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.