Post on 01-Dec-2014
description
Kyle VannEnergy Commodity Consultant
The 5 Dimensions for a Robust Career and Life
based on The Science of Success
by Charles Koch
1
FREE SOCIETIES
CENTRALLY PLANNED SocietiesVS
• Dissatisfaction with the current state• A vision of a better state• A belief they can reach the better state
Human Action
von Mises
Schumpeter
Creative DestructionBusiness Mutation
Hayek
Experimental Discovery Process
Spontaneous Order
“Invisible Hand”
Smith
MBM® Dimensions
• VISION• VIRTUE & TALENTS• KNOWLEDGE PROCESSES• DECISION RIGHTS• INCENTIVES
VISION
Determining where and how the organization can create the greatest long-term value.
VISION
Based on Reality?Executable?Measurable?
VISIONthat isn’t executable
is a hallucination
VISION
EXPERIMENTAL DISCOVERY
VISION
CREATIVEDESTRUCTION
VISION
• Is it a shared vision?
• Do you know how you create value?
• Complacency / Arrogance
COMMON PROBLEMS
coordinates the actions of your business
VISION
Helping ensure that people with the
right values, skills and capabilities are
hired,retained and developed.
VIRTUES & TALENTS
10 Guiding Principles
Principled Entrepreneurship
Integrity
Compliance
Humility
RespectCustomer FocusValue Creation
Knowledge
Change
Fulfillment
Virtue Talent
VIRTUES & TALENTS
VIRTUE & TALENT Problems
• Not shared or enforced
• No development process
• Lack of multiple intelligences
• Creating, acquiring, sharing and applying relevant knowledge.
and •Measuring and tracking profitability.
KNOWLEDGE PROCESSES
• Defines how company creates value and key constraints
• Measures profitability wherever practical
• Financial statements based on reality
• Create a culture of challenge
KNOWLEDGE PROCESSES
Create Value
• Student of Business• Understand Best Practices• Challenge Self
KNOWLEDGE PROCESSES
KNOWLEDGE PROCESSPROBLEMS
• Lack of profit centers• Lack of benchmarking• Informational knowledge silos• Lack of free speech• Opportunity Costs• Marginal Analysis (individual P&L)
DECISION RIGHTS
Ensuring the right people are in the right roles with the right authority tomake decisions and holding them accountable.
DECISION RIGHTS
• Based on Private Property Rights• Tragedy of the Commons• Division of Labor• Principled Entrepreneurship
•Overlapping responsibilities
•Poorly defined roles, responsibilities and expectations•Conflict resolution lacking
•Authority not consistent with abilities
DECISION RIGHTSPROBLEMS
INCENTIVES
Rewarding people according to the value they create for the organization.
INCENTIVES
• Key role of leadership is to measure
• Must tie to results
• Financial, Cultural, and Compliance
• Must have meaningful dollars at risk
• Marginal Analysis
• Time Preference
INCENTIVE PROBLEMS
• Incentives not tied to reality• Teamwork Issues • Entitlement• Agency Problems• Perverse Incentives • Short Term vs Long Term
MBM Summary
• Proven way to bring the power of the free market into the firm.
• It must be applied consistently
• Perseverance