Beyond the Virtual Corporation

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Beyond the Virtual Corporation

In 1992, Michael Malone predicted the rise of The Virtual Corporation1 and co-authored a book by the same name.  The virtual corporation was a new idea in 1992, but it is commonplace now.  It involves telecommuting, global teams collaborating across national boundaries, outsourcing of noncritical functions, always-on mobile communications, Internet marketing and sales, and a flat hierarchy. 

But times are changing so fast, he argues, that even the virtual corporation itself is now becoming obsolete.  Malone began thinking about this in 2000.  After refining his thoughts for several years, he first concluded that in an Internet-based global marketplace, businesses couldn't keep operating as they do today.  Secondly, since every new economic era spawns a new type of business paradigm, there would have to be one coming down the pike very soon.  The question in Malone's mind was:  What would this new enterprise look like? 

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His first conclusion was based on fact that the corporations were essentially staying the same even as their marketplace, their employees, and society were all changing. 

The second conclusion was derived from a quick review of history.  It shows that each new era has produced a new kind of business structure.  Process industries with huge economies of scale produced integrated companies like U.S. Steel and Standard Oil.  Alfred Sloan's divisional model of General Motors was the post-war paradigm that combined customer focus with scale economies. 

An economic crisis usually precedes the changing of the paradigm.  So now appears to be the perfect moment to expect emergence of a new form that fits the new realities. 

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Malone describes this new organization in his book called The Future Arrived Yesterday:  The Rise of the Protean Corporation and What It Means for You.2

The word "protean" means something that changes frequently and easily.  In this case, the protean corporation is one that can change as fast as the world and the people in it change.  It is a company that can meet head-on challenges like distracted customers who lack loyalty, and competitors that are scattered all over the globe. 

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In this sense, the new corporation is less of a traditional organization, and more of a loose affiliation of people and tools of all sorts that can be rolled out on short notice to meet a challenge or take advantage of an opportunity...

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