Michael Malone on The Protean Corporation

Michael S. Malone is perhaps best known for his work defining the “Virtual Corporation” in the early 1990s. At Stanford’s Media X conference he proposed the next iteration of organisational development – the Protean Corporation. The topic forms the basis of Malone’s next book. This article is based on his talk.

Trends

The total number of consumers is growing exponentially. Wireless broadband covers an ever-increasing amount of territory. The US may become the first truly “entrepreneurial society”, with skill-based work that never last more than a few years, where people never plan to do the same work forever: A mixture of creativity and volatility. The increasing size of the customer base will lead to larger organisations. Simultaneously, competitive threats can appear from anywhere, particularly in fast-moving technology sectors.

The result is two contradictory forces:

  1. Centrifugal: Technology enables workers to be spread out.
  2. Centripetal: Humans still need a sense of legacy and wider purpose; and are inherently social creatures. The “fatal flaw” of the Virtual Corporation was that once everything has been pulled apart, nothing is left.

Throughout history, from pre-corporations (such as early modern trading companies and guilds), through Taylorism to the virtual/adaptive/wired organisations, two trends can be seen:

The Protean Corporation

The paradox is simple: How to build an enterprise that lasts, while still being flexible and adaptive?

Michael used the Quantum atom to demonstrate the shape of things to come: An organic form, in constant flux, which retains its core. The design attempts to recreate the structures within Hewlett Packard, where a group of long-term employees remained at the core, with the traditional enterprise formed around them.

The Protean Corporation has three parts:

  1. Core
  2. Inner Ring
  3. Cloud

The Core are the permanent staff – people that have been with the business since as long as anyone can remember – “the immortals”. Their role is to protect the culture of the company, which they do somewhat informally. For example, they might be highly regarded by other employees for their experience or ability to get a result out of the organisation. Largely unseen, they are the people that make the organisation run smoothly. They may not be immediately apparent to the senior management, and as such they need to be protected from a new CEO – they are likely to be accidentally culled along with the rest of the workforce.

The Inner Ring are the traditional full time employees. They manage and operate the business. Their job is to recruit the Cloud.

The Cloud are 90% of the organisation. Their employment might last a matter of hours or days. They might work remotely, never having met their employer. The cloud is so transient that they might make errors before they have time to learn. It is critical that the Core is able to watch over the Cloud, and maintain the company’s culture and standards.

The role of the company’s board is merely to adjudicate and not to manage – to act like the company’s Supreme Court.

Competence Aggregator

The Protean Corporation will be fixed in perpetual motion. The most important role in such a corporation will be “competence aggregators”. These people pull individuals together for specific projects, much like creating start-up companies within the corporation. Competence Aggregators exist within the Cloud, but are still governed by the Core. The Competence Aggregators will be the new superstars of the economy.

Private and Public

The shape-shifting Protean Corporation can exist in both public and private sectors of the economy. To achieve this is the zenith of the concept.

A key problem remains: There is no way to accurately value the Protean Corporation. Its assets are intangible, and not reflected in conventional accountancy-based corporate market valuation. It is a similar issue to that which limits social entrepreneurs – there is no way to measure the performance of non-profit organisations. The ultimate limitation on the whole process is the lack of a market for intellectual capital.

The Protean Corporation in Practice

Wikipedia was cited as an example of a protean-like corporation.

I personally recognise the existence of both the Core, Inner Ring and Cloud from the Open Directory Project. The Core was part-formalised as “Editalls” – floating editors that had no fixed role, but which were always trusted and experienced veterans of the project. The Inner Ring consisted of “Meta” editors (and later Admins), who appointed everyone else, and took the formal leadership role. However, neither group entirely matched these roles. The Cloud, the regular editors, were just as described by Malone: The majority of the organisation, often with very limited ties to the project, many moving on after a short period of work.

The Core is also commonly found within British local government: In most long-established authorities there are a handful of people who both provide a sense of stability, and can simply get things done that nobody else can (usually through some combination of contacts and experience). Without these people I suspect that much of local government would be rendered totally dysfunctional (as close to collapse as a public body can become).

It was noted that Intel had originally shunned the concept of the Virtual Organisation, yet had subsequently developed into one “by walking backwards into it”. For example, only 20% of its “employees” are now traditional permanent staff. Far more contribute “virtually” or as suppliers. Yet all need access to company data and systems, so have to be trusted. A fifth have never met their boss face-to-face, and half of those never expect to: Such an organisation is logically already facing the challenges that the Protean Corporation seeks to answer.

Michael S. Malone’s book is called The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You.

One comment on "Michael Malone on The Protean Corporation"

  1. On September 4th, 2009 at 8:40 am Carlos V. Roman wrote:

    Hi Tim, I started a company not realizing that the organization I was conceptualizing and created is a Protean Corporation. I am bringing to light a hidden, often misunderstood, under appreciated and fragmented industry called the Public Works Industry. We are pleased about our aspirations and the level of interest some large private and public companies have in what we are doing in a short amount of time. We have executed and delivered in record speed a fantastic platform around professional social networking and ecommerce on a single platform involving government, contractors, educators and citizens. The theory is interesting. I honestly believe the book description and what you have analzed to be the concept of the Protean Company because I am living it daily-recently and I am planning to purchase Mr. Malone’s book soon. I hope to be the next corporate case study that will be evaluated in the years to come.

    Please visit us at http://www.publicworksagency.com

    Regards,

    Carlos V. Roman, Founder