Accelerate IT IMS The Future Will Not be Centralized

THE REVOLUTION WILL NOT BE CENTRALIZED.HOW THE RISE OF THE PROTEAN CORPORATION IS CHANGING BUSINESS

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. Capital. Acceleration. • accelerateit.com @TheAccelerateIT 866.611.4652 [email protected]

THE REVOLUTION WILL NOT BE CENTRALIZED. HOW THE RISE OF THE PROTEAN CORPORATION IS CHANGING BUSINESS

HOW THE RISE OF THE PROTEAN CORPORATION IS CHANGING BUSINESS The world is very different from the one that existed just a century ago. Semiconductor transistors, and along with them processing capabilities, have doubled every two years, follow-ing Moore’s Law almost exactly. Thanks to cheaper electronics and widespread internet access, the number of consumers is expected to triple and the rapid growth and advancement of technology will affect every industry (Malone, 2009). This ex-ponential growth of both technology and the number of peo-ple using it has turned classic business models on end and many companies, even previously thriving companies, are

struggling to keep up. Even large, multina-tional corporations haven’t been immune to these changes (McKinsey, 2000). With the ever-evolving company landscape, changing industrial climates and newfound purchasing power of consumers with more choices than ever before, enterprises need increased flexibility that will allow them to maneuver and adapt to changes quickly. In his book, “The Future Arrived Yesterday,” Michael S. Malone describes system of in-creased outsourcing called the “Protean

Model,” in which only a small amount of core competencies are maintained within the corporation, while all other pro-cesses are managed by external entities. Because of rapid advancements in technology, society and industrial practic-es, the Protean Corporation business model is well-suited for enterprises looking to boost their flexibility and enhance their survivability in the modern age.

The history of the modern enterprise is a long and arduous one, dating all the way back to the market shops and trading

THANKS TO CHEAPER ELECTRONICS AND WIDESPREAD INTERNET ACCESS, THE NUMBER OF CONSUMERS IS EXPECTED TO TRIPLE AND THE RAPID GROWTH AND ADVANCEMENT OF TECHNOLOGY WILL AFFECT EVERY INDUSTRY.

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companies of the middle ages (Micklethwait & Wooldridge, 2003). As society, technology and the business environment have evolved, the companies that have evolved with them have had staying power far beyond those that haven’t. It’s al-ways been those that stayed nimble, that allowed themselves to evolve with technology and society that have remained rel-evant. Companies like Texas Instruments, which began as a company that specialized in seismic instruments before ven-turing into defense systems and eventually becoming one of the largest semiconductor manufacturers in the world, have continued to thrive not simply through ingenuity and deter-mination but because they have stayed flexible in the face of a changing world (Malone, 2009).

One way that many companies chose to answer the need for increased flexibility has been with more reliance on conven-tional forms of outsourcing. In fact, outsourcing of profes-

sional services such as accounting and in-formation technology is also expected to accelerate rapidly over the next five years and beyond (Elram, Tate and Billington, 2007). In the past few years outsourcing has proven very important for both Amer-ican and European companies, but while traditional outsourcing has provided a cer-tain level of flexibility for enterprises, the need for increased adaptability is becom-

ing more and more apparent. Malone describes the need for companies to become shapeshifters. He describes companies like HP, Apple and Cisco, all of whom went through rather ex-treme changes and were able to adapt to the changing face of business as opposed to being destroyed by it (Malone, 2009).

Epitomizing the current trends of increased outsourcing, the Protean Corporation model described by Malone is a mod-el based on managed services in which most facets of the business are managed by outside entities such as external

IT’S ALWAYS BEEN THOSE THAT STAYEDNIMBLE, THAT ALLOWED THEMSELVES TO EVOLVE WITH TECHNOLOGY AND SOCIETY THAT HAVE REMAINED RELEVANT.

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corporations or independent contractors. In an article for the Wall Street Journal, Paul Christiansen describes the Protean Corporation and its makeup: “Owners of protean companies create a core of strategic employees who manage the big-pic-

ture elements of the enterprise—the cul-ture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations” (Christiansen, 2013).

In the modern age, Protean Corporations enjoy many benefits that traditional corpo-rations do not. The relatively small core of the Protean Corporation allows them to en-joy many of the tax incentives and health-care benefits of smaller companies while still experiencing the growth and expansion

of a larger corporation (Christiansen, 2013). More importantly however, are benefits to overall adaptability and flexibility that Protean Corporations retain. In a précis of “Tomorrow Arrived Yesterday,” Pete Laburn perfectly summarizes the broader ben-efits of the Protean Corporation:

It is this flexibility, this ability to change and adapt nearly ev-ery aspect of the business at any stage that gives the Protean Corporation its power. A perfect example of this adaptability can be seen in how the Protean Corporation is able to han-

COMPANIES LIKE HP, APPLE AND CISCO, ALLOF WHOM WENT THROUGH RATHER EXTREMECHANGES AND WERE ABLE TO ADAPT TO THE CHANGING FACE OF BUSINESS AS OPPOSEDTO BEING DESTROYED BY IT.

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 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 changes taking place just beyond its edges (Laburn 2010).

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dle product adaptation. Traditionally, the process of making drastic changes to existing products or creating entirely new products has been a slow and tedious one, often relying on large scale reorganization and company-wide restructuring to be effective. Companies looking to create new products of-ten need years before production methods are in-line with industry standard (Daley, 2009). However a Protean Corpo-ration can move fluidly through levels of product design and production by relying on external entities specialized in those fields. It makes sense that because the external com-panies being relied upon are highly specialized, they are also often more efficient than an internal department would be. This higher degree of specialization often means that these external companies are operating with more acute industry knowledge and higher productivity than an internal depart-ment may be capable of (Malone, 2009).

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In an article for Entrepreneur.com, Jason Daley describes how this sort of adaptability has been the deciding factor in many industries and the single most important element in the success stories of companies such as Dell, Cisco and Face-book. He also highlights the importance of outsourcing pro-duction facilities in particular. “One of the best examples may be Vizio,” Daley writes, “whose meteoric rise has helped push old-guard corporations such as Fujitsu, Pioneer and Apex to exit the television business and companies like Philips to li-cense their flat-panel units.” (Daley, 2009) Vizio is a perfect example of a company that has embraced the idea of man-aged services particularly in it’s manufacturing. As a major electronics manufacturer, Vizio has only 162 employees, most dealing with marketing, sales and product development (Da-ley, 2009).

Because there is proof that the Protean Corporation can be utilized to provide flexibility and adaptability in the modern age, it will only be a matter of time before the model gains

more traction and becomes more wide-spread. In his book, Malone describes the Protean Corporation as inevitable, partially because of the way that the newest gener-ation of entrepreneurs and workers view authority and structure (Malone, 2009). Ac-cording to Malone, this new generation will embrace Protean Corporations, companies that “behave like perpetual entrepreneur-ial start-ups, continuously changing their form, direction, even their identity in order

to respond to the rapid changes in the marketplace (Malone, 2009). If these companies are destined to become more preva-lent, then the only question that remains is “what will happen to those that choose traditional methods?” While it cannot be said that these businesses will die out, when one looks to the evolution of the modern corporation for clues as to the fate of those that refuse adaptation, it doesn’t look good.

MALONE DESCRIBES THE PROTEAN CORPORATION AS INEVITABLE, PARTIALLY BECAUSE OF THE WAY THAT THE NEWEST GENERATION OF ENTREPRENEURS AND WORKERS VIEW AUTHORITY AND STRUCTURE.

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WORKS CITED:Christiansen, P. (2013, January 28). To outsmart obamacare, go protean. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424127887324461604578193472562389926.html

Daley , J. (2009, November 15th). The entrepreneur economy. Retrieved from http://www.entrepreneur.com/article/204086

Elram, L., Tate, W., & Billington, C. (2008). Offshore outsourcing of profes-sional services: A transaction cost economics perspective. Journal of Operations Management, 26(2), 148-163.

Hagel, J. & Singer, M. (1999, March 01). Unbundling the corporation. Harvard Business Review, Retrieved from http://hbr.org/1999/03/unbun-dling-the-corporation/ar/1

Malone, M. (2009). The future arrived yesterday: The rise of the protean corporation and what it means for you. New york: Random House.

Micklethwait, J., & Wooldridge, A. (2003). The Company: A Simple History of a Revolutionary Idea.

Laburn, P. (2011, February 01). The future arrived yesterday the rise of the protean corporation (and what it means for you): A précis of the book by pete laburn. Retrieved from http://www.petelaburn.com/wp-content/up-loads/2011/02/The-Future-Arrived-Yesterday.pdf

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ONE COMPANY, THREE BUSINESSES Beneath the surface of most companies are three kinds of businesses—a customer relationship business, a product innovation business, and an infrastructure business. Although organizational-ly intertwined, these businesses differ a great deal (exhibit).

It’s because of the growing trend of Protean Corporations and the increased reliance on outsourcing and managed services that Accelerate-it has evolved in the way it has. In order to cre-ate value for companies looking to outsource a large amount of normally internalized processes Accelerate-IT has created modules that take on tasks outside of enterprise’s core compe-tencies such as strategy and planning, financial operations and marketing, to allow these enterprises to focus on what they do best. And when we find that our client’s needs are outside our own skill-set, we help find external organizations that can work with them and fulfill their needs. In essence, Accelerate-IT has become a one stop shop for companies looking to increase their flexibility, their adaptability and their survivability in an increas-ingly complex world.

Accelerate IT IMS The Future Will Not be Centralized

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