what is mbm?
MBM refers to practices used by leaders to continuously discover and apply the beneficial aspects of the market process within an organization (using internal markets to guide transactions between business units, for example, or basing pay on value creation rather than tenure).

MBM is based on economic thinking, sound mental models, and an ability to harness the dispersed knowledge of employees, just as markets harness knowledge in society. To adopt a market-based approach to management is to cultivate and continuously improve those knowledge processes, behaviors, and “rules of the game” within an organization that promote principled entrepreneurship and the creation of superior economic value.

Market Based Management was developed by scholars and businesspeople working in and with Koch Industries, the largest privately-held company in the United States, with assets in oil refining, chemicals, trading, textiles (through its ownership of Invista), and paper products (as a result of its recent acquisition of Georgia-Pacific). Koch Industries Chairman and CEO Charles Koch credits the success of Koch Industries to the application of MBM.