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The next chapter of MBM: Introducing Principle Based Management™

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The next chapter of MBM: Introducing Principle Based Management™

Principle Based Management, formerly known as Market-Based Management®, provides a holistic approach to living out principles of human progress.

This article was previously published by Stand Together Foundation.

Principle Based Management™ provides a holistic approach to making decisions, solving problems, and creating value for individuals in your community, team members in your organization, and society at large. ​​​​​​​​​​​​​It is rooted in proven principles that have fueled the ongoing success of Stand Together and our partners. In this Principle Based Management 101 series, we’re unpacking mental models, ideas, and tools that you can use to reach the next level in your work.

The following is a modified and abridged version of the full Principle Based Management booklet, which you can download here and use in your own work.


Success comes from empowering people

Our approach at Stand Together Foundation echoes history's profound lesson: lasting progress comes from enabling everyone—not just the few—to contribute and realize their potential. It comes from empowerment, from a commitment to removing barriers so everyone can shape their own lives and use their unique gifts to contribute to the lives of others while finding meaning. 

At the core of our work has been a management philosophy, Market-Based Management® (MBM), which has enabled us to apply this empowerment paradigm within organizations and to drive more effective social impact. 

Now, we're changing the name of this management philosophy to better reflect the fact that principles inform everything we do, rather than methods.

Principle Based Management™ is rooted in a belief in people

It is an approach anchored in a belief that people are capable of extraordinary things. They are capable of making good decisions and acting creatively. They are capable of finding the best ways to work together in a spirit of respect. They are capable of discovering better ways to do things, and they have unique insights to share. They are capable of lifelong learning and transforming themselves and their organizations. 

It is an approach to create conditions that empower people, instead of gaining power over people.

Through empowerment, people unlock their innate potential

How are people empowered? People empower themselves and one another by applying principles of human progress. These principles include dignity, openness, mutual benefit, bottom up, self-actualize, and dozens more. They are time-tested and universal truths—and history shows that when people apply these principles, they improve their own and others' lives. 

The way that principles come to life will differ for every individual, organization, and context. We think that's a great thing. After all, principles are a compass, not a map. 

But it's not enough to intellectually understand the principles of human progress. We must identify ways that principles lead to action. That's why we have revised the five dimensions of Principle Based Management™ to equip more people to solve problems and capture opportunities in the social sector and beyond. When applied effectively, the five dimensions of Principle Based Management™ help create the conditions for empowerment and make it possible to solve major challenges throughout the social sector. 

Check out the updated dimensions below and read more in the booklet linked at the bottom of the page. Stay tuned for more updates as we integrate this new focus throughout our materials, programs, and experiences:


Everyone is capable of extraordinary things. 

As individuals, we are empowered when we discover, develop, and apply our aptitudes to contribute in the lives of others. As we do, we continually discover new and better ways to fulfill our potential (self-actualize) and live a life of meaning. 

Organizations succeed when they empower each individual to continually discover new ways to create value for others through a shared vision. More than writing a vision statement, applying the vision dimension is about developing a shared understanding of how we create value for others and creating conditions where each of us can contribute to that value creation.

  • How does my organization and team create value for others? Do I understand how my efforts advance our vision? How does my work help my colleagues, partners, and those we serve?
  • What am I doing to act as a principled entrepreneur and discover new ways to advance our vision?
  • What are my top priorities to create value? How can I ensure that my supervisor and I are on the same page about these priorities?
Virtue & Talents

Everyone can embrace values and develop their gifts to self-actualize by contributing in the lives of others. 

As individuals, we are empowered when we embrace values that help us fully develop and apply our unique gifts to help others improve their lives. This is called being contribution motivated. Our organization succeeds when we hire and retain individuals who are contribution motivated and have gifts and passions that can help us advance our vision. 

Contribution-motivated individuals seek opportunities to stretch and grow. They identify problems and seek solutions with an entrepreneurial mindset. They find meaning in work where they can fully express their gifts, enabling them to self-actualize by helping people improve their lives. They use a principle-based approach instead of pre-set directives, enabling them to excel in spontaneous and creative ways.To encourage contribution motivation as an organization, we commit to shared values that provide a principle-based approach to ethical and effective behavior.

  • What conversations do I need to have to best discover, develop, and apply my gifts to create the most value toward our vision?
  • What opportunities do I see—big or small—to change my role so it better leverages my gifts and passions in ways that create the greatest value for the organization?
  • What am I doing to embrace our shared values and become increasingly contribution motivated?

Everyone has knowledge to contribute. 

As individuals, we are empowered when we embrace openness: seeking, sharing, and applying knowledge so we can continually improve. Our organization succeeds when we empower each individual to learn and apply knowledge at an ever-increasing rate, discovering better ways to create value in harmony with our vision and values. 

Openness is essential to success because the world is always changing (creative destruction) and closed systems fail (entropy). We use Republics of Science—networks of people exploring ideas and new ways to add value—to learn and improve. We each generate and share learnings, speeding up our cycles of innovation to get better results.

  • What can I do to better internalize principles such as humility and openness? How can I better invite feedback and challenge from my peers?
  • How can I expand the network of people I and my teammates are learning from and with?
  • What well-designed experiments and reality-based measures can help me gain knowledge I can use to advance our vision?
Comparative Advantage

Everyone has something to contribute. 

As individuals, we are empowered when we partner with those who have complementary gifts. We maximize the benefits of such collaboration by applying the principle of division of labor by comparative advantage, achieving more together than we could alone. Our organization succeeds when we empower each individual to be entrepreneurial—to discover where and how they can best collaborate toward our shared vision. 

Comparative advantage focuses on your best opportunity to make the greatest contribution, in light of your next-best opportunity (opportunity cost) and other people who can contribute. Contributing based on comparative advantage matters because when we unite to achieve a shared vision, we each strive not just to add value but to add the greatest value we can. When we each focus on our comparative advantage, we position ourselves and others to succeed through teamwork.

  • What conversations do I need to have to clarify my role, responsibilities, and decision rights so I can be even more entrepreneurial?
  • What can I do to better understand my teammates' responsibilities and gifts, so we can improve our collaborations?
  • Thinking of my team, how can I drive a conversation around responsibilities and decision rights so everyone can focus where they can make the greatest contribution to the team's success?

Everyone can find success and meaning by benefitting others. 

As individuals, we are empowered when we act on our innate motivation to apply our gifts toward pursuits we are passionate about and that improve the lives of others. This is how we increasingly succeed, self-actualize, and find meaning. Our organization succeeds when we empower each individual to pursue opportunities beneficial to them and our organization—when we approach motivation through the lens of mutually beneficial partnership. 

Long-term and meaningful success comes from building mutually beneficial partnerships. Mutual benefit is the cornerstone of all partnerships across our lives, including those between teammates, external partners, those we serve, employees, and the organization. 

This approach extends to the partnership between the organization and each employee. As we each learn and share with our supervisor and collaborators what we find motivating, together we craft roles and responsibilities that motivate us to create the greatest value.

  • What motivates me to grow, contribute, and do my best work?
  • What motivates my partners (internal or external)? What conversations can I have to better understand them and find valuable areas of deeper mutual benefit?
  • Thinking about the long term, how does my role help me learn, grow, and self-actualize? What adjustments would further help me self-actualize and find meaning through my work?

Download the full Principle Based Management booklet for more information or to further your learning journey. 

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