Would Market-Based Management Work for PSFs?

Most PSF marketers spend their careers working to move their companies to embrace more nimble marketplace practices.  (Some have wailed to me that their companies are like barges in an ocean of speedboats!)  Indeed, in these consensus-driven micro-societies, new ideas often get watered down to the lowest common denominator in order to be accepted by all the fee-earning professionals. 

In the past, I've been skeptical of management theories that glibly promote new operational constructs as if they were the true panacea for growth.  "These folks obviously aren't thinking of professional service firms," I usually cluck.

But wait a minute.  Could there be merit to the theory called "Market-Based Management?" I saw it referenced on Paul Gladen's Innovation blog, which he picked up from a fascinating Wall Street Journal interview with Charles Koch (registration may be required).  Koch leads "a $60 billion, 80,000-employee empire, which just recently became the largest and most profitable privately held company in America."

You can read the WSJ article (I recommend it), but if you can't, take a look below at just a few of Koch's ideas, which ought to quicken the pulse of any professional services marketer: 

• Free markets and economic liberty should be studied as sciences (including the political aspects of these).  It appears Koch eschews traditional management philosophies and academic preparation.  Instead, he adheres to what he calls "the basic laws of economics."
• "Long-term success entails constantly discovering new ways to create value for customers and building new capabilities to capture new opportunities," he instructs. "In this sense, maintaining a business is, in reality, liquidating a business." Mr. Koch likens the cycle to Schumpeter's "creative destruction" -- where the old and inefficient are ruthlessly swept away by the new." 

• As a way to crystallize the concept above, Koch has trademarked the term "market-based management," which encourages a company's employees to think and act like owner-entrepreneurs, always seeking to provide new value to customers and always seeking to capture new opportunities.  Take a look at the text from this 1996 speech to get a sense of the underpinnings of Market-based Management. 

Most professional services marketers will find some of Koch's points familiar:   vision, integrity, humility, tolerance, responsibility, desire to contribute, and more.   For sure, PSF marketers have a keen understanding of the organized chaos that's involved in "herding cats" to market and sell a firm's services.  Some of us wish we had what Koch espouses:  practitioners who earnestly seek to build profitability, and who continuously put forth their most critical efforts to maximize new marketplace opportunities.  (Some of us have so much of it that we have to rein in the cowboys who go off on tangents and screw up our brand's equity!)

Nevertheless, I can't recall before seeing such a market-focused management construct as this, or one that so succinctly articulates how a business could maximize the opportunities that can be had from a shifting marketplace. 

Could this construct work in your firm?  (Admit it:  wouldn't you just love to have a legion of marketing-focused professionals whose dedication to growing the firm could be harnessed under the principles of Market-based Management? )

But could it work if it were applied without the charisma, energy and savvy of a person like Charles Koch?