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 are important to a healthy, growing society, they are 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: 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.
By viewing organizations through five different dimensions, problems are more easily diagnosed and remedied. They are: vision, virtue and talents, knowledge processes, decision rights, and incentives. These dimensions each provide a lens through which to understand and solve complex obstacles that organizations face.
Conduct all affairs with integrity, for which courage is the foundation. Honor donor intent.
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.
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.
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.
Discover, collaborate, and partner with those who can most effectively advance free societies.
Seek and use the best knowledge and proactively share your knowledge while embracing a challenge process. Develop measures that lead to more effective action.
Anticipate and embrace change. Envision what could be, challenge the status quo, and drive creative destruction through experimental discovery.
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.
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.
Find fulfillment and meaning in your work by fully developing your capabilities to produce results that create the greatest value.