The Future Arrived Yesterday
The Rise of the Protean Corporation and What It Means for You
Michael S. Malone
Crown Business, 2009, 284 pp., ISBN 978-0-307-40690-3
Malone is co-author of The Virtual Corporation, an advance description of the shape most global organizations have taken. However, the virtual corporation has no core identity to hold it together. The future corporation will have a solid core, surrounded by a cloud, much like the quantum representation of an atom. Proteus was the mythical god that could quickly change his shape to elude pursuers but retain his essential self. The Protean Corporation will rapidly and continuously restructure and reinvent itself, behaving like a perpetual entrepreneurial start-up, while maintaining a core of identity and values.
"Every trend in the corporate world…is pushing companies toward ever-greater virtualization, the dismantling of every traditional organization structure, and their replacement with networks of free agents. At the same time, mounting evidence is warning us that this model doesn't work." The best companies of the future will become shape-shifters, "constantly restructuring themselves to adapt to changing circumstances and new opportunities." Such companies already exist, including Google, Wikipedia, Blogger.com, and others. Companies will mover further away from hierarchies toward highly connected craft guilds. (Introduction)
Part I The New World
Chapter 1. A New Business Model for a New World
The companies that succeed will be internal contradictions: nimble but substantial, adaptive but established, long-lived but perpetually young. They will adapt and change at lightning speed, yet retain something enduring at their core. (4)
"The secret to building an unbeatable, world-class enterprise lies in understanding not just the heads, but the hearts, of their employees and customers." (6)
Managing the next entitlement generation may be impossible. But they are desperately needed because they are bright, confident and entrepreneurial. (12)
Technology, culture and demographics are pulling companies apart, untethering workers from the company. However, human needs for socialization, commitment, continuity and legacy are pushing organizations inward. While virtual is great for the entrepreneur, the sense of isolation, abandonment, and being left out is traumatic for workers who value stability and commitment. "Order needs chaos, and it seems that the reverse is also true." (21)
Chapter 2. The Shape-Shifter, The Paradox of Permanence and Change
"Successful companies of the future must find a way to continuously and rapidly change almost every one of their attributes--products, services, finances, physical plant, markets, customers, and both tactical and strategic goals--yet at the same time retain a core of values, customs, legends, and philosophy that will be little affected by the continuous and explosive changes taking place just beyond its edges." (24)
The challenge is to marry a solid core with a changing periphery. The Protean Corporation must be able to change its form and business models while maintaining the right skills, attitude, and goals. For example, IBM shifted from a manufacturer to a consulting company.
Definition: "A Protean Corporation is an enterprise that features (1) an amorphous external form that uses technology to rapidly adapt to changing situations with regard to market, customers, competition, finance, and even ownership, and (2) a slowly evolving internal center that uses interpretive tools to maintain the identity and continuity of the enterprise over time." (34)
Part II Reinventing Themselves: How Corporations Evolve
Chapter 3. The Rise of the Corporation [fascinating history]
Chapter 4. Packard's Way - The Technology Era
Dave Packard had to run the company practically single handedly during the war and he discovered the incredible power of letting the employees make decisions, assume control over their careers and help the company succeed. This led to the development of the Nobel Prize winning transistor. Packard recognized that employees had become the company's single greatest asset. During these years perpetual innovation was becoming a crucial competitive advantage. You couldn't wait for customer demand. You had to get ahead of the market and draw it to you. Technological revolutions inevitably force transformations that bring sweeping societal change. Once you give employees power you can't get it back, especially autonomy. Employees want to define their own schedule, relationships, even work location.
Chapter 5. The Center Cannot Hold - The Virtual Era and Its Fading Relevance
The virtual era took hold when a computer sat on every worker's desk at Apple. Virtual Corporations, enabled by the Web, feature a strong digital component, enlist outside participants in distribution and supply, exhibit higher levels of change, and accelerate away from their competitors. With emphasis on empowering employees and moving them out of the building, many companies went too far. Underlying destructive forces are at work.
"Every trend in the corporate world…is pushing companies toward ever-greater virtualization, of the dismantling of every traditional organizational structure, and their replacement with networks of free agents. At the same time, mounting evidence is warning us this model doesn't work." (93) It leads to anarchy and impermanence that is repellent to human nature.
A whole generation of entrepreneurs has grown up believing that no one has to go to an office to work or to work for someone else. You can create and control your own life. In cyberspace start-ups are cheap and there are few barriers. Therefore we are likely to see the creation of millions of new companies. (98-9) Think of the corporation where most of the employees resemble the most maverick employee you have right now. How will you build a stable and enduring company?
As another billion join the internet, the intellectual capital will double. Enormous markets will be created with massive logistics issues. You will have to compete on the international stage, whether you want to or not, because if you don't go compete in their market, they will still come and compete in yours. How will you find the right people among the billion or two in the rest of the world?
"What's needed is a new kind of corporate organization that manages to balance some kind of enduring structure at its center, which develops the strategic direction of the company and maintains and enforces the company's core philosophy…yet still allows the kind of global extension, scalability, and rapid-fire adaptability that will be required to compete in this new world." (105)
Part III Building the Corporation
Chapter 6. The Cloud, The Core, and The Boss
"Despite the historic trends of the last two centuries toward ever-greater decentralization, employee empowerment, and dependence on technology, there is a point beyond which human beings cannot go. A purely Virtual Organization--that is, one that is only a homogenous cloud of undifferentiated, equal employees…simply does not work in the real world…. Real, human-based organizations need some kind of structure. They need a purpose. They need an identity. They need direction and goals. And they need…a culture." (120)
The CEO is not the heart of the new organization. The zigzag career paths and the fact of always being on the road have resulted in CEOs that lack a general knowledge of the culture of the corporations they lead. The risk is corporate catastrophe. Thus the Core of the Protean Corporation will consist of a body of individuals who understand the company's philosophy, history, and culture and are committed to the firm. They are the protectors of the values and standards of behavior, the keeper of its myths and culture.
Chapter 7. Denizens of the Core
Chapter 8. Rethinking the CEO
The CEO will almost entirely "focus on creating the ground for their company's operations, choosing the best talent to run those operations, resolving disputes, and breaking logjams, and in almost every other way, serving his or her employees." "When you can't manage by fiat, you have to manage by charisma, character, and competence." (151)
Chapter 9. Where the Real Action Is - The Cloud
The Inner Ring is essentially the traditional corporation. "Most companies already have emerging clouds, and most full-time employees spend at least part of their workdays acting as conduits and intermediaries to these inside-outsiders--managing them, training them, and training them in the company's way of doing things." (159) The Inner Ring (or Varsity) will have responsibility for recruitment, control, and communications with the outer rings.
Corporations are going to have to innovate from within and to do that, "they have to recognize, cultivate, invest in, and support the entrepreneurs within the company, rather than lose them. And to do that, they have to create an environment of trust and freedom that allows these entrepreneurs to play, create, and even fail." (176)
Chapter 10. Bringing in Talent - Competence Aggregators
Most entrepreneurs want to take control over their own destinies and avoid risk. They stay away from the big companies so they don't risk losing control of their destiny. Therefore corporations must offer entrepreneurs a better package of support and rewards. Many start-up endeavors will come from free agents selling their ideas and themselves to the highest bidder. "Rather than resisting, even punishing…the entrepreneurial impulses of its employees, the Protean Corporation is all but dedicated to attracting these figures, competing to hire the best of them, and then giving them whatever assistance they need to succeed." (195)
Part IV Running The Protean Corporation
Chapter 11. Who Matters - Fateholders
Chapter 12. Rings of Engagement
The Protean Corporation can be seen as a series of concentric rings of engagement: the Core, the Inner Ring, the Cloud, and the Family. In chapters 11 and 12, Malone describes some features of relationships with various groups such as suppliers, customers, shareholders, analysts, financial institutions, organized labor, community and regional governments, the media, activists, national governments, markets, community, competitors, trade organizations, etc.
Chapter 13. Redefining Success - What a Protean Corporation Actually Does
"The Protean Corporation continuously works to maximize value in all of its endeavors." (224) This includes both financial profit and the intangible value represented in its reputation.
The greatest thing that has stalled social entrepreneurship is the lack of accurate and universal metrics for intellectual capital.
Some companies will find it valuable for their reputation to establish a non-profit within their corporation for socially valuable activities such as distributing a non-profitable drug that meets a societal need.
Part V The Protean Society
Chapter 14. The World's First Entrepreneurial Society
"The United States has become the first true entrepreneurial society in history." (251) At some of the most progressive corporations as many as 20% of the professionals have never met their boss face-to-face. The largest college in the U.S. is the University of Phoenix, an online degree program. 750,000 eBay sellers consider that their primary or secondary source of revenue. 3 million people home school. Every institution will have to answer the need for members to retain their independence and manage their own lives.
The Core/Cloud philosophy is sweeping society, but it is not taking hold in government! The U.S. government continues to grow "by hiring full-time, heavily benefited workers and offering them almost perfect job security." The sheer mass continues to increase and gobble up an ever-greater share of the economy. And because more people at the bottom means more power [and jobs] at the top, there is every motivation for government leaders to just keep hiring. (260) But pressure is growing.
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