This is a guest post by Chris Cardiff. In Chris's words he, "struggles to teach and apply MBM as a member of the Charles G. Koch Charitable Foundation MBM team."
Approximately 17 jillion people have seen the Keynes vs. Hayek "Fear the Boom and Bust" rap video now (if you have not, prepare yourself for a video that even non-economists enjoy). The Wall Street Journal continues to spread the meme with a recent profile of Professor Peter Boetkke titled "Spreading Hayek, Spurning Keynes." The article credits Boetkke with reviving the Austrian economics tradition over the last decade. It goes on to discuss how Austrian ideas of government non-intervention in the economy are gaining even more traction now as the tidal wave of Keynesian spending not only failed to spur the economy but contributed to making it worse.
MBM is signifcantly influenced by general economic thinking and Austrian economics. Opportunity cost, marginal analysis, creative destruction and more are rooted in economic thought. But what about central planning? Austrians argue against it for the economy but don't we need it in the firm?
In the "Use of Knowledge in Society," Hayek was careful to differentiate between "central planning" by the government, which he thought was harmful, and decentralized planning by individuals and organizations which led to beneficial competition. “This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.” Translating this into the firm, if all the planning is done by one authority at the top of an organization it will inherit some of the same problems of trying to centrally plan an economy.
Both society and organizations face a similar problem: how do you establish an environment that maximizes the entrepreneurial efforts of individuals? The entrepreneur and a dynamic economic environment are at the heart of Austrian economics. As supervisors and individuals, what do you do in your teams to foster Principled Entrepreneurship?
Thanks to Chris for his contribution. If you'd like to submit a guest post for potential publication on this blog, please email drafts to Ann at ann.zerkle (at) cgkfoundation.org.