So you’re new to MBM… What now?

Lately I’ve been in a lot of meetings with people who are new to MBM. When I say new to MBM, I mean people who have worked in an MBM organization from a couple of days to up a year or so. I draw the line around a year because for most people after a year they’ve been exposed to the major MBM performance management tools (RR&Es, performance reviews, compensation reviews, coaching, etc). There’s something about seeing a full cycle of this that helps people put it all together.

The most frequently asked question from folks who are new to MBM has got to be this: “What can I do to learn more about MBM?” See some of my thoughts below (please note this is not meant to be a “must do” list, but simply some ideas). I know many of our readers have some thoughts on this, so please add to my list in the comments.

  • Study some of the basics. Read the Guiding Principles with a close eye. Use the Science of Success as a reference tool. Get curious about whatever MBM tools you use regular (ex: MBM Framework, DMF, etc).
  • Discuss MBM with your colleagues. You don’t have to be an expert in MBM to toss around ideas, look for examples, and dissect what principles to use in a given situation.
  • Find a mentor. A good MBM mentor doesn’t have to be someone on an MBM Team. It’s someone who you can bounce ideas off of, be intentional about discussing MBM regularly, and is far enough down the road on MBM learning that they can give you some guidance.
  • Ask lots of questions to your supervisor, HR folks, the MBM Team, colleagues and folks who’ve been around MBM for awhile. I have yet to encounter someone in an MBM company who isn’t willing to spend some time helping another person learn (Guiding Principle of Knowledge). I’ve even go so far as to cold-call people in other MBM organizations to ask questions, and my questions have always been received with a genuine willingness to help. Just make asking questions a habit.
  • Get comfortable with the ambiguity. Because MBM is based on principles, there are going to be many situations where many approaches could work or there may not be a clear sign to do this specific thing or do that specific thing. Even as you learn more about MBM, the ambiguity never goes away — getting used to it early can help smooth the path as your MBM knowledge/application evolves.

These are very broad. I’m hoping for some reader comments to add to this list. Even if it’s a specific question you asked, something you read or a type of conversation you had, let’s get some good ideas out there for folks trying to learn more about MBM in their early days with an MBM organization.


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Learning from Stories: James Bond and How Swiss Watches Survived

I think we can learn a lot about MBM® from stories and case studies – even stories that don’t happen in MBM organizations. A colleague of mine sent me a great story about disruptive innovation. It’s told in the form of a slide show you can click through at your own pace and to whet your appetite, it does in fact (as promised in the post title) involve James Bond.

So here’s my challenge to you:

  • Click on the link below and page through the story.
  • As you go through the story, think about what MBM lessons we can take from it – including any mental models that you see illustrated in the story.
  • Leave a comment (or two) with what you see.
  • If you know of a good business story with some possible MBM learnings, send it to me (or leave a link in the comments).

Here’s the link to the story. Thanks to Pablo for sending it along! I hope we can all learn something from it.

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Leadership never seems to go out of style. Type “leadership” into any search engine and you’ll get everything from the latest blog post from an MBA student to a CEO’s manifesto to that latest sports figure memoir to who knows what. Ask 100 people to define leadership and you’ll like get 75 different answers.

One question I get fairly often is, “What makes a good leader in an MBM organization?” I don’t have a tidy answer, but here are a few things I’ve discovered are at least minimum requirements for being a good leader in an MBM organization:

  • Applying the five dimensions. If you have an MBM Framework, look at the column labeled MBM Five Dimensions and that’s a good start for some things a leader must do.
  • Holding people accountable – I know this is technically covered in the MBM Framework, but it’s a specific area that leaders must be better at than a typical employee. If leaders don’t hold people accountable (both in a positive sense and a negative sense), then this whole MBM thing just doesn’t work.
  • Consistency with MBM Guiding Principles. Leaders have to walk the walk and talk the talk. It’s not enough to just demonstrate, leaders need to be willing and able to identify and articulate when others are being consistent with MBM Guiding Principles.
  • Some level of commitment to understanding the ideas of a free society. How can you truly apply to an entire organization MBM if you don’t understand some of the fundamentals of a free society?

Those are just some high level thoughts for you. I’ve encountered a number of leaders with a variety of personality traits and personal styles that have the ability to do all of these things, so I want to steer clear of personalities and focus on behaviors and values and beliefs. What do you think makes a good leader in an MBM organization?

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Prices Convey Knowledge

As a graduate student, I spent many hours in a computer lab writing code to run statistical models (yes, it was almost as awful as it sounds). One afternoon, after hours of doing battle with my code, I picked up my plastic soda bottle and walked over to the trash and recycling cans. I stood for a moment between the two cans and then threw the bottle into the trash. A student nearby snorted. I asked if she had a problem. She said she did have a problem because I didn’t recycle my bottle, even though the recycling bin was “right there.”

Little did she know that I was an economics student who had a dedicated and intellectually honest environmentalist for a professor. Here’s a taste of some of his research.



You see one of the many problems with the way we currently recycle is that there’s no price mechanism to tell me what is worth recycling and what is not worth recycling. If I knew my empty bottle was worth 5 cents, I would have the knowledge I need to know it’s worth recycling. If I knew no one was willing to pay for my bottle, then I would know it was trash. If you look at the data, the majority of household level recycling isn’t worth it (some exceptions are shown in the video). Without prices, I have to rely on (costly) studies that cannot be up-to-the-minute. This is just one of many examples of how prices convey knowledge and when you take the knowledge away it gets difficult. Without that knowledge there is more waste than there would be otherwise.

In MBM®, we try to take a concept from free societies – like prices—and translate it into our organization. The idea of prices is one of those concepts we can’t take one-for-one into the company (imagine how awful it would be negotiate prices with your co-workers every time you needed to work together). Instead, we want to take the essence of what prices do for a free society. Prices convey knowledge. They send signals that allow us to make better decisions. If you want to get the essence of prices into your organization, you want to ensure that people have appropriate measures that help them make decisions. You want to make sure that people have the appropriate knowledge to eliminate waste and know what is valued.

What has your experience with knowledge seeking and sharing been? Do you have an example where certain measures helped people make better decisions? What else about prices would you want to bring inside the organization?

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Below is a video telling the story of a person with an entrepreneurial spirit that is crushed by bureaucracy. As you listen to the story, think about how it translates into the organization.


What are some ways we can eliminate bureaucracy inside the organization? What are some signals a process or procedure isn’t useful? What are signs your culture has become bureaucratic?

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How would you coach?

Below is a made up situation that represents known misunderstandings or misapplications of MBM®. Use the comments to leave your thoughts about how you would coach in this situation.

Sarah is a member of a branding team. She’s asked for you to help her with her RR&Es and has brought a draft of her RR&E Summary Document. You noticed on her summary document, one of her roles is “Brand Manager for Zepher” and an associated responsibility is “Manage Zepher Brand.”

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How to Fight Global Poverty

Here's a video with some great reminders about how amazing free societies are and why MBM(R) is based on the ideas of a free society.


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How would you coach?

Below is a made up situation that represents known misunderstandings or misapplications of MBM®. Use the comments to leave your thoughts about how you would coach in this situation.

William comes to you in a panic. He says, “We have to come up with a talent strategy pronto. My team doesn’t have all the capabilities we need. Of the six listed in the new vision statement, I think we have 3 at best.” 


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Studying the Guiding Principles: Respect

Guiding Principle 9 – Respect:

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

Many of you know that there are no idle words in MBM®. Each word is there for a purpose, and often the ordering of words is important as well. If you want to learn more about MBM, get good at studying – not just reading. You can discover answers to your questions if you develop the ability to look closely and ask thoughtful questions.

Let’s take a look at the Guiding Principles of Respect as an example of how studying, reading closely and asking a few questions can help discover some deeper layers of MBM. Below are some questions that I think would come up naturally if you were really studying this guiding principle:

  • Why does the word honesty come up first in that list of four things?
  • Why even have honesty in this guiding principle – we have a guiding principle of integrity?
  • What does sensitivity mean? How can I both treat someone with honesty and sensitivity if I have to tell them something that will hurt their feelings?
  • What is the value of diversity? What do we mean by diversity?
  • Why does it call out teamwork and not teams? How can I practice teamwork?
  • Why is this a Guiding Principle in the first place? How does it help us create value?

These are just examples of some of the questions you might come up with if you really study this guiding principle. I’m sure there are endless others. What questions do you have about the Guiding Principle of Respect? What if someone asked you one of the questions above, how would you answer?

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Competitive Advantage versus Comparative Advantage

Often, when I get the chance to hear about a new project or initiative I’m told, “we have the comparative advantage.”  My immediate reaction to this is (sometimes voiced, sometimes not): “Compared to whom or what?” The beauty of comparative advantage is that you are comparing among different people or things in a group and figuring out who or what has the lowest opportunity cost. If you do this for the whole group, the group will maximize its output. So if I say, “Joe has the comparative advantage,” I’d better be prepared to tell you who is in the comparison group and why I believe Joe has the lowest opportunity cost.

Comparative advantage is different from competitive advantage and is meant for a different purpose. Competitive advantage is about looking at your competition. Most of the time, we don’t know our competitors opportunity costs. What we can do is make an assessment of how well we are doing compared to the competition. Think of it as a foot race. While you don’t know the opportunity costs of each runner, you can tell who is fastest. So if I say, “I believe we have a competitive advantage in capital deployment,” I’d better be ready to tell you what competitors I was thinking about and show evidence about capital deployment.

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