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