If, for some reason, you have not yet read and re-read Charlie Koch’s book on “The Science of Success,” you should correct that deficiency … at a minimum, you should at least understand the guiding principles of Market Based Management … and many something about WHY it matters, ie understand the history behing this philosophy BEFORE you dismiss it. If you ever disrespect this philosophy in my presence and also indicate that you have not bothered to investigate it or understand why PHILOSOPHICALLY it is important, you will be very sorry. I am not referring to nitpicking criticisms in the implementation of philosophy or seeming hypocrisy of Koch Industries – I am referring to respect for the philosophy itself.

Fred C. Koch 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”. Driven by a personal appreciation that TENS of MILLIONS of the brightest, most capable, most talented people had died because of communism, the Kochs understood the necessity of freedom to the success of societies, and translated that necessity into their business practices — Market-Based Management is ALSO the working business philosophy for Salebarn.com.

The Salebarn.com implementation will be different than the Koch Industries approach … there’s no need to repeat what Koch is doing; they are doing a fine job and must execute within the parameters of their business, with their personnel and resources. The implementation will be different. The philosophy is essentially the same.

Integrity

Conduct all affairs with integrity, for which courage is the foundation.

Discipline equals freedom. Without daily building of courage by working out, doing HARD things that stretch us into a zone of discomfort [not absolute terror, but like weightlifting or doing the tiny little things that are tough to do, eg getting up at 4:39 AM, when we’d prefer to sleep] we cannot grow, get stronger and have the requisite confidence to ACT with integrity.

Compliance

Strive for 10,000% compliance with all laws and regulations, which requires 100% of employees fully complying 100% of the time. Stop, think and ask.

The core thing here is that nobody really likes restrictions and constraints and often the need for regulations is not thoroughly understood, but we operate in regulated environments where stakeholders MATTER … this is the ESSENTIAL thing that the naive people behind SilkRoad got very, very wrong and that is why, justifiably so, the founder is going to be in prison for a very long time. Really trying to get 100% of the people involved at least trying to be in 100% compliance is essential.

Value Creation

Create long-term value by the economic means for customers, the company and society. Apply MBM to achieve superior results by making better decisions, pursuing safety and environmental excellence, eliminating waste, optimizing and innovating.

Different markets in different realms routinely create arbitrage opportunities for those who are paying attention … attention is a scarce commodity; not everyone can pay attention to all of the different markets, but specialists can pay close attention in the markets they follow and make adjustments to exploit the presented arbitrage opportunities. By exploiting these arbitrage opportunities, value is create for OTHER participants – this means that different producers and consumers who can better allocate assets and take advantage of better opportunities to use better products.

Principled Entrepreneurship

Apply the judgment, responsibility, initiative, economic and critical thinking skills, and sense of urgency necessary to generate the greatest contribution, consistent with the company’s risk philosophy.

Salebarn provides infrastructure, but it will also provide the critically-important components to allow participants in markets to make assessments of the reputation, quality and other principles embodied in the offering of other participants. In other words, Salebarn facilitates entrepreneurship, but by providing data and information, it also provides the infrastructure that reinforces a highly principled conduct of business. It’s not Salebarn’s mission to judge this or to act as a policeman – the marketplaces are conducted on a caveat emptor basis, but Salebarn will work to ensure that buyers CAN do their homework to be as aware as they can be.

Customer Focus

Understand and develop relationships with customers to profitably anticipate and satisfy their needs.

A wide array of market alternatives fosters a maniacal focus on customers. Not only must producers think about what their consumers want and satifying that consumer need, they must ALSO work at anticipating their consumers’ future needs better than consumers can anticipate those needs themselves … this level of shrewdness is possibly only by being aware of technological alternatives – this is not only limited to variations in product attributes and features, but it also involves understanding of what would be necessary to engineer and develop a better product or to breed, cultivate and produce better crops and livestock.

Knowledge

Seek and use the best knowledge and proactively share your knowledge while embracing a challenge process. Develop measures that lead to profitable action.

Advancing a body of knowledge demands embracing a continual challenge process. There is no way to grow, to get smarter, to have a better stock of knowledge without the incessant battering of existing alternatives with BETTER alternatives … and better alternatives don’t get to succeed without knocking off the old alternative. Knowledge is impossible without the creative destruction of ideas and products that were at the top of the heap enough yesterday. Unfortunately, many in academic or educational circles have failed to understand the disastrous impact of participation ribbons for just trying or of safe spaces to protect people from having to adapt to better ideas. Excessive civility ultimately kills knowledge.

Change

Anticipate and embrace change. Envision what could be, challenge the status quo and drive creative destruction through experimental discovery.

Change is inevitable, but Salebarn will encourage greater, more rapid, more productive change. An essential tool in the Salebarn.com toolkit will be a disruptive engine, akin to a recommendation engine, but instead one that will suggest areas that should be investigated for background research for the purposes of making essential changes that help buyers avoid constraints or corner solutions where they are forced to rely on a product regardless of price. At its core, change is about finding better substitutions and applying a theory of constraints approach in order to optimize bottlenecks and overcome barriers.

Humility

Exemplify humility and intellectual honesty. Constantly seek to understand and constructively deal with reality to create value and achieve personal improvement. Hold yourself and others accountable.

Humility is the reason that Salebarn.com is committed to a jiu jitsu lifestyle. In life, we should never arrogantly imagine that we are not getting flanked or that we can possibly know everything – we should always proceed under the belief that somebody somewhere knows how to do it better. This is fundamentally why a jiu jitsu lifestyle is so important – because there’s ALWAYS someone with a better move, a move we haven’t seen or way of approaching the problem that transcends everything we can do on the mats.

Respect

Treat others with honesty, dignity, respect and sensitivity. Appreciate the value of diversity. Encourage and practice teamwork.

The raison d’etre for valuing respect as highly as we do is not just that respect is a core value or something key to our sense of morality, although that would be reason enough … the big reason for making respect one of the key philosophical pillars is that we really NEED a truly diverse environment that fosters teamwork, collaboration and different ways of thinking. We push hard, we play as a team, we encourage people to think competitively – but we refuse to think of competitors as EVIL. We operate with respect because we really are all in this together. If we cannot respect others, respect our opponents, respect our enemies, we die … without respect, we produce the precursors for Win-Lose games, which inevitably come Lose-Lose scenarios and in the largest of these Lose-Lose scenarios, we ALL die. When we don’t work at cultivating an environment of respect, we do our part to doom our species.

Fulfillment

Find fulfillment and meaning in your work by fully developing your capabilities to produce results that create the greatest value.

Satisfying customers is not just about saying the right things and promising something. It is not just about actually producing something and getting it ready for shipment. It is not just about shipping something on time to a destination that is desired by the customer. It’s not just about the product working when it gets out of the box and delivering the results that were expected. It’s not just about ensuring that the product continued working as good as or better than advertised throughout its useful life. It’s not just about ensuring that all other stakeholders and regulatory agencies were satisfied in the process. Fulfillment is ALSO about ensuring that all customers and stakeholders have a chance to express their misgivings or desires for improvement or air their grievances about any slights or mistreatments. Fulfillment is a 360-degree listening process where everyone with skin in the game gets to participate and ensure that satisfaction is FULLY fulfilled.