It is hard to imagine, but every organization was once a vague idea inside one smart head. Somebody thought the resources lying around could be realigned into something more useful, and then spent years proving it against odds of failure. Then the thing worked. It grew, it built muscle, and attention shifted from growing to maintaining, defending, and shaving cost. Balance exists only in theory, so from here there are two directions, up or out. Owners usually start planning for decline once the organization is already well down that path, and by then recovery means salvage. Late-growth and maturity stages provide a stable basis for launching the evolution cycle. ### Stages of the organizational evolution 1. **Startup.** Maximum growth, zero to one. 2. **Established core.** Maximum margin, held as long as possible, one to N. 3. **Evolving business.** Maximum leverage of the core into new growth, N x M1. 4. **Autonomous organization** (hypothetical). Maximum extension via digital representation, N x M1 ^ M2. How it maps onto organizational growth stages: ![[organization_evolution_stages.excalidraw.png]] *N is the obtainable value from the core growth cycle; M1 is the absorption multiplier to the core growth trajectory; M2 is the exponential growth that opens up once friction approaches zero in digital-first systems.* Every step is measured against the core business the organization started with. The core establishes first, finds its market fit and its operating model, and takes a share of the market. After that, extending the useful life of the core needs two things at once: building the [[Absorption|absorption]] muscle, so that every asset the business already owns can be monetized in new combinations with other market participants, and solving the integration bus once rather than deal by deal, so that change and disrupt work gets enough support to survive in a core-focused internal environment. Stage 4 is currently mythical and hard to imagine at an organizational scale. It still belongs in the strategic vision, as the absolute the other three are heading toward. >The Research Program is about raising the multipliers on change and disrupt work far enough that the organization evolves instead of declining. The core assumption is that M1 and M2 can be built deliberately rather than stumbled into, and that what they unlock is substantial. From what I have seen running inorganic growth programs inside tech groups, and from what AI now does to process work as a general purpose technology, I expect the multiple on non-core work to be large enough so its relative contribution may even exceed the core. Software moves faster than the businesses it runs, so once absorption is digital the pace is determined by: how efficient the autonomous processes are, how fast the counterparty can move, and what the competition regulator will allow. ### Flow x Friction As the core business was never built for anything other than the core business, there is friction towards change and disrupt initiatives. [[Why Change Is Hard|Change is hard]] because any resource, any hour of focus, any unit of financing taken for change and disrupt work competes with the core. And the core is mature and actually brings the money, so its position is strong and its argument is convincing. **Flow x Friction is the multiplier on non-core projects.** Score friction from zero upward. One means a non-core project meets exactly the resistance a core project meets. Zero means it never lands. It is not obvious that anything above one exists, though legacy pressure and growth debt may yet make the core worse off than a well-designed new business. Flow is how much arrives, how varied, how often. [[Navigating Mechanics|Mechanics]] generate it: scouting, partnerships, venture investment, an acquisition pipeline, ecosystem participation. - 0 flow x 1 friction = 0. - 100 flow x 0 friction = 0. - 100 flow x 1 friction = 100. High flow into high friction is expensive and it is a waste of money. Perfecting friction and forgetting the mechanics that generate flow is building and maintaining capacity nobody uses. **Project thinking is the enemy.** Every business case, every stage gate, every discounted cash flow sets absorption to one. It is not one. It is not a universal constant across all new initiatives inside an organization. Now you know why M&As and transformations fail. Friction was below one, and every business case assumed it was one. Absorption competes with the core growth function for the same money, people and resources. And a few failed change and disrupt initiatives teach the decision maker to stop backing them, and the mandate gets revoked without anyone announcing it. Launching the upward absorptive growth spiral is a tricky business. It's harder than building a startup on the open market, as it's a closed market with strict rules and specific resource allocation. And you are trying to build both products and change internal organizational market rules. ### The absorption ladder The ladder starts at the late scale-up stage, when someone asks a question what if we try something outside of the core business, because it is already obvious that the organization holds an advantage in businesses it has never been in. **1. Start it.** Task number one is recognition: that the organization holds assets and advantages which may be worth something in combination outside the core, that these are underutilized, and that the value is therefore locked and worth unlocking. **Unlocking it means:** - identifying the valuable elements the organization already holds, and the upside locked inside them, - identifying the counterparties outside the core business needed to realize that upside, - building the combinations in which the non-core value flows. Learn your own flow and friction multiplier by looking at what already happened, and [[About Playbook|build the toolbox]]: the mechanics and the design decisions adapted to this organization (don't copy). Where the opportunity lands. Who owns it before it is raised. What that role is permitted to attempt, as distinct from what it is accountable for delivering. Whether the support functions are calibrated for anything other than the core. Pick the low hanging opportunity-fruits first, build the experience, adapt the processes so they hold non-core work, and the mandate for new business grows out of the results. It is an extension of the core business, allowing the organization to earn more with what it already has. **2. Build the muscle.** Absorption stops being a project and becomes a standing function, and the organization goes from static to evolving. This is where digital representation enters, as a mixed mechanics and design element. A machine-actionable model of a firm's own processes turns the internal environment into something that can be measured and changed on purpose, and it turns the outside edge into an interface with a published specification and a service level, instead of a relationship with somebody in corporate development. **3. Transcend.** Take the representation far enough and parts of the organization become autonomous, and absorption decisions get made by agentic systems and made about them. Absorption operations become the orchestration of autonomous loops running through the core business itself. The principles hold: what is allowed in, where opportunities land, who owns them, what mandate they carry. Same tasks, finally solvable, at least locally. Last part is not a science fiction. Organizations have already fully automated value chain elements that used to be manual: bank risk assessment, ICT routing, navigation. All of it happened before general AI. Continue the trend and more of the chain goes the same way, because it is cheaper and it is better. Skipping steps does not work, because what goes before how. Assume the technology exists. You still have to find which value is locked, and unlock a first piece of it by hand, before there is anything worth automating. First data hygiene, then analytics, then decisions, then agentic loops. ### The puzzles The reason this is research rather than a manual. **One**. If the returns to adopting new technology are large and the mechanisms are publicly known, why is adoption so low and so uneven? - **Cannot.** The complementary process does not exist in most organizations. No ladder to climb. - **Will not.** The mandate for change does not fit the standing structure, and stretching the organization to carry a different risk appetite and different incentives is a design job no one owns. - **Should not.** Absorption does not belong inside the organization at all, and is better handled as equity management at owner level. **Two.** Where does a change and disrupt opportunity arise, and where does it die? At the landing point, in a shortage of incentive energy, or in the friction that arrives after the project is already approved? Each answer needs a different repair, and treating them as one thing is the failure. It's a different form of startup within the internal market of the organization, with absorption tools correcting the entire internal market environment. **Three.** Is digital representation truly the binding complementary asset for AI. What does digital representation even mean? How do we avoid making the same binary, zero or one, thinking mistake again on a new level? (as with project thinking about change-disrupt). How does an organization move to a useful representation, and then manage it? Is that an IT department problem or a strategy problem? Too new to tell. ___ The content is written in public as it develops. **Foundations** holds the building blocks, **Frameworks** turns them into tools you can run an organization through, and the **Playbook** is where the **mechanics** and the **design** choices live. **Cases** apply the same lens to real situations. Please disagree, and [[Who's Writing This|write to me]].