEO of Koch Industries Inc., a position he has held since 1967. He is renowned for growing Koch Industries from a company worth $21 million in the early 1960s to one with a current estimated value of $100 billion.

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overhead view of a neighborhood

Framework for a Free and Open Society™

What drives long-term human flourishing? What characteristics of a society give individuals—especially those least fortunate among us—the best opportunities to improve their lives? At the Charles Koch Foundation, these questions motivate our mission.

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