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