Market-Based Management®

Thinking about the Guiding Principles

Not too long ago, I was on the phone with a member of the MBM Team, and he said to me, "Think about what is special about the first word of each Guiding Principle." I'm a touch embarrassed to say that it took me awhile to think of them (and I quickly ran to my desk and got my Guiding Principles card to study them).

So, stealing a little trick from Andy G, I've put the Guiding Principles below and made the font of the first word in each white. Take a guess at what you think it is, then highlight to see what it is. After thinking through it a little bit, I'd love to see if you notice something special about the first words of each principle. I think I know what this colleague was getting at, but I've not looped back around with him to pick his brain. Leave a comment to let me know what you think!

Integrity
Conduct all affairs lawfully and with integrity.

Compliance
Strive for 10,000 percent compliance, with 100 percent of employees fully complying 100 percent of the time. Ensure excellence in environmental, safety, and all other areas of compliance. Stop, think and ask.

Value Creation
Createreal, long-term value by the economic means. Understand, develop, and apply MBM to achieve superior results. Eliminate waste.

Principled Entrepreneurship™
Demonstrate the sense of urgency, discipline, accountability, judgment, initiative, economic and critical thinking skills, and the risk-taking mentality necessary to generate the greatest contribution to the company and
society.

Customer Focus
Understand and develop relationships with customers to profitably anticipate and satisfy their needs.

Knowledge
Seekand use the best knowledge and proactively share your knowledge while embracing a challenge process. Measure profitability wherever practical.

Change
Embrace change. Envision what could be, challenge the status quo, and drive creative destruction.

Humility
Practice humility and intellectual honesty. Constantly seek to understand and constructively deal with reality to create real value and achieve personal improvement.

Respect
Treat others with dignity, respect, honesty, and sensitivity. Appreciate the value of diversity. Encourage and practice teamwork.

Fulfillment
Produce results that create value to realize your full potential and find fulfillment in your work.

Friday Links

The Tax Foundation's blog features a post by KAP alum Joe Henchman. His article shows an interesting Bootleggers and Baptists situation around the new tanning salon tax.

Taking Hayek Seriously has some links to videos of F. A. Hayek being interviewed by Armen Alchian. Two of my favorite economists in one room!

Here's a report that kid's creativity is falling, but I don't know if I buy it.

Here's a neat chart that explains some of the Online Dating Lies." I'm a sucker for charts like this.

Lifehacker brings us a cool idea: let people "test drive" expensive electronics on their computers. I wonder if it will work.

If you have some cool links you want to share, please leave them in the comments.

I Order You To Creatively Solve This Problem, Soldier!

You may think of the armed services like I do--the quintessential model of top-down order. 

This isn't the case, however, in the Marines.  Sure, there are orders, but the Marines have optimized their management structure for the chaos of war, where smart individuals need to be able to act on their feet in the absence of commands.

If you haven't yet, definitely check out Corps Business by David Freedman. 

Reading this book, I was astonished at how similar the Marine's view of management parallels MBM.  Freedman identifies 30 principles that the Marines spend every minute of every day drilling into their members.  Principles such as "build a capability-based organizational mission," "manage by end-state," "demand to be questioned," and "experiment obsessively" scream MBM to me.  Vision, culture, decision rights, challenge, and even the Kitchen Sink Mental Model are all represented in this quick read. 

If you've read it before, please share your favorite ideas from the book, or where it diverges from MBM--I'd love to hear your comments!

The Old Institutions Are Broken

The video below is interesting. I don't feel at all qualified to comment on this, but I'm hoping some of you brave readers will. From Stanford's ECorner, I give you "The Old Institutions are Broken" (full lecture here).

Rule-o-Law

The following photograph from the DC area says a lot about the concept of the Rule of Law.  As I understand it, RoL is the standard by which we evaluate laws in a society.  Usually, those standards are that all laws should be:

-stable and predictable
-equally applicable to all, even the rulers
-abstract and general; not created for specific times, places, or situations

I shot this photo for "equally applicable to all," but I need your help finding or creating the rest....  Any visual representations of the "stable and predictable" or "abstract and general" standards? Also, did I miss any criteria?

This sticker is on the parking meters in Arlington, Virginia. I think it gets at the concept of equality of treatment (unlike in New York City...).

 

Reader Question

KAP Alum, Ben Stafford, sent in this email:

I recently read an article by Collins called "Building your company's vision" and attached is a cheat sheet I wrote based on the essay.  My question after reading this is where do Koch's 10 guiding principles fit in? 

It would seem they are the "Core Values" he talks about it.  But Collins stresses that there should only be only 3-4 core values and companies that had more than five never made the good to great cut, not because that was a qualifier but just by correlation.  So according to him the meaning we can gather from that is we should just pick a few that are core and focus on those.

How does that work at KII / CGKCF?  Do  people really truly focus on all ten all the time or does there naturally end up being 3 or 4 that get more attention?  Does relentlessly trying to balance all 10 perhaps hamper value creation? 

I can only speak for my personal experience, which I've found to be true with both the Guiding Principles and learning the mental models. Some aspects of MBM come more naturally for me than others, and I personally can only give focused attention to only a couple of things at a time to get sustained change.  In theory, once these few things sink in, I can focus my attention on the next step. That's just from one individual's perspective.

Also, I have read articles that claim Koch "over-trains" its people and spends too much time focusing on these "soft" things. So, maybe since Collins is left with just public companies, he isn't picking up on something in which private companies have an advantage: long-term thinking. My view is that with the long-run view, 10 Principles can be balanced (even if it comes in fits and waves) because people have time to learn, grow and internalize over the long haul.

What do you readers think? How would you answer Ben's email?

Friday Links

A former Associate stumbled upon a cool website where you can post ideas, and then invite people to comment and vote on them. It's called uservoice. I've not used it, but it looks neat.

Tyler Cowen at Marginal Revolution has a quick post on How do Higher-IQ People Choose?

Bill Easterly has a great post (with a Hitchhiker's Guide to the Galaxy inspired title), which explains the difference between solutions and problem solving systems.

And now for some self-indulgent links to some charts. This oneshows the DAC airport path restrictions... I've always wondered why it's such a pain to find good flights to Wichita from there. This one is about heat... It's HOT in DC right now.

I didn't do a good job of keeping track of the cool links I saw this week, so this selection probably isn't as fun as normal. Hopefully you can help me out in the comments with some good stuff.

Riddle Me This

And now, for a special Thursday post!

One of my favorite classes in graduate school was the Property Rights course. The professor was engaging and had a habit of asking questions that in answering them, caused us to learn. So, here I am going to rip off a question from him to see what creative answers I can get from you.

Say I allow you to borrow a tennis racket from me. I value the tennis racket at $20. During the tennis match, you get so angry that you smash the tennis racket to pieces. In this hypothetical situation, I too have a temper, and regularly smash tennis rackets. Also, we are good friends, and I'd happily give you $20 if you needed it any time. Given all this information, why am I angry when you smash up the racket?

Think about it for a minute, and then see my professor's answer after the jump. Also, leave a response in the comment as if you were answering the professor.

The Road to Serfdom

F. A. Hayek's Road to Serfdom has been getting some serious attention in the media lately. (Here's the cartoon version if you just want a quick overview.) It outlines what I've come to call a "theory of change" for society based on Hayek's experience.

Recently, I led a reading discussion with the Associates about The Road to Serfdom (and a couple of other works), and I asked them to think about what lessons managers could learn from Hayek's work. Using the panels of the cartoon for reference, here are a few bullet points of what they came up with:

• Small steps can result in large changes over time. Pay attention to the little changes in organizational culture.
• In panels 1 and 2, a war results in centralization of power that stays even after the war. For an organization, a crisis can result in any number of quick changes that may or may not be optimal in the long run.
• Panels 3-7 could have a decision rights lesson. Authority through consensus doesn't always work in an organization.
• Panels 10-13 led us to a conversation about cults of personality and the implications a strong single decision maker.

While we didn't talk explicitly about panels 14-18, flipping through them this time made me think about how miserable I would be in a place that planned every second of my working day. An appropriate translation into the organization might be that entrepreneurial people go elsewhere as their days turn mindless and boring.

If you've not read The Road to Serfdom, I highly recommend it. Do you think there are other lessons we can draw from this? Do you agree with Hayek's theory of change presented in The Road to Serfdom? Do you think I'm trying too hard to draw lessons into the organization from it?

Nesting

So, let's say you are in charge of a project.  You started it last year, but now you have a direct report who you think is ready to take things over.  She's been working with you on it for a long time, and you feel that she's ready to "own" this thing.

After a month, you see she's about to make a mistake; one that--in your opinion--might cost some money and potentially kill the project.

What do you do?

Do you let her possibly fail, or protect her since you're invested in her personal development?  Do you assume she has better knowledge but challenge strongly, or does your opinion trump hers?  Do you step in; and if so, did you really delegate responsibility in the first place?

To complicate things, I think decision rights are always "nested," in that the supervisor is ultimately responsible for the actions and projects of her direct report.  

I don't know the answer, but I am interested in hearing your thoughts.  What do you think?