My notes on chapter 6 of The Science of Success by Charles Koch:

Quotes

•  ”The market determines who shall [have what property and who shall do what work]. None of these decisions is made once and for all; they are revocable every day. The selective process never stops.”—Ludwig von Mises [Wikipedia]
• “In the market economy, every owner is continuously obliged to justify, through service, his right to retain control of the resources he claims. Otherwise, consumers peacefully transfer the ownership and control into more capable, more productive, more serviceable hands.”—Paul Poirot
• “Markets maximize benefits [when they are] supported by externally enforced property right rules that prohibit taking without giving in return.”—Vernon Smith [Wikipedia]

Concepts

1. Property Rights. Must be clear and defined. Must be coupled with responsibility for the consequences of the use of the property so that owners reap all of the benefit of productive use and bear the full costs of what they destroy.
2. The Tragedy of the Commons. That which is “owned” by everyone is cared for by no one.
3. Division of Labor. Because humans vary in their talents, specialization and cooperation leads to greater production and satisfaction of human wants and needs.
4. Roles, Responsibilities, and Expectations. An ongoing dialogue involving the employee, supervisor, and other interested parties. Employees are responsible for ensuring they are accurate, effective, and current.
5. Roles. Not a job title. Description of position held and the functions performed by an individual.
6. Responsibilities. Define products, services, or processes for which we are responsible, along with level and nature of responsibility.
7. Expectations. Should be clear, specific, and measurable. Should be open-ended and challenging.
8. Principled Entrepreneurship. Even if you lack decision rights, you can still take action by seeking out and persuading those who do have the decision rights to implement ideas.
9. Decision Rights. Earned, not granted.
10. Shared Responsibility. Not an excuse for failing to take critical action.

Source Note and Links

1. Ludwig von Mises, Human Action. Regency Co., Chicago, Ill., 1963, p. 308. [Amazon]
2. Paul Poirot, “Ownership as a Social Function,” Toward Liberty, Vol. 2, Institute for Humane Studies, Menlo Park, Calif.,1971, p. 296.
3. Vernon Smith, “Some Economics and Politics of Globalization,” Speech given at North Carolina State University, Raleigh, N.C., March 2, 2005.
4. Garrett Hardin, “The Tragedy of the Commons,” Science, 1968, pp. 1243 – 1248.
5. Ludwig von Mises, Human Action. Regency Co., Chicago, Ill., 1963, p. 157. [Amazon]
6. No external source.

Common Symptoms and Related Mental Models

From a business troubleshooting summary:

“Establishing the Right Climate”

From another document showing what happens when a piece (knowledge processes) of the MBM framework goes missing:

The MBM Framework: Knowledge Processes

Applying MBM as a Supervisor: Decision Rights

In addition to answering these questions for yourself, how are you ensuring your direct reports are striving to get results with their own direct reports?

• RR&Es In Action 3/29/2011: RR&Es can be written and forgotten. Managers should consider reviewing them before meeting with employees to remind them what the top priorities are.
• Mises is Smiling 3/8/2011: There are thousands of unelected bureaucrats for every elected politician. It is naive to believe that you can change the government just by changing elected officials. Ludwig von Mises claimed that large institutions do not become bureaucratic as long as they continue to operate according to the profit motive.
• “Alignment”–Not Just For Tires Anymore 3/1/2011: Links to another Janice Fraser video from Stanford on alignment around core principles.
• Rules vs. Judgment: The Sequel 2/18/2011: Reviewed in previous Knowledge Processes notes.
• Football Entrepreneur 2/10/2011: [Pointless football discussion.]
• As In Government, So In Organizations 11/23/2010: [Rambling discussion. Nothing particularly of interest.]
• I’m Being Taxed HOW much?! 10/12/2010: Links to a tax burden calculator.
• MBM Readings 8/3/2010: Reviewed in previous Vision notes.
• Nesting 7/6/2010: If you pass on a project to a qualified successor and you see them about to make a dangerous mistake, what do you do? [Respectfully challenge, of course!]
• Responsibility, Accountability and Authority 4/12/2010: Links to Stanford video on aligning responsibilities, authorities, and accountabilities. If you have responsibility for something, you must have authority for seeing it done. If you have responsibility and authority, you must have accountability. The author challenges the proposition with a personal example, but without elaboration.
• Starvation in the Land of Plenty: how property rights saved America 7/3/2007: Describes the communistic system of early North American colonies and their movement toward private property. Early starvation was replaced by industrious hard work. [No one tells this story better than Thomas DiLorenzo in How Capitalism Saved America.]
• 1.3 Billion People Get de Jure Property Rights 3/21/2007: Rice production in one province of China shoots up when neighbors secretly agree to divide communal land and keep the production of their own plot. Plan spreads to other parts of China after success. China officially recognizes property rights.
• Sure you’re smart, but remember others can and should contribute 2/18/2007: Key quote: “If you’re going to make all the decisions, you may as well hire idiots… they’re cheaper.”
• Through the Eyes of a Child 11/2/2005: Without property rights, there is no incentive to work hard to acquire property.
• A Decision That’s Good and Wrong 7/21/2005: Author buys movie tickets in advance and pays extra to secure a seat, gets to the theatre, and it’s not even close. Claims it was a good decision (got peace of mind) even if it was the wrong decision.

Related posts:

1. Notes on The Science of Success Chapter 2: The Science of Human Action
2. Notes on The Science of Success Chapter 5: Knowledge Processes
3. Notes on The Science of Success Chapter 3: Vision
4. Notes on The Science of Success Chapter 4: Virtues & Talents