What is Market-Based Management?

Market-Based Management (MBM®) is a management philosophy that empowers individuals and organizations to succeed long-term by applying the principles of mutual benefit.  

History demonstrates that peaceful and prosperous societies tend to practice certain common principles, such as guaranteeing free speech, protecting private property rights, and ensuring that the inherent dignity and rights of all are equally protected. We’ve found that these principles can be analogously applied within organizations to help employees fulfill their potential, and in doing so help the organization grow and succeed as it creates value for others. 

By applying these principles of human progress to Koch Industries through this management philosophy, Charles G. Koch was able to transform what was a small engineering firm into the country’s second-largest private company. Since the 1960s, Koch Industries has grown to have a presence in over 70 countries and currently employs about 130,000 people worldwide (about 65,000 in the U.S.). But MBM isn’t a business philosophy. It’s a management philosophy. Because it’s based in principles, its proven success is seen not only across industries and countries at Koch Industries, but also among many of the organizations within the Stand Together philanthropic community, including think tanks, grassroots organizations, impact funds, and community-based nonprofits.  

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

What are the Five Dimensions of MBM? 

Market-Based Management is comprised of dozens of principles and concepts. Individually, each are helpful, but when applied holistically the sum is greater than their parts.

To help more easily consider and apply these concepts, Charles developed a framework based on five dimensions: 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.

What are the MBM Guiding Principles? 

The eight Guiding Principles define who we are as an organization, and how we treat one another and our partners. 

When put into action, these principles combine to create a dynamic and positive culture, one in which each employee can progress along their unique self-actualization journey while contributing to others. 

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.