Somebody in your organisation has an idea right now that will never be tried. Not because it is bad, and not because anyone rejected it. It will stop at the moment that person works out what pushing it forward would cost. And without ideas getting far enough to become legitimate projects, this organisation will not change. This page is about this person, and about the four conditions an organisation designs, which decide the result. ### The internal market for change Every organisation has an internal market of its own, bounded but not closed. It's a market with its own dynamics, not a deterministic system (though it is often modelled as one). Rules and resources change over time, adapt, depreciate, overfit, and there are employees who keep these imperfect systems running. A start-up as a new organisation searches for value creation, a core process to grow on. During its product lifecycle the core muscle develops, but at the same time some things get forgotten and put aside, still living within the organisation. Some promises, projects and interconnections remain unfinished or undersupplied, accumulating [[Why Change Is Hard|organisational development debt]]. That debt is not only a liability. It is the standing stock of change an organisation has already half-started and never absorbed, and it is what a change agent has to work with. The organisational market resembles regular markets in several ways: there are participating agents, internal laws and norms, rules of access to resources, and the potential to get a higher return for an agent or market maker who solves distribution better. Internal market dynamics are regulated by organisational design. ### Agents of change Owner, employee, supplier, outsider. Anyone who starts something new may take the role of an agent that brings change. There is no initiative without an agent, and no change without an initiative. [[Enabling|Technology, rules, incentives and culture change]] the environment of the internal market, but produce nothing themselves. An agent always stands outside the core process, because an initiative is by definition not yet part of it. This holds whether the agent is an employee or not. Employment does not move the agent inside. It only sets how much authorisation he carries. The role of an agent may be: - self assigned: intrapreneurship, leadership; - assigned by employer as an extension of formal job scope; - or anywhere in between. > Anyone who decides or agrees to play on the internal organisational market and makes a real effort becomes an agent of change. Any change or disruption project implies an executor, an agent who has taken responsibility for the result. The only difference from the classic project management approach is that agents take action before a project has all its properties (sponsor, budget, plan, scope). An agent's reasons may be anything, from genuine interest in solving the reallocation task to financial motivation. But before the project is formally set up, the agent acts as his own sponsor, spending his energy, time and resources to reach an early stage. ### What the agent is made of An agent is his capability. It is a vector in the system. This means that every employee or external party is not considered only as a part of the core business process, but also as a prospective co-founder of something new. The point is to attract this agent with his change capability to the internal market of an organisation. Obviously agents are not equal. Different education, experience, network, hard and soft skills, wealth, personal values. So the same change project within the same internal market realised by different agents will achieve different results. Speaking of employees, this capability may be assigned to the core business via an employment contract, but this contract captures only the baseline behaviour and elements of employee capability. Activation of an agent beyond the core business process standard is one of the core tasks of [[Absorption|absorptive]] growth engineering, the practice of designing an organisation so it can take in change it did not plan for. ### The four conditions Fire, water, air, earth.. Not really. 1. **Activation**: does the environment make starting normal? Whether initiative is expected here, has precedent, and is socially safe. 2. **Permission**: the internal rules on what may be done, and by whom. 3. **Access**: availability of resources to perform actions. 4. **Return**: what an agent can expect to gain from progress, in money, career, ownership or experience, and what he risks losing. All four belong to the environment of an organisation. They describe what the agent faces, not what the organisation earns. Authorisation is not a fifth condition. It is the grade of access an agent holds within the organisation, and it sets how hard permission and access bind him in particular. An owner and a supplier meet the same rules with different authorisation. ![[Four Conditions and an Agent.png|429]] The four conditions overlap, so one check can touch a single condition or several at once. The dot marks one check on one action, and where it sits shows which conditions that check ran into. The agent stands outside, with authorisation setting how hard each condition binds him. Once an agent starts working on a change project each action goes through internal work and a reality "check". Internal work depends on the capability of an agent, the reality check on these four conditions. A check may relate to one or all four conditions at the same time, depending on the nature of the check. A very capable employee wouldn't do a thing if the environment of the internal market deactivates him (nobody around him starts anything, so starting is not a normal move here), there are no permissions to act, no access to resources, and no path to a better return with each step. ### How the design system works One example to make it less confusing. 1. **The idea.** An employee comes up with an idea: add a video analytics service to the B2B platform product offering *(from my time heading an internal business analysis team that supported bids for internal investment)*. He saw a supplier demo at a conference and is interested to try this feature. The service would not only detect movement and record video streams, as before, but also identify faces and flag whether a person in the picture is known or unknown. 2. **Initial activation.** The idea is not in the job description scope of the employee, and there is no formal project for it. But the employee is just curious to try. Activation shouldn't be that bad, so there is already an attempt (at least mental at first) to try something new. The first "check" worked out positive, as the idea of a business opportunity mapped onto the existing organisation. 3. **Reality checks.** After the initial approach, the employee will take time to consider whether it's possible to try this within the organisation. His perceived reality of the four conditions will affect each consequent step in this project. The risk of getting fired, numerous formal permissions, an inadequate technological base, and a routine where nobody around him has ever started anything may all discourage action. 4. **Accumulation of mandate.** If the intrapreneur keeps persisting he will be moving on with his project as a micro-founder, a mini-CEO of his initiative within the organisational internal market. This means that at some point there may arise a project (start-up) sponsor, formal team, budget, goals. Probably there will be some stage process which authorises further access, permissions and respective return. If the agent is external, or lower-grade, there will be lower initial authorisation, which may increase initiative complexity. For example, an initiative arising from an external start-up founder or supplier usually has higher barriers to progress. But at the same time, there may be situations when external parties are better positioned to drive change, due to strict conditions of the internal organisational environment. Constricting the internal market does not automatically kill all initiatives. Ideas will appear more rarely and they will leak more. The idea goes to the supplier who gave the demo, to a competitor, or into a new start-up founded by the employee who left to build it. An initiative does not belong to the organisation initially, so it can leave. **Ownership is the first challenge. The second is earning on the change initiative.** For example, a joint venture may be structured so that the organisation formally owns everything and takes almost no part of the cash flow. Capturing cash flows of a change initiative is a separate task, which may have many different solutions. Changing design always [[Absorptive Organization|enables or disables absorption]] of change. Though, it is not right to say that conditions should be set loose. They should be calibrated to achieve expected results and healthy organisational evolution. Fixing them too tight means the organisation is destined to live through only one core lifecycle, losing its non-core monetisation opportunities. Setting them too wide means leaking resources and capabilities, so that the organisation itself won't be able to earn on them.