THE FUTURE ARRIVED YESTERDAY
By Michael S. Malone
As you may know, especially if you read the very large review two days ago in the Wall Street Journal, I have a new book out called The Future Arrived Yesterday.
Depending upon how you count authorships, co-authorships, collections and anthologies, this is something like my 16th book – a bookshelf full of volumes bearing my name that I never could have imagined when I was a cub reporter thirty years ago. Some of those books have been best-sellers, some have sold only a handful of copies; some are forgotten and others are described these days as ‘classics’ – interestingly, there is little correlation between the current status of those books and their original sales.
As I look back over my book writing career (as opposed to journalism or television) it becomes apparent to me that I write three types of books: reporting, history or business theory. In my bibliography, the last type is the rarest: strictly speaking, I’ve written only four, up until now all of them co-authored, on virtual corporations, sales force automation, and intellectual capital. Only the new one, which is about “Protean Corporations”, bears my name alone.
Writing (and no doubt reading) this kind of book is a very different experience from, say, my last book, which was a biography of Bill Hewlett and Dave Packard (Bill & Dave). Reported books are typically the product of thousands of hours on the ground, covering events, getting quotes on the fly, capturing the ‘first draft of history.’ Historical books are the product of a handful of key interviews with survivors, and a ton of research in libraries and on-line.
But a book of business theory, where you are describing a model of something – in this case the corporation of the future – for which there are few examples, either complete or fragmentary, the work is mostly thinking. You spend months, even years, puzzling out the long-term implications of discrete phenomena happening today. You try to do a few sanity checks – like lecturing on the topic in front of a knowledgeable audience, writing a few preliminary articles, talking to business executives you respect – but when you finally send your manuscript to the publisher there is no guarantee that there isn’t some fatal flaw in your theory, or that the audience won’t conclude that you are nuts.
Happily, that hasn’t seemed to have happened . . .so far. One reason, I suspect, is that I’ve had a long time to think about this book. The legendary venture capitalist, Bill Davidow, and I wrote the precursor to this book, the best-selling The Virtual Corporation, seventeen years ago. And I’ve had all of the intervening years to watch – as most of the world’s great companies turned into virtual corporations and we all went to work for them – as the flaws in that model slowly surfaced.
In fact, I first began to formulate my ideas for the successor to virtual corporations – “Protean” (or shape-shifter) organizations, as early as 2000. But in those days, I was running a million circulation magazine and starting this column, and I didn’t have time for writing books. When I was ready, it was the era of the dot.com crash and 9/11 – and neither the marketplace nor the publishing world was interested in any radically new ideas about business organization and competition. All of us were just trying to get through.
But I kept revisiting the idea over the years, knowing that someday I would write this book because I was certain of two things:
1. Businesses can’t keep running the way they do now, not in an Internet-based global marketplace; and
2. Every new economic era is accompanied by, and ultimately led by, a new type of business organization.
The first point is now truer than ever – and, the economic crisis aside, most companies are now beginning to sense that they are racing towards a structural crisis, one in which their organizational models are dangerously out of synch with the marketplace, with needs of their own employees, and of society.
As for the second point, even a cursory glance at business history will convince you that every great economic bust and boom cycle in our country’s history has produced a new kind of business: the English Model of the early 19th century, the American model of the Civil War era, the Factory Model, the Progressive/Scientific Model of Henry Ford, the Divisional Model of Alfred Sloan’s General Motors, and on and on. Out of the ashes of an economic crisis, new and more competitive businesses emerge, evolved to best adapt to the nature of the new boom. We are in just such a crisis now – and as we come out of it in the months ahead, we will need a new kind of business to lead us into the next era of prosperity.
I believe that will be the Protean Corporation.
What is a “Protean” Corporation? Simply, it is an organization that answers the fundamental paradox of modern business in our fast-moving, technology-based world:
How do you build a company or other organization that can keep up with today’s blistering rate of change, that can adapt itself to constantly changing market conditions, yet still not tear itself to pieces or lose its identity in the process?
This is the challenge faced by almost every company in the world today, as well as by non-profits, governments and other institutions. It used to be that you competed with the company down the street, or in another state. Nowadays, you must compete (for sales, attention, allegiance) not only with competitors on the other side of the planet, but new competitors that can appear out of nowhere due to some technological advance — for customers with almost no product loyalty and ever-shorter attention spans . . .all in the midst of an unprecedented cacophony of competing interests.
The only way, it seems, to do this is to reorganize your company to be able to adapt to change so quickly, to transform itself so rapidly, that it becomes less a real enterprise and more a collection of people and tools that can be thrown at the latest challenge or opportunity. In a sense, that’s what we’ve done with “virtual” companies, sending the employees home to work and giving them more and more responsibilities to shorten the decision cycle.
However even this isn’t fast enough in our ever-accelerating world. But if companies continue to atomize themselves they run the risk of evaporating entirely. Already we are seeing a collapse of morale and loyalty among modern workers – and why not? When your office is a table at Starbucks, and when you’re employer is little more than a home page, why should you be loyal to a company with “no there there”?
In other words, we are racing in a direction that not only risks destroying the very enterprises we are trying to preserve, but also ultimately against the very human need to belong to something enduring, that has a purpose and is larger than ourselves. But how do you create an infinitely adaptive, shape-shifting organization that also in permanent and enduring?
I think I have the answer . . .and if not, then at least I’ve asked the right questions. And, perhaps just as important, in writing The Future Arrived Yesterday, I’ve written a book that has given me, and I hope you as well, something to be optimistic about the years ahead even as we struggle through our economic troubles today.
If you’d like to learn more about Protean Corporations, please scroll down for a pair of white papers I’ve written that are currently available on only the Amazon Kindle. And for those of you who do decide to read the book itself, thank you in advance for being a loyal reader for all of these years. And be sure to let me know if I’m crazy . . .
Amazon Kindle Essay #1 (exclusive to the Amazon Kindle and Edgelings.com)
Sometime in the next year – and we can only hope that it is sooner rather than later – we will emerge from our current recession and find ourselves in a new era of economic expansion.
In the process, we will likely be stunned to discover that while we were hunkered down just trying to get through the hard times the world has continued to move on. There will new technologies, new products, new competitors, new markets . . .and perhaps most important, new rules for doing business. And in response to all of these changes, there is likely to emerge a new kind of enterprise to compete for dominance in this changed world.
There is certainly no shortage of precedent for this kind of transformation. In fact, just about every boom/bust cycle of the last two centuries has seen the evolution to a new kind of business organization. Just in the last sixty years, we have seen the hierarchical corporation, the Sloan divisional organization, the R&D corporation, the conglomerate, management by objective, management by walking around, total quality management, virtual corporations, agile corporations, dot.coms and Web 2.0 companies.
So, as we begin to ramp upwards into the next period of economic expansion, the question isn’t whether we’ll see a new kind of company emerge – that’s almost a given – but what that new kind of company will be like.
This isn’t an idle question: if history is any precedent, this new organizational paradigm will come to dominate and define their era – and those companies that adopt it first will quickly leave their less progressive competitors far behind. For that reason, at least in the early years of a new era of economic expansion, there may be no more important piece of information for companies to have than this model – after all, it will both define how they will be organized and the rules under which they will compete.
Almost twenty years ago, teamed with legendary Silicon Valley executive and venture capitalist Bill Davidow, I helped define the last great organizational model: the “virtual corporation.” At the time, we had both independently – he as an executive, me as a journalist – come to the realization that the rise of personal computers and networking technology was forcing radical changes on companies: inverting their organizations, forcing them to adopt principles of mass customization, enlisting their customers in product design, manufacture and service, and, ultimately, tearing down their walls and making them all-but edgeless.
The concept of the virtual corporation was considered too radical for most companies in the early 1990s. But then along came the Internet; and suddenly the idea of workers at home employed by a company without edges not only seemed possible, but inevitable. And, indeed, today virtual corporations can be found everywhere today in the business world. They help define the Internet Age.
But, almost from the start, I began to notice weaknesses – even potentially fatal flaws – in the virtual model. And as the years passed, it became obvious to me that these weaknesses were real, and that the challenges they raised would have to be answered by a new model of business organization.
I began searching for this new model even as the tech world was collapsing at the end of the dot.com bubble – and it has taken me the better part of the decade to elucidate those ideas and (not a minor matter for ideas this radical) find the right editor and publisher in John Mahaney at Random House.
What is the fatal flaw of virtual corporations? They are fast, flexible and smart but there is no there there.
Virtual corporations have no center, no heart, no reason to be. In theory there is nothing wrong with that, but in the real world companies are filled with living, breathing human beings. And human beings want to be part of something larger than themselves. They want to participate in a venture, a crusade, that accomplishes much more than they ever could themselves. And they want to look back on their life and believe that it was worthwhile and that what they accomplished will endure.
My own epiphany about this came when I was updating my autobiography for my ABCNews column. It suddenly hit me, with an empty feeling in my gut, that almost every company I had ever worked for was now gone. I would never have that moment as an old man, as my father and grandfathers had, of pointing at a building or a car and saying ‘I worked there’ or ‘I helped build that.’
Unfortunately, as a business reporter, I understood as well as anybody that those very companies I missed were now becoming extinct precisely because they were slow-moving, un-adaptive and unattractive to the new generation of workers.
So, there it was, the paradox facing the business world as we raced into the 21st century: How do you build a company that is as fast-moving as the pace of technological innovation, that is ever-changing, and that can adapt to the special demands of the new Internet-based global economy . . .yet, at the same time, is permanent and enduring, and that preserves the corporate culture and business philosophy that first made it great? How do you build an enterprise that is in perpetual motion yet, in some essential way, remains permanent and grounded?
It seemed to me that there was no answer to this question. And yet, finding that answer was the single most important challenge facing every important company – indeed, every institution – in the 21st century.
My search for a solution to that paradox ultimately led me to the model of the “Protean Corporation” – the shape shifter with the solid Core – and my new book , The Future Arrived Yesterday.
Amazon Kindle Essay #2 (exclusive to the Amazon Kindle and Edgelings.com)
The Protean Corporation, the subject of my new book The Future Arrived Yesterday is the product of three centuries-long trends – yet, at the same, is uniquely possibly only now, at the beginning of the 21st century.
The first of those trends is the ever-greater empowerment of company employees to assume control over not only business decision for which they are best positioned in the organization, but also over the daily conduct of their own careers. Ever since the mid-19th century enterprises have been slowly pushing decision-making and responsibility down through the company and giving employees more and more independence.
This process began with the demand by employees – especially when they formed into unions — for ever more freedom. But, for the last thirty years, and especially now in the new agile, virtual corporations, it has been management that has been pushing for greater employee empowerment – all but pushing them out the door to work at home, assume their own pensions via 401K’s and make their own business decisions for the company . . .and be credited or blamed for the results.
Until recently, the assumption was that modern employees, if given the chance, would both choose to work at home (or at Starbuck’s) and would prefer to be free agents in their careers, moving gypsy-like from one employment contract to the next.
However, what has become increasingly apparent is that this sort of career only appeals to a minority of all workers – and that the rest, if given real freedom to choose, would pick careers across a wide spectrum that ranges from extended part-time work, to traditional jobs, to a lifelong commitment to a single organization. Thus, if a modern organization is to maximize its productivity, its intellectual capital and its employee morale, then blindly pursuing ever-greater virtualization will only yield ever-worse results. What is needed now is business model that moves away from across-the-board, programmatic notions of employee freedom and empowerment and delivers it in the form best suited for each employee.
The second trend, which I wrote about in column last year in the Wall Street Journal is that the United States is rapidly becoming history’s first true Nation of Entrepreneurs. Our heroes are entrepreneurs like Steve Jobs, our children tell pollsters that they never plan on working in a real corporate ever in their lives, and over-40 Americans are now the fastest-growing group of new entrepreneurs in the country.
That’s where this huge new cohort of gypsy, free-agent, workers wants to go. And they aren’t alone: even those folks who want to stay connected in some way to established companies are feeling the pull to create their own organizations. If companies don’t wan to lose their shot at the most of the nation’s best business talent, they are going to have to offer entrepreneurial opportunities inside their organizations – not just the usual lip-service about ‘intrapreneurship’, but real stand-alone internal start-up businesses with their own management and reward structures.
The third trend is Globalization. The rise of a world-wide marketplace, powered by the Internet and mobile telephony, has deservedly gotten a lot of attention in recent years. Unfortunately most of the characterizations of this market have been overly simplistic. The world, in fact, is not flat. Nor is the global marketplace mostly homogeneous.
The truth is far more complicated (and is, in fact, the subject of my next book). For now, it is sufficient to appreciate that this global marketplace is going to be so complex that companies in the future are going to have to be more adaptive than ever before. And not just on the edges anymore, but across the organization. Indeed, they may even have to leap back and forth from being manufacturers and service providers, public and private companies, and even for-profit and non-profit entities.
The impact of these three forces on the 21st century enterprise was the impetus behind The Future Arrived Yesterday . . .and the book offers the first attempt to reconcile them. The result is a radically new kind of company – what I call a “Protean Organization” — that finds a delicate balance between the company as shape-shifter (hence, protean) and the company as enduring institution.
How do I find that balance? Well, it takes me a couple hundred pages to do so, but put simply – in what we Silicon Valleyites call an ‘elevator pitch’ – imagine the company as a permanent, solid center surrounded by an ever-changing cloud of employees, entrepreneurs, free-lancers, contractors, and even people who may just stick around for a few minutes to write a line of code. In other words, an answer to the question: How do you meet the needs of all company stakeholders – from those who want their independence to those who want to belong forever – and still build an organization that is both perpetually changing and also built to last?