Market-Based Management presentation copyright 1997, 1998 by Barry and Deborah Brownstein

Tom Peters n "My introduction to Hayek made me vow that I'd never accede to...the dogmatic strategic planners, the hierarchists, the central controllers who try to convince that...if we can just can the plan right, goodness will surely follow."

More Tom Peters n "I reviewed my scribblings on Hayek...and ripped up my notes on Marketing Strategy with anguish, anger even disgust. Why? Nowhere in those tidy pages (presented as a primer for business students) was there even a hint of the richness, messiness and uncertainty of markets...To the contrary, the possibility of conquering markets with a sound plan and a little more market research could be found on any page."

Innovation is Increasingly Important “Wealth in the new regime flows directly from innovation, not optimization; that is, wealth is not gained by perfecting the known, but by imperfectly seizing the unknown.”-Kevin Kelly “Selection processes can only work on available diversity.”- Hannan and Freeman “Unless you do something, you don’t know whether it will work.”- Tom Peters

A Reminder From Hayek n "To the naive mind that conceives of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order and adaptation to the unknown can be achieved more effectively by decentralizing decisions."

Dee Hock On Visa n "It was beyond the power of reason to design an organization to deal with such complexity and beyond the reach of imagination to perceive all the conditions it would encounter."

Dee Hock On Implementation n People ask: "Where's the plan? How do we implement it?" But that's the wrong question because an organization isn't a machine that can be built according to a blueprint. n "They (organizations) can be no more or less than the sum of the beliefs of the people drawn to them; of their character, judgment, acts and efforts."

Dee Hock (Cont..) n "An organization's success has more to do with clarity of shared purpose, common principles and strength of belief in them than to assets, expertise, operating ability or management competence, important as they may be."

n "The regimentation of work has created a political majority whose attitudes about themselves and their world are heavily conditioned by a lifelong habit of subordination...There is little in their daily experience which would cause them to conclude that a society is kept alive by a continuous process of adaptation, led by independent enterprising people. They are bound to see society as something static- something to be administered. Employed people can scarcely be expected to revere qualities they have been carefully instructed to repress. They tend to become what the work requires: politicized, unimaginative, unenterprising, petty, security-obsessed and passive."-Richard Cornuelle

Command and Control Management n management thinks, employees do n employees are costs to be minimized n conflict of interest exists between management and employees n management's responsibility is to direct and control employees; creativity and entrepreneurship discouraged n individual success dependent on "pleasing" supervisors politically n orders are communicated downward through the hierarchy

Command and Control (Cont.) n attitude of compliance often without commitment n accumulation of power by hoarding key information n overhead often grows excessively n communication takes place through proper channels n compensation is based upon title etc. rather than value added

Market-Based Management: What It is Not n business firms exist for specific purposes unlike the spontaneous order of the market, therefore market based management is not merely turning everyone loose n not merely being responsive to the market n not industrial democracy or participative management n not merely the creation of competitive bidding internally- markets are a mix of competition and cooperation

Six Key Systems in Market Economies and Organizations n Division of Labor n Property Rights n Rules of Just Conduct n Price System n Free Flow of Ideas n Market Incentives n Mission System n Roles and Responsib n Values and Culture n Internal markets n Open Communication n Compensation and motivation