Going Protean

Michael S. Malone’s 2009 book "The Future Arrived Yesterday" details a business model he calls the "protean corporation." As Malone describes it, a protean corporation employs only a small number of critical employees and functions; all other resources and services are outsourced so that they can be quickly adjusted to meet the company’s needs. Like a protozoa, the corporation can rapidly adapt to changing circumstances; it is not encumbered with routine or easily outsourced functions that are not critical to its central mission.

A January 28, 2013 article in “The Wall Street Journal” by Paul Christiansen, founder of the web design firm Quorim, promotes the protean model as a tool for companies seeking to manage their costs under the Affordable Care Act (“Obamacare”). Christiansen notes that “Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That's because Obamacare is forcing them to cover their employees' health care or pay a fine—either of which will cut into profits and stymie future investment and growth.”

The Affordable Care Act requires Companies with more than 50 fulltime employees to provide health insurance or incur penalties. Many larger companies will find it impractical to scale down to this level but companies nearing the 50 person threshold or up to 100 or so over are looking at ways to manage the impact. Many plan to scale back their staffing levels and many others have already started shifting personnel from fulltime to part-time positions.

The protean model offers a less painful option for some: retain the key employees responsible for the company’s vision and mission and outsource more routine functions like IT, legal, finance accounting, PR, manufacturing, and even marketing and product development.

The protean model predates the Affordable Care Act and there are there other reasons for adopting some form of it. People are expensive, managing them can be daunting, unexpected departures can leave hard-to-fill gaps, needs may vary seasonally or for one-time matters, and “right-sizing” and other staffing level changes can be painful. Outsourcing can help manage these challenges.

Many of our clients outsource functions ranging from IT to manufacturing. In addition, Morrison assists many others with services including managing finance and accounting functions, strategic and long-term planning, annual budgeting and operational overview, reviews of business acquisitions and dispositions, and special planning and research projects. These services are scalable depending on needs, allowing companies to pay only for what they require and to concentrate their internal resources on core needs.

The protean model won’t work for every company but it can be a valuable tool whether it’s to manage the impact of the Affordable Care Act or just to more efficiently focus a company’s resources.

About the Author

+Brent Morrison is managing principal at Morrison, providing business valuations, business planning (including budgeting, cash flow forecasting, strategic planning), feasibility studies, interim executive CFO services, competitive grant writing and special projects that don't fit into any conventional category. You can contact Brent directly at bmorrison@morrisonco.net or via telephone at 530-893-4764 ext. 202.

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