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The Corporate Shape Shifters


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Why the dominant companies of the next decade will behave like perpetual entrepreneurial startups

The Future Arrived Yesterday:

The Rise of the Protean Corporation and What It Means for You

By Michael S. Malone

Crown Business; 295 pp; $27.50

When he became one of the first reporters to cover technology as a beat, back in 1980 for the San Jose Mercury News, Michael S. Malone made telling the story of Silicon Valley his raison d'être. Then, in books such as 1993's The Virtual Corporation, Malone boldly—and presciently—described how technology would reshape corporate reality. In his 2007 book, Bill & Dave: How Hewlett and Packard Built the World's Greatest Company, he reached into the past to chronicle the Valley's first startup.

Now, with The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You, Malone has his forecaster hat back on and another game-changing theory. And because his past predictions about the impact of digital technologies were so often on the mark, many people really do want to know what he's been noodling over.

The central idea here is both simple and powerful: The global economy has entered a new era, and a mercurial corporate form Malone calls the Protean Corporation will become the dominant species by the middle of the next decade. "These Protean Corporations," he writes, "will behave like perpetual entrepreneurial startups, continuously changing their form, direction, even their identity. They will be true corporate shape-shifters."

This notion may not come as a shock, but the huge repercussions Malone envisions just might. The big challenge will be finding a way to protect the core DNA of a company as it reinvents itself over a time frame of months rather than once a generation or decade. Workers will need to be more adaptable than ever. "The company that employs you for the next 20 years may radically change a dozen times, and you will have to find your place in each of those reincarnations," writes Malone.

The price of ignoring this warning is steep. Corporations that fail to figure out how to couple permanence with perpetual change will be "swept away," he says. Although it's a grandiose theory, Malone presents a strong and timely case that business is entering a phase of creative destruction where nothing can be taken for granted and change is the only constant. In part, the cause of all this disruption is the runaway nature of the changes he and co-author Bill Davidow predicted in The Virtual Corporation. "Ever-greater virtualization" is eating away at organizational structures and replacing them with "networks of free agents." Another factor is generational: Malone says the more entrepreneurial mindset of today's twentysomethings will serve as a "catalyst for radical change." With the implosions on Wall Street and in Detroit, Malone's message is likely to resonate with an uncertain and edgy public.

But at times, especially in the back half of the book, Malone veers off track when he switches from prognosticator to management consultant. In several highly detailed chapters, he explains how Protean Corporations will have to adopt radically new ways of structuring themselves. And some of his prescriptions seem downright fantastical. Take his idea of Core Employees. To protect a company's core values, Malone proposes the creation of a coterie of workers, a sort of tribal council, whose members answer to the board of directors, not the chief executive, and have job security for life (unless they really mess up). And though he acknowledges the risk that the Core could become counterrevolutionaries "who secretly run the company to their own ends," he naively clings to the notion that CEOs would willingly relinquish so much power.

That's not to say the book runs out of gas. In one of the later chapters, Malone introduces another class of power player in the Protean Corporation: the Competence Aggregators. These are the entrepreneurs inside a company who create products and services. Since perpetual innovation is key to survival, Malone says these "intrapreneurs" must be supported and given freedom, funding, technical resources, and a stake, much like a startup with venture capital. "Companies of the future must not only support fully the creation of new entrepreneurial enterprises within their corporate operations and do whatever it takes to make the company's work environment conducive to startups, but even take the next step of basing their corporate strategy on the presence of these internal startups."

It's an idea so audacious that—in a sped-up, hypercompetitive future—it just might work.

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Who Pays for Change?

In a June 8 blog post for the Harvard Business Review, Rita McGrath of Columbia University's B-school lays out why the lifespan of a company's competitive advantage in this day and age is "nasty, brutish, and short." She says one thing that separates the sheep from the goats among corporate strategists is the ability to let go of an expired game plan. But even in enterprises nimble enough to switch gears, many will fire employees associated with the operations being abandoned while hiring new people to staff the next initiative—in essence, sticking their own people with the check.

To read McGrath's post, go to http://bx.businessweek.com/change-management/reference/

Ante is an associate editor for BusinessWeek.

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