The jury is arguably the cornerstone of our legal system, and few rights are more ancient or precious than the right to have one’s guilt or innocence decided by one’s peers. A soon to be released study of 290 non-capital criminal cases claims that U.S. juries get the verdict wrong in one out of six cases. However, buried in this news article on the supposedly shocking study is the revelation that judges are even more fallible than juries. According to the study, juries mistakenly convicted innocent people 25 percent of the time, while judges did so 37 percent of the time. The difference is not so quite extreme when we consider acquitting the guilty. Juries acquitted the guilty at a rate of only 10 percent, compared to 13 percent for judges.*

Studies like this always strike me as a little suspect, and are inevitably ripped to pieces after publication; but let’s assume its conclusions are true. Ok, so juries are not perfect, but they have to go on what they are told, so we have no idea if these mistaken convictions and acquittals may have been due to prosecutorial misconduct, withheld evidence, or incompetent defense counsel. However, if you consider that judges are well-educated, experienced professionals, see additional evidence that juries do not, and manage to make more mistakes, then the jury still appears a preferable proposition. Of course, mistakes will be made, but that is why we have appeals, pardons, DNA testing, and Bill Kurtis (we found out about all these mistakes somehow).

So why do we entrust juries with such important decisions, when most countries place their faith in judges? My guess is that long ago our ancestors figured out that a jury of peers made an excellent platform for challenge processes. A challenge process is an MBM model by which employees are free to challenge the status quo, ideas, superiors, subordinates, and peers. While it is important to remain respectful, challenges are crucial to discovery and improvement. Effective challenge allows the firm to make more profitable decisions and avoid costly mistakes. The jury makes for a good challenge environment because it is a black box where words and ideas are expected to fly freely among peers and prying eyes are not allowed. Sure, there are likely to be instances of groupthink (where a group makes a hasty consensus decision without careful—or even any—analysis), but the fact that juries are drawn from all walks of life and ideological backgrounds, combined with a lack of strong leadership (the foreman is pretty much just a spokesman) makes groupthink in a jury much less likely than ,say in any President’s cabinet. Compare this to judges who, despite their greater experience and knowledge, are unlikely to challenge themselves in their decisions.

Employees are often both reluctant to give and receive challenge, but this is usually because they work in an environment that is not conducive to the challenge process. So if you are reluctant to challenge or feel your work environment is not open to challenge just think that some of the most important decisions in our society—whether to deprive someone of life or liberty—are only made after a rigorous challenge process, which is why it is so important for employees to safeguard their livelihoods, and those of their coworkers, with adequate challenge.

*The article first says that judges were only wrong 12 percent of the time, while juries were wrong 17 percent of the time. However, data are then presented showing that judges convict the innocent and release the guilty at higher rates than juries. Without the study I cannot explain this contradiction, but since, according to the article, juries appear to have a higher accuracy rate at convicting the guilty and sparing the innocent than judges; then I can only assume a jury trial is arguably preferable to a bench trial.

Ah the kilt, the very symbol of every Scotsman’s freedom and virility. Unfortunately, under a new law proposed in Scotland, those of us partial to these manly skirts will have to obtain a license for sporrans, which are the fuzzy leather and fur pouches worn at the front of the kilt (where the frugal Scot hides his hard-earned money). The law is intended to protect endangered species such as otters and badgers, but I cannot help but feel that there is something very wrong and patently un-Scottish about having to have a license for a sporran. Perhaps if William Wallace had been picked up for carrying an unlicensed sporran, then maybe that whole “Scottish Wars of Independence” thing would have never happened.

While it is my hope that my countrymen may rediscover their freedom-loving ways and do something about this—rather than “standin aboot havering”—my feelings about the sporran license must be tempered by the MBM principle of compliance. Governments make plenty of rules and regulations that the people and businesses don’t like—many of which seem too superfluous, trivial, and/or pointless to bother adhering to. However, while grumbling about the rules is certainly everyone’s right and seemingly favourite pastime, failing to comply with laws and regulations is simply not an option. Ten thousand percent compliance (100 percent compliance, 100 percent of the time) is not intended as a gimmick or to fit handily on a bumper sticker (although it does); it is an integral part of MBM, because non-compliance can cost the firm its life—no matter how well it excels in creating value for its customers and society. So while I say fie on the sporran license, if I ever get transferred to the Aberdeen office, then it looks as if I will be getting one.

P.S. The maximum penalty for possession of an unlicensed sporran is a $10,000 fine and six months in jail.

The second annual MBM Summit was held this week in Atlanta, Georgia, and it was great to finally meet many of the folks who teach MBM around the world—especially those who do so in German, French, Chinese, Spanish, and Portuguese.

Although we spent a lot of time talking about how hard it was to build an MBM culture, I couldn’t stop thinking about the first MBM class I ever attended as a sixteen year-old lab technician in Medford, Oklahoma (summer of 1994). Although by that time MBM had been simmering in Mr. Koch’s head for decades, the actual teaching of MBM to employees was pretty new. Looking back, those doing the teaching did a great job and really brought the lumber; it’s just that the lesson was heavy on straight shots of Hayek, von Mises, Polanyi, and Schumpeter. As these great thinkers often puzzle professors and graduate students, you can imagine the impact on a sixteen year-old kid and his colleagues involved in the storage and movement of gas liquids. Needless to say, the result was an excellent academic lesson that few people could understand, let alone conjure up ways to apply in their day to day jobs.

Now fast forward thirteen years to an MBM Academy I sat in on two weeks ago. Although the philosophy was the same—as was the invocation of the aforementioned great thinkers—the presentation was smooth, easy to understand, and peppered with teaching activities and examples of real life applications which did much to personalize the philosophy. Different employees from many different companies were nodding their heads in agreement and understanding, while the token few surly types who were obviously not happy to be there gradually got in to it and soon accepted the fact that this was worth their time.

I am in no way, shape, or form trying to disparage those who rolled out the first MBM classes for employees; they did a fantastic job and provided an ideal starting point. I just wanted to point out that as difficult as it is to build an MBM culture, those teaching MBM have done a tremendous job of refining and developing the courses over time. MBM Academy is light years ahead of where it was, and this is due to the people involved at every stage of the process. As employees leave academy today, they may not remember the philosophers’ names or who said exactly what, but they retain an understanding of philosophical principles that many academics take years to learn and, in many cases, often fail to completely wrap their heads around.

Understanding and applying MBM is not easy, but thanks to some of the tools painstakingly developed, I’d say the chances of eventually realizing a vibrant MBM culture are pretty good.

The concepts embodied in Market-Based Management are closely related to questions of entrepreneurship (How do you get more entrepreneurial behavior in a business? How do you identify new employees who will thrive in an entrepreneurial environment?). Entrepreneurship is certainly a hot topic not just in the business world, but in universities as well, as evidenced by the growing numbers of students with degrees in entrepreneurship, as well as the plethora of university centers devoted to the study of entrepreneurs.

This creates a language challenge when we talk to students and others about promoting Principled Entrepreneurship, however, because academics (and therefore their students) by and large define the entrepreneur as someone who owns a business. While there are historical reasons for this, it seems today that the practice persists not because it creates a useful and meaningful distinction between economic actors, but because it’s easy. And that’s not very scholarly.

Think about it — if you’re charged with studying entrepreneurial behavior, you can work to articulate, perhaps along the lines of a Joseph Schumpeter, the qualities of those who engineer creative destruction in a market economy. Or you can follow a Frank Knight, and try to capture how they grapple with risk and uncertainty. Either way, you’ve got some real roll-up-your-shirtsleeves work in front of you, first trying to define what entrepreneurship is, and how it differs from everyday business practice, and then searching for people who exhibit these qualities, and then figuring out a way to study them in order to draw meaningful conclusions.

Or you could just count everybody who owns his own dry cleaning or plumbing or mowing business as an entrepreneur, and ignore the Art Fry’s of the world.

Who is Art Fry, you ask? He’s the guy at 3M who saw potential in a colleague’s disappointing glue mixture, pursued his vision, and convinced teammates and upper management to go along, all of which eventually led to the Post-It Note. By conventional academic standards, Fry and his colleagues aren’t entrepreneurs. The guy with his own hotdog stand, however, who serves you the same dog and bag of chips that he’s been serving customers for the past twenty years, well, to most business scholars, he’s the entrepreneur.

Do you see the problem? Starting a small business often takes guts and vision, about this there is no question. But some small businesses embody narrow-minded thinking, zero innovation, and poor customer service. Why are we so excited when we find a good plumber, after all? Because so many others are awful. Some large companies, on the other hand, have numerous employees who identify opportunities to create exceptional value, develop the vision that sells their colleagues on the opportunity, work up the strategy to capture the opportunity, and then see that it’s implemented, making their company money while improving the lives of their customers. But for some reason, we persist in calling the owner of a mediocre plumbing business an entrepreneur by definition, and ignoring  real entrepreneurship elsewhere because it happens to come from people who don’t own their businesses.

Entrepreneurship is a critical behavior for the advancement of health, wealth, and prosperity, and we can find it in large companies, small businesses, and yes, even non-profits — if we are willing to define it properly. So I’ll propose a definition, for those of us interested in the practical understanding of what entrepreneurs do, and where they can be found. It’s probably not 100 percent right, but I’ll suggest that it’s closer to good than the limited definition that dominates universities.

Entrepreneur: Someone who sees an unmet need, often before customers themselves see it. The entrepreneur discovers a way to profitably meet that need, and organizes the resources and people to deliver the resulting value to customers.

Coming back to the idea of Principled Entrepreneurship, then, we mean by that an entrepreneur who maximizes long-term profitability by creating real value in society while faithfully acting lawfully and with integrity. This behavior can happen in a small business or a big business, and the person demonstrating it can be an employee or an owner. Sound reasonable? Now comes the hard part, which is cultivating an organizational environment that fosters that kind of behavior. Which is where MBM comes in.

In his very popular 1888 book, Looking Backward, Edward Bellamy tells the tale of a young 19^th century American who awakes in the year 2000 to find his nation transformed into a socialist utopia. The book caused a sensation when published and even led to the establishment of over 160 “Bellamy clubs” dedicated to realizing the utopian future described in the book.

This article from the BBC tells the tale of a man who has had a real life “looking backward” experience, although quite different from that imagined by Mr. Bellamy. Polish railroad worker Jan Grzebski lapsed into a coma after being hit by a train in 1988. His last memories are of a communist country where the only things in the shops were tea and vinegar, where meat was scarce and long lines formed for rationed gasoline. Mr. Grzebski was delighted to awake this year in a free market economy. “[T]here are so many goods in the shops it makes my head spin,” he told Polish television. He is particularly amazed by the fact that everyone has mobile phones and does nothing but complain. “I’ve got nothing to complain about,” says Mr. Grzebski 65. Mr. Grzebski is more than just a great story, he is a living reminder of how far we have come and a window into a nearly forgotten world without markets.