The Rise of Business Shape-Shifters

May 22, 2009 — -- As you may know, especially if you read the 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 30 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. 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, 17 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. For those of you who do decide to read the book, 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 …

TAD'S TAB: Remember the last time you were in the hospital? It was probably as awful as most hospitable visits. But what about those on the other side of the bedpan, those in charge of the patients? "Head Nurse" is a hilarious blog run by a head nurse from a nameless hospital, covering topics ranging from disorderly patients to miracles of health witnessed. The blog is fascinating for those curious about the hidden lives of the service workers we encounter every day.