“THE WORLD IS FLAT”
- THOMAS. L. FRIEDMAN
The speech about Thomas L. Friedman’s book, the brief history of 21st
Century ‘THE WORLD IS FLAT’. He has won the Pulitzer Prize 3 times for his work at the New York Times, where he serves as the foreign affairs columnist. He is the author of 3 best selling books from Beirut to Jerusalem (FSG, 1989) winner of the National Book Award for notification and still considered the definitive work on the Middle East, the Lexus and the Olive Tree understanding Globalization (FSG, 1999) and the Longitudes and the Altitudes exploring the world after Sept. 11(FSG, 2002). He lives in Bethesda, Maryland with his family.
When scholars write the history of the world twenty years from now and they come to the chapter “Y2K TO MARCH, 2004” what will they say was the most crucial development? The attacks on the World Trade Center and the Pentagon on 9/11 and the Iraq War or the convergence of technology and events that allowed India, China and so many other countries to become part of the global supply chain for services and manufacturing, creating an explosion of wealth in the middle classes of the world’s two biggest nations and giving them a huge new stake in the success of globalization? And with this “Flattening” of the globe, which requires us to run faster in order to stay in place, has the world gotten to small and too fast for human beings and their political systems to adjust in a stable manner?
CHAPTER 1
He demystifies this brave new world for readers, allowing them to make sense of the often bewildering global sense unfolding before their eyes. With his inimitable ability to translate complex foreign policy and economic issues, Friedman explains how the flattening of the world happened at the dawn of the 21st century, what it means to countries, companies, communities and individuals and how governments and societies can and must adapt. The world is flat is a timely and essential update of globalization, its success and discontents were powerfully illuminated.
When on his journey to Bangalore in Feb., 2004 he realized that the globalization had gone to a whole new level. If you put the Lexus and the olive tree and this book together, the broad historical argument you end up with is that there have been three great areas of globalization. The 1st lasted from 1492, when Columbus gets sail, opening trade between the old world and the new world until around 1800. This is the 1st era of globalization. It shrank the world from a size large to size medium.
The 2nd great era Globalization 2 lasted roughly from 1800 to 2000 interrupted by the Great Depression and World Wars I & II. This era shrank the world from size medium to a size small. The key agent of change is the dynamic force driving global integration was Multinational Companies. In the 1st half of this era, global integration was powered by falling transportation cost, and in the 2nd half by falling the telecommunication costs. It was during this era that we really saw the birth and maturation of a global economy, in the sense that there was enough movement of goods and information from continent to continent for there to be a global market, with global arbitrage in products and labor.
Around the year 2000 we entered a whole new era globalization 3. Globalization 3 is shrinking the world from a size small to a size tiny and flattening the playing field at the same time.
CHAPTER 2
THE TEN FORCES THAT FLATTENED THE WORLD
A. When the walls come down and the windows went up:
The Berlin wall had been breached in Nov. 9, 1989. The fall of Berlin wall help to flatten the alternatives free market, capitalism and unlock enormous pent-up energies for hundreds of millions of people in places like India, Brazil, china and Former Soviet Union. In Europe alone the fall of Berlin Wall opened the way for the formation of EU and its expansion from 15 to 25 countries. The doors for IBM PC’s and Windows Operating System were opened due to the rapid growth in communication sector. The diffusion of personal computer, fax machines, windows and dial-up modems connected to a global telephone network all come together in late 1980’s and early 1990’s to create the basic platform that started the global information revolution.
B. When Netscape went public:
Netscape’s first commercial browser, which could work on IBM PC, an APPLE Macintosh or a UNIX computer, was released in Dec. 1994 and within a year it completely dominated the market. As browsing and the internet in general grew, Netscape wanted to make sure that Microsoft, with its huge market dominance would not be able to shift these web protocols open to proprietary standard that only Microsoft’s servers would able to handle. Netscape helped to guarantee that these open protocols would not be proprietary by commercializing them for public.
C. Work flow software:
In the late 1990’s the software industry began to respond to what its consumers wanted. Technically what made it possible was the development of a new data description language, called XML and its related transport protocol. Called SOAP, IBM, Microsoft, etc. They enabled digitized data, words, music and photos to be exchanged between diverse software programs, so that they could be shaped, designed, manipulated, edited, credited, stored, published and transported.
D. Open Sourcing:
The intellectual commons form of open sourcing has its roots in the academic and scientific communities, where for long time self-organized collaborative communities of scientists have come together through private networks and later the internet to pool their brain power or share insights around a particular science or math’s problem. IT people tend to be very bright people and they want everybody to know just how brilliant they are. Open source is nothing more than pre- reviewed science, some times people contribute these things because they make science and they discover things and the reward is reputation.
E. Outsourcing:
In many ways the Indian IT (outsourcing) revolution began with GE coming over. Outsourcing from U.S.A. to India as a new form of collaboration exploded. By just stringing a fiber-optic line from a work-station in Banglore to companies Mainframe. India IT firms like Wipro, Infosys and Tata Consulting Services managing E-Commerce and Mainframe applications. Y2K lead to this mad rush for Indian Brainpower to get the programming work done. The Indian companies were good and cheap, but price wasn’t first on customers mind setting the work done was and India was the only place with the volume of workers to do it. India is one of the few places where you can find surplus English speaking engineers at any price because all of those in U.S.A. have been scooped up by E-Commerce companies. Therefore, there is an large volume of employment opportunities outside India.
F. Off shoring:
Off shoring which has been around for decades is different from outsourcing. Off shoring by contrast is when a company takes one of its factories that it is operating in Canton, Ohio and moves the whole factory off shore to Canton, China. There, it produces the very same product in the very same way, only with cheap labor, lower taxes, subsidized energy and lower health care costs. One that off shoring process began in a range of industries from textiles to consumer electronics to furniture to eye glass frames to auto parts. The only way other companies could complete was by off shoring to China as well (taking advantages of its low costs, high quality platforms) or by looking for alternative manufacturing centers in Eastern Europe.
G. Supply Chaining:
As consumer we love supply chains, because they deliver all sorts of goods from tennis shoes to laptop computers – at lower and lower prices. That is how Wal-mart became the world’s biggest retailer. Wal-mart became one of the world’s most controversial companies. No company has been more efficient at improving its supply chain (and thereby by flattening the world) than Wal-mart. Supply chaining is a method of collaborating horizontally among suppliers, retailers and customers to create value.
H. In sourcing:
The process that has come to be called ‘In sourcing’ a whole new form of collaboration and creating value horizontally made possible by the flat world and flattening it even more. In the previous section I discussed why supply chaining is so important in the flat world. But not every company, indeed very few companies can afford to develop and support a complete global supply chain of the scale and scope that Wal- mart has developed. That is what gave birth to In sourcing. In sourcing is distinct form supply chaining because it goes well beyond supply chain management. Because it is third party managed logistics, it requires much more intimate and extensive kind of collaboration among clients and its client’s clients.
I. Informing:
Informing is the individuals personal analog to open sourcing, out sourcing, in sourcing, supply chaining and off shoring. Informing is the ability to build and deploy your own personal supply chain, a supply chain of information, knowledge and entertainment. Informing is about self-collaboration. Informing is searching for knowledge. Informing though also involves searching for friends, allies and collaborators. It is empowering the formation of global communities across all international and cultural boundaries which are another critically important flattening function.
CHAPTER 3
THE TRIPLE CONVERGENCE
The net result of the convergence was the creation of global, web-enabled playing field that allows for multiple forms of collaboration. The sharing of knowledge and work in real time, without regard to geography, distance or in the near future, even language.
IT revolution leads to more productivity right away. The era of globalization of mainframe computing which was very critical command and control oriented with companies and their individual departments tending to be organized in vertical silos.
The internet now makes the whole world “like one market place”. This infrastructure is not only going to facilitate sourcing of work to be the best price, best quality, from the best place it is also going to enable a great amount of sharing of practices and knowledge and its going to be ‘I can learn from you and you can learn from me’ like never before.
The world has been flattened. As a result of the triple convergence, global collaborations and competition between individuals and individuals companies and individuals, companies and companies and companies and customers have been made cheaper, easier, more friction free and more productive for more people from more corners of the earth that at any time in the history of the world.
CHAPTER 4
THE GREAT SORTING OUT
In the wake of the triple convergence that we have just gone through we are going to witness, because when the world starts to move from a primarily vertical (command and control) value creation model to an increasingly horizontal (connect and collaborate) creation model, it doesn’t affect just how business gets done. If affect everything communities, companies and individuals such as consumers, employees, shareholders and citizens.
It is not only communities and companies that have multiple identities that will need sorting out in a flat world. Along with these individuals such as employees, citizens, tax payers and shareholders and consumers also faces tension in flat world. As you sort out and weigh your multiple identities, consumers, employees, citizens, tax payer, shareholder- you have to decide about this. Because this is going to be an important political issue in a flat world. Because why you take the middleman out of business, when you totally flatten your supply chain, you also take a certain element of humanity out of life.
CHAPTER 5
AMERICA AND FREE TRADE
Will free trade benefit America as a whole when the world becomes so flat and so many more people can collaborate and compete? It seems that so many jobs are going for outsourcing and off shoring. The English Economist David Ricardo, who developed the free trade theory of comparative advantage, which stipulates that if each nation specializes in the production of goods in which it has a comparative cost advantages and then trade with other nations for the goods in which the they specialize, there will be an overall gain in trade.
Last year Indian Infosys Company received “One Million Applications” from young Indians for 9000 technical jobs.
Americans employment rate would be much higher than 5%. The reason it is happening is that as lower-end service and manufacturing jobs move out of Europe.
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