Market-Based Management Institute
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| Founded | 2005 |
|---|---|
| Founder | Charles G. Koch |
| Type | Professional Organization |
| Focus | Management strategy |
| Location | |
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Area served
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Worldwide |
| Method | Education, Industry benchmarking, Conferences and Seminars |
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Key people
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Tony Woodlief, Research Fellow |
| Website | http://www.mbminstitute.org |
Tony Woodlief, Research Fellow
Abel Winn, Director of Experimental Economics
Alastair Walling, Research Fellow
Ben Pratt, Senior Fellow
The Market-Based Management Institute (MBM) is a non-profit organization based in Wichita, Kansas that researches management strategies, and utilizes their expertise to educate students, educators, community leaders, non-profit organizations, and government leaders in the concepts and methods of management that their research has developed.
The MBM Institute was founded in 2005 by Charles G. Koch, Chairman and CEO of Koch Industries, and author of The Science of Success, in which he introduced his concept of "Market-Based Management." Koch developed his idea of MBM after some study into the nature of free market economies, likely influenced, in part, by his father's experiences.
His father (and co-founder of Koch Industries), Fred C. Koch, had spent time developing petroleum cracking units in the Soviet Union under Joseph Stalin's regime between 1929 and 1932, and came back with a deep disdain for the communist regime's totalitarianism. He described the nation as "a land of hunger, misery, and terror," and later, lamented the fact that many of the engineers he had worked with there had been purged by Stalin's regime, along with a great many other "intellectuals".
The Kochs saw the necessity of freedom to the success of societies, and translated that into their business practices—this is the basis of Market-Based Management; the implementation of which was a major factor in allowing Koch Industries to grow to become the second largest privately held company in the United States.
MBM challenges traditional American business practices, and encourages a relatively flat hierarchical structure, with the free flow of ideas between all levels of an organization. Employees are encouraged to approach their work from an entrepreneurial perspective, and be rewarded based on the value that they bring to the company, rather than only the amount of time that they spend at work. This encourages workers to use their own deductive powers to overcome obstacles and be creative in their decision-making, rather than waiting for orders from higher-ups. Problem solving, the theory contends, is best carried out by those closest to the problem - the workers. This, they say, is the best way to utilize the "collective brainpower" of the entire organization, rather than just that of the few top decision-makers. Research fellow Tony Woodlief explains:
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