The World is Flat

A compilation for a book review presentation done by:

Saurabh Dixit

www.saurabhdixit.comDecember 2008

The World is Flat

A Brief History of the Twenty-First Century

By Thomas L Friedman

Friedman has won the Pulitzer Prize three times for his work at the New York Times, where he serves as the foreign affairs columnist. He is the author of three best selling books. He lives in Bethesda, Maryland.

2005

Thomas Friedman “While visiting in Bangalore, India someone commented that the playing field is being flattened . . . My God, he’s telling me that world is flat!. . . The global competitive playing field was being leveled. The world was being flattened.”

Playing GolfNo one gave me directions like this before:Aim at either Microsoft or IBMI was standing on the first tee at the KGA Golf club in downtown Bangalore. The Goldman Sachs building wasn’t done yet and HP and Texas Instruments had their offices on back nine. That wasn’t all – the tee markers were from EPSON, a caddy was wearing a 3M hat and outside the Pizza hut billboard showed a headline ”Gigabites of Taste”

The world is flat

Nilakani said:“Tom the playing field is being leveled.There was a massive investment in technology, broadband connectivity around the world, coupled with the PCs becoming cheap, there was an explosion of software, e-mail, search engines like Google

The world is flat

We then had software that can chop up any piece of work and send one part to Boston, one to Bangalore, one to Beijing making it easy for anyone to do remote development.2000 all these came togather creating a platform where intellectual work, intellectual capital, could be delivered from anywhere.Tom and Nilekani were sitting in the Massive conference room of Infosis in Banglore.

The world is flat

Flattening of the world means that we are now connecting all the knowledge centers of the world together into a single global network, which if politics and terrorism do not get in the way – could usher in an amazing era of prosperity and innovation.

The Three Eras of Globalization1492 – 1820 Globalization 1.0World shrank from Size large to size medium

Exploration and colonization drive successCountries think globally to thrive

1820 – 2000 Globalization 2.0World shrank from size medium to size small.

Collaboration between international companiesCompanies must think globally to surviveFirst half falling transportation cost and second half falling telecom costs.

2000 – Present Globalization 3.0World shrank from size small to size tiny.

Individuals and small groups globalizeDriven by diverse group of all nationalities

Do you remember when you first realized the world is flat?

Friedman asked a classroom teacher and the teacher said he saw a student using a cell phone with a camera taking a picture of an exam and emailing it to another student. He said it was at that moment he realized the world was flat.

For me it was the first time I spoke to Dell Tech Support in Bangalore, India.

Jerry Rao was one of the first I met in Bangalore. He told me he could handle my tax returns and any other accounting needs I had from Banglore. No thanks, I have an accountant in Chicago. Jerry just smiled. He was too polite to say it – that he may already be my accountant”Thank goodness I am a journalist there will be no outsourcing for me!!!Brickwork the wonder

Everyday ExamplesJet Blue Reservation System

Retirees and housewives take airplane reservations from their homes

McDonald’s Call CenterDrive-thru customers across the country give their order to a worker in Colorado Springs

Indian Technicians and EngineersRead X-rays, write software, provide administrative support to US companies from Bangalore

Chinese Workers and TechniciansJapanese speaking Chinese workers provide backroom support to American and Japanese companies

The Ten Forces That flattened The World

The 10 World Flatteners11/9/1989: Berlin Wall came down

Worldwide balance of power shifted to free marketsEach outbreak of freedom stimulated another outbreak

8/9/1995: Netscape IPOSparked the dot com boom and over-investment in fiber optic cable (connected the world)Dot com bust made cost of using fiber optic cable virtually freeFirst commercial browser, invigorated internet use

Workflow Software DevelopedSoftware and standards developed that allow people to work togetherCreated a global platform that enabled collaboration

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Higglytown heroes

All American show produced by an all world supply chain.Recording in LA, design and direction in San Francisco, writers work from home, animation in Bangalore and editing together on line.VPN and Footballs in Starbucks

The 10 World FlattenersOpen-Sourcing

Self-organizing collaborative communitiesFree code written by individuals and shared openlyPeer review provides rewarding gratification

Out-SourcingAny service, call center, business support operation, or knowledge work that can be digitized can be sourced globallyOpportunity to seek cheapest, smartest, most efficient providersInvigorated by Y2K computer date crisis (India)

Off-ShoringCompanies move entire factory or operation offshore to foreign countrySame product produces in same way with cheaper labor, lower taxes, etc.Invigorated by China joining the World Trade Organization (Dec 2001)Zx

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The 10 World FlattenersSupply-Chaining

Wal-Mart pioneered global supply chain efficiencyWal-Mart trucks deliver products to stores, pick up goods from manufacturer on return to distribution centerAn item is purchased in Wichita, KS and another one is instantly produced in BeijingPrediction of hurricane causes specialized products to be shipped to affected stores (Pop Tarts, toys, beer)

In-SourcingLogistics giants take control of customer supply chainsUPS provides internal logistics support for other companiesToshiba laptops sent directly to UPS where a UPS employee repairs it and return ships to customer

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The World is FlatFlatteners #7 & #8Thomas Friedman

Flattener #7 – Supply Chaining

Wal-Mart Prophet?

Flattener Key Points

Resourcefulness versus opportunityBusinesses in Difficult situations or insecure in the marketplace will innovate and educate the industry

Small efficiencies via technologyEnhanced communication, leads to identification of more instances to cut costs

Smart products and meta data MicrochipSmart products

RFID tags Streamline their supply chain

What are the implications for the US economy and position in the world?

Adoption is a necessityResistance is futile. A place in the business world is solidified by adoption and innovation.

Catch-22, Hegemony, Tiny gains  Demand models, anticipation techniques and trend analysis makes meta data key in highly competitive markets

Wal-Mart Profit.

Flattener #8: UPS: In-Sourcing

Example #1: UPS fixes laptops for companies to speed up service. 3 day turn-around, instead of week (s) for product repairs

Point 1 - UPS is not only shipping parcels, but also providing smart business solutions

Example #2: Take orders from Nike.com, fill the order from a warehouse staffed and operated by UPS and ship with UPS.

Point 2

UPS makes big companies act small + small companies act bigIf you are a seller on EBay, the buyer pays through PayPal, you print UPS label through PayPal and tracking number is emailed to the customer so they can track online and know when it’s being delivered

Point 3UPS is creating enabling platforms for anyone to take their business global.Provides funds for small businesses for computers, scales, printers to help grow your businessProvides banking/COD solutions for businesses

Point 4UPS makes delivery super efficient & super fast, and does this in high volumes.Figured out a way to track packages more efficiently. Allow customers to track their own packages online.Coding system to track packages - saves money and speeds up delivery delivery.

Lowered price from $2+ to 5 cents

Point 5

UPS is now basically an extension of departments within other companiesUPS tracks weather and geopolitical disturbances to make sure they’re prepared for that days business.2% of global GDP is being transferred through UPS at any given moment.Largest user of wireless technology in the world. Cell Phones/DIADs (Driver Delivery Information Acquisition Devices)UPS Companies   UPS Air Cargo  UPS Capital Corporation  UPS Consulting  UPS Mail Innovations  Mail Boxes Etc., Inc.  Motor Cargo, A UPS Company  Overnite, A UPS Company  UPS Professional Services  UPS Supply Chain Solutions

And Flattening Capabilities…..

The 10 World Flatteners

InformingSearch engines (Google, Yahoo!, etc) provide universal access to informationIndividuals empowered to find information

SteroidsWireless, VoIP, file sharing that enhance the collaboration toolsDigital, mobile, virtual and personal technologies explode

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The Triple Convergence

Vertical (command and control) value-creation model

Horizontal (connect and collaborate) value-creation model

All 10 flatteners converged in 2000 and worked together to create the flat world

Horizontalization – Emergence of management practicesand infrastructure to boost productivity

India, China, and former Soviet Empire are joining the Flat world (300 million people)

The Quiet Crisis

Friedman argues that the US is in a “quiet crisis” caused by 3 issues

The Numbers Gap• US is no longer producing adequate number of educated

workers and engineers• India and China overshadow US demographically

The Ambition Gap• Americans believe they are “entitled” to certain jobs• Some companies believe productivity higher in other

countries

The Education Gap• US education system is not preparing young people for

new types of work• Funding levels for education are inadequate

Impact on Jobs

Three types of jobs in current marketFungible Jobs

• Repetitive and skill-based work• Easily digitized and not tied to a particular location• Easily outsourced

Anchored Jobs• Must be performed in a particular location

Value-add Jobs• Require specialized skills and knowledge• Knowledge must be across a number of disciplines and

deepThe individual worker is responsible for managinghis or her own career, risks, and economic security

Becoming an “Untouchable”

Four types of workers in current marketSpecial Workers

• Special people like sports stars, movie actors, etc.

Specialized Workers• Work cannot be outsourced• Skills in high demand and not fungible

Anchored Workers• Tied to a specific location

Really Adaptable Workers• Constantly acquire new skills, knowledge, expertise• Look for unique and creative components of job

Untouchables are people whose jobs cannot be outsourced, digitized, or automated

Help Wanted Ads in a Flat WorldGreat Collaborators and Orchestrators

Collaborating within and between companiesManagers who can work in 24/7 supply chains

Great SynthesizersPutting disparate and unusual things togetherExample: Search engines require mathematicians and marketing experts

Great ExplainersAbility to explain complex concepts with simplicity

Great LeveragersOptimizing the interface between people and machines

Help Wanted Ads in a Flat WorldThe Great Adapters

Employees must be adaptable and versatile• Specialists have deep skills and narrow scope• Generalists have shallow skills and broad scope• Versatilists apply depth of skill to widening scope

through constant learning and growing

The Green PeopleIndustry of creating renewable energies and environmentally sustainable systems will growThree-billion people in China, India, and former Soviet Empire are joining the flat-world – will create more demand for energy and products

The Great LocalizersLocal businesses will still drive majority of jobsSuccessful people will understand global infrastructure and adapt to local needs and demands

Taking Advantage of a Flat WorldUtilize information resources

AIAA Electronic Library, other internet sourcesUtilize international network

Colleagues at Universities, industry partnersInternational members at AIAA conferencesLook for opportunities to learn from and collaborate with others

Become Really AdaptableNever stop learning

• Participate in continuing education events• Conduct research, write a paper for AIAA Journal or

ConferenceBuild a global network

• Participate in AIAA conferences, section meetings, etc.• Become a member on an AIAA Technical Committee• Find a mentor

Take control of your own career

A Flat World – Implications for Education

The Quiet Crisis40% of the 18,146 NASA employees are age 50 or older

NASA employees over 60 out number those under 30 by a ratio of 3:1

The National Commission on Mathematics and Science Teaching for the Twenty-first Century found that 2/3’s of the nation’s mathematics and Science teaching force will retire by 2010

“When they send jobs abroad, they not only save 75% on wages, they get a 100% increase in productivity.”

“Young Chinese, Indians, and Poles are not racing us to the bottom. They are racing us to the top.”

“In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears – and that is our problem.”

The Annual worldwide Intel International Science and Engineering Fair

Forty countries participated

In 2004 – 65,000 American kids participated

In China – 6,000,000 Chinese kids participated

Federal Funding

. . .for research in physical and mathematical sciences and engineering as a share of the GDP declined by 37% between 1970 and 2004.

. . .National Science Foundation funding for 2005 cut

My parents used to say “clean your plates because there are children in China who are starving.

Now we should say “do your homework” because children in China are starving for your jobs

Where to Learn More

“The World is Flat – A Brief History of the Twenty-First Century” by Thomas L. Friedman, 2005.MIT Lecture by Thomas Friedman, May 16, 2005, available at the MIT Open Course website“The Untouchables: Finding the New Middle” by Thomas Friedman, available at www.thesmarttechie.com