Market-Based Management®

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 10 Guiding Principles and the five dimensions. The 10 Guiding Principles are key to the internal culture of an organization. They are integrity, compliance, value creation, Principled Entrepreneurship™, customer focus, knowledge, change, humility, respect, and fulfillment. 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.

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.

 

GUIDING PRINCIPLES

Integrity

Conduct all affairs with integrity, for which courage is the foundation. Honor donor intent.

Compliance

Strive for 10,000% compliance with all laws and regulations, which requires 100% of employees fully complying 100% of the time. Stop, think, and ask.

Value Creation

Contribute to societal well-being by advancing the ideas, values, policies, and practices of free societies. Understand, develop, and apply Market-Based Management® to achieve superior results by making better decisions, eliminating waste, optimizing, and innovating.

Principled Entrepreneurship™

Apply the judgment, responsibility, initiative, economic and critical thinking skills, and sense of urgency necessary to generate the greatest contribution, consistent with the organization’s risk philosophy.

Customer Focus

Discover, collaborate, and partner with those who can most effectively advance free societies.

Knowledge

Seek and use the best knowledge and proactively share your knowledge while embracing a challenge process. Develop measures that lead to more effective action.

Change

Anticipate and embrace change. Envision what could be, challenge the status quo, and drive creative destruction through experimental discovery.

Humility

Exemplify humility and intellectual honesty. Constantly seek to understand and constructively deal with reality to create value and achieve personal improvement. Hold yourself and others accountable.

Respect

Treat others with honesty, dignity, respect, and sensitivity. Appreciate the value of diversity, including, but not limited to, diversity in experiences, perspectives, knowledge, and ideas. Encourage and practice teamwork.

Fulfillment

Find fulfillment and meaning in your work by fully developing your capabilities to produce results that create the greatest value.

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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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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