Developed by Koch Industries’ CEO Charles Koch, Market-Based Management® (MBM®) prepares individuals to deal successfully with the challenges of growth and change while fostering a healthy, growing organisation. By applying the same shared values that unleash prosperity in free societies – such as value creation, integrity, responsibility, free speech and tolerance – we encourage each other to take initiative and to challenge.

The theory of MBM is rooted in the Science of Human Action and is defined by five dimensions:

  • Vision: Determining where and how the organisation can create the greatest long-term value
  • Virtue and Talents: Helping ensure that people with the right values, skills and capabilities are hired, retained and developed
  • Knowledge Processes: Creating, acquiring, sharing and applying relevant knowledge, and measuring and tracking profitability
  • Decision Rights: Ensuring the right people are in the right roles with the right authority to make decisions and holding them accountable
  • Incentives: Rewarding people according to the value they create for the organisation

When these dimensions are applied in an integrated, mutually reinforcing manner, they create continuous transformation and positive growth.

The MBM® philosophy enables employees to constantly search for opportunities to improve and grow. Rooted in guiding principles such as Integrity, Humility and Respect, the MBM® framework attempts to bring some of the workings of the free market inside the company—building on the belief that freedom is a powerful engine for generating well-being, discovery and growth.

In his latest book, “Good Profit,” Charles Koch shows managers, entrepreneurs, leaders, students, innovators, and employees of all kinds — and in any field — how to apply the principles of his revolutionary Market-Based Management® system to generate good profit in their organisations, companies and lives. To learn more about this book, please visit www.goodprofitbook.com, and to learn more about MBM® philosophy, click here.

Guiding Principles

1. INTEGRITYConduct all affairs with integrity, for which courage is the foundation.
2. COMPLIANCEStrive for 10,000% compliance with all laws and regulations, which requires 100% of employees fully complying 100% of the time. Stop, think and ask.
3. VALUE CREATIONCreate long-term value by the economic means for customers, the company and society. Apply MBM to achieve superior results by making better decisions, pursuing safety and environmental excellence, eliminating waste, optimizing and innovating.
4. 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 company's risk philosophy.
5. CUSTOMER FOCUSUnderstand and develop relationships with customers to profitably anticipate and satisfy their needs.
6. KNOWLEDGESeek and use the best knowledge and proactively share your knowledge while embracing a challenge process. Develop measures that lead to profitable action.
7. CHANGEAnticipate and embrace change. Envision what could be, challenge the status quo and drive creative destruction through experimental discovery.
8. HUMILITYExemplify 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.
9. RESPECTTreat others with honesty, dignity, respect and sensitivity. Appreciate the value of diversity. Encourage and practice teamwork.
10. FULFILLMENTFind fulfillment and meaning in your work by fully developing your capabilities to produce results that create the greatest value.

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