Thirty years ago, if you had to choose between being born a genius in Mumbai or Shanghai and an average person in Poughkeepsie, you would have chosen Poughkeepsie because your chances of living a prosperous and fulfilled life were much greater in the United States. ''Now,'' Bill Gates says, ''I would rather be a genius born in China than an average guy born in Poughkeepsie.'' This is an excellent illustration that author Thomas L. Friedman uses in his book, “The World Is Flat: A Brief History of the Twenty-First Century.'' This is another great book in my continuing series of book reviews.
The world we live in is completely different from what it was 20 years ago and changes are now taking place at a faster rate than ever before. Distances have shrunk, accessibility has increased, new territories have been discovered and jobs have been broken down into processes that are digitally transferred and worked on by the person who is the most efficient, fastest and cheapest.
The metaphor of a flat world, used by Friedman to describe the next phase of globalization, is brilliant. It came to him after hearing an Indian software executive explain how the world's economic playing field was being leveled. For a variety of reasons, what economists call ''barriers to entry'' are being destroyed; today an individual or company anywhere can collaborate or compete globally.
What created the flat world? Friedman stresses technological forces.
Paradoxically, the dot-com bubble played a crucial role. Telecommunications companies like Global Crossing had hundreds of millions of dollars of cash -- given to them by investors and they used it to pursue incredibly ambitious plans to ''wire the world,'' laying fiber-optic cable across the ocean floors, connecting Bangalore, Bangkok and Beijing to the advanced industrial countries. This excess supply of connectivity meant that the costs of phone calls, Internet connections and data transmission declined dramatically -- so dramatically that many of the companies that laid these cables went bankrupt. But the deed was done, the world was wired. Today it costs about as much to connect to Guangdong as it does New Jersey.
Friedman explains what he calls, “The Ten Forces that Flattened the World.” They are as follows:
Flattener #1: 11/9/89: Fall of Berlin Wall
On 11/9/89, the captive people of Eastern Europe were liberated as the Berlin Wall fell. Some believe that Reagan and the United States outspent the U.S.S.R. on the arms race and drove it to bankruptcy. Others believe that the joint efforts of Jobs, Gates and IBM, efforts that enabled millions of people to have PCs and to communicate differently, brought down the Berlin Wall. And, of course, Osama Bin Laden also takes credit, having beaten the U.S.S.R. in Afghanistan.
Whatever the cause, the results are indisputable: the dualistic world of capitalism and communism died that day. The great socialist/communist experiment failed in Russia, in Eastern Europe, in China, in India, and in other countries. The result was across-the-globe (except for Iran and North Korea) free trade.
Flattener #2: 8/9/95: Netscape goes public
Netscape went public, creating a browser for all to use in order to access the Internet. The Internet became a system for creating, organizing, and linking documents in an abstract informational space. The Internet bubble was born, and anything could be bought and sold in cyberspace.
Flattener #3: Work Flow Software
In the late ‘90s, a plethora of application software hit the marketplace. This software enabled more people in more places to design, manage, and collaborate on business data in real time. This software could shape things, design things, create things, sell things, buy things, and keep track of things.
Flattener #4: Open Sourcing or Uploading
Uploading harnesses the power of communities. It allows open source software to be used cooperatively. Uploading allows for blogs, wikis, and podcasts. Uploading perpetuates the democratization of information. The most popular stepchild of uploading is MySpace.com, a social networking site through which millions of people worldwide communicate with each other.
Flattener #5: Outsourcing
More and more United States companies are outsourcing parts of their functions to the Far East. A full-time computer programmer that costs $70,000 in the U.S. might cost $12,000 a year in Bangalore, India. Customer service centers are being outsourced to India, Ireland, and Mexico. U.S. companies have found that this is a way they can reduce costs.
Flattener #6: Offshoring
Companies are offshoring their manufacturing to China and the Far East. One CSP grad sends 95% of his production to China, “because it costs only one-third of what it costs in Wisconsin.” Most consumers are beneficiaries of offshoring: we buy inexpensive apparel at Target or Wal-Mart. Nike does not own one manufacturing plant; plants in the Far East make all of their shoes.
Flattener #7: Supply-Chaining
The competitive advantage in a globalized, flattened world becomes your supply chain. How efficiently can you get your products from the hinterlands of China or Vietnam to the Target store near you? Wal-Mart, the biggest and most profitable retailer in history does not actually make a thing. They just have an extremely efficient supply chain. That supply chain is based upon information systems. They can track any goods en route. They know when and where they need which products. It is a science based upon an effective information system.
Flattener #8: Insourcing
Not every organization has the logistical capabilities to play thoroughly in the global economy; nor is it cost effective for every organization to operate its own supply chain. In these cases, other companies can help them with their logistical supply chain. For instance, Federal Express warehouses Medtronic products at its hub in Memphis. That makes it easier to send an important medical part in real time to a hospital. Fed Ex also fixes Toshiba laptops in Memphis. Fed Ex is an effective insourcer.
Flattener #9: In-forming
Google, Yahoo, and MSN.com all allow individuals to be self directed and self empowered in order to drill down and obtain information that our grandparents would only dream about. These search engines allow anyone at anytime in any part of the world to gather a tremendous amount of information: one does not have to be at a great university or in a large city.
Flattener #10: The Steroids: digital, mobile, personal, virtual
These four steroids--digital, mobile, personal, virtual--allow anyone to talk, compute, write, and access information from almost any place at almost any time. PDAs (Personal Digital Assistants) allow instant access to information. People with PDAs need not waste time waiting as access is instantaneous.
So what does it all mean? What are we to do with this great insight that the world is indeed flattening? Friedman tells us we need a key skill in order to survive. That skill is adaptability. This is true of an individual, a business, a teacher… We all need to understand what we do today to be successful, will not be what we do tomorrow. This is a great action point for all of us. We cannot become complacent. I highly recommend this book!
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