By definition micro enterprises are small and directly serve end customers. They take care of both a market and the production customer value for that market.
Micro Enterprises directly manage their own people, **strategy** and **distribution of rewards**.
> The Micro-Enterprise is a small unit (normally less than 20 employees) characterized by an identity (unique) and its **reputation** (based on the contributions it provided to partners) and it’s normally defined as a self-managed product or service provider that bears its own defining health indicators.
Normally having a positive P&L is the simplest health indicator that drives Micro-Enterprise development in the very same way it would if the Micro-Enterprise was not part of an existing organization but was alone in the market. Using the P&L as the defining indicator of health for a Micro-Enterprise – as in Haier’s Rendanheyi – is a powerful driver towards reducing technical and organizational debt that an otherwise bureaucratic structure would allow to accrue, as a consequence of optimizing for bureaucracy. source 
The core reflection around the ME entails how to unbundle an organization into small units able to specialize, become the best at what they do, and systemically interact with others.
**The Rights of a Micro-Enterprise** The core property of a Micro-Enterprise is its autonomy and full decisional power to fulfill its goals within the organization.
This happens through three foundational rights each ME can benefit from: **The right to make decisions** → work and priorities are managed locally to be best able to cope with the context of work, not depending on centralized decision making. **The right to hire talent** → the team is built dynamically to address customer-driven objectives, based on braveness, innovativeness, and reputation, without imposed constraints. **The right to distribute compensation** → compensation is distributed in the micro-system to motivate people to perform in line with its objectives.
There are **two Types of Micro-Enterprises**: User MEs →are focused on user needs, user innovations, and user-facing products; Node MEs →are focused on serving other Micro-Enterprises.
User MEs and Node MEs rapidly form network structures (EMCs) to innovate, based on contracts (we’ll explore this later), to define their relationships.
There are also **two categories** of Micro-Enterprises: The Transforming Micro-Enterprise has the mandate to evolve existing capabilities from a **transactional** point of view. For example, by selling a product and generating experiences that connect the customer to others. The Incubating Micro-Enterprise focuses its attention on **business models**, creating joint ventures to generate **new opportunities** historically not in the company's core.
> Still, the more the model becomes mature, and the demand grows, the less this characterization works. In a mature 3EO based organization, the same Micro-Enterprise would often adapt, becoming more transforming or incubating according to market and internal needs. Understanding such dynamics is critical to defining how the organization "rebundles" its capabilities through Micro-Enterprises to create new user scenarios and bring new products and services to the market.
There is only one ask Haier poses Micro-Enterprises: doing **better than the market average** with all their freedom. Leading Goals are used to evaluate performance and success, ensuring RenDanHeYi's core principles are respected: Leading goals are not set by the “organization”. Leading goals are set by the Micro-Enterprise at the foundation. Leading goals are included in a Valuation Adjustment Mechanism (VAM) and are dynamic. Leading goals set the “future target”, not "how to get there”.
Some examples of leading goals for existing Micro-Enterprises are: * For Firstbuild: to create 10 new products every year * For Thunder Robot: create a gaming laptop that solved all existing user pains.
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