Realization: The field is being leveled and other countries are able to compete for global knowledge. In essence, the world is being flattened. The flattening means that we are connecting all knowledge centers on the planet together into a single global market. The use of computers, email, fiber-optic networks, teleconferencing, and new software are the tools that are allowing the world communicate.
The playing field is being leveled in more ways than with just innovators; is also drawing in and giving power to a group of angry and frustrated people – Al Qaeda.
Flattener #1 -When the Walls Came Down and the Windows Went UpFlattener #2 - When the Web Went Around and Netscape Went PublicFlattener #3 - Work Flow SoftwareFlattener #4 - UploadingFlattener #5 - OutsourcingFlattener #6 - OffshoringFlattener #7 – Supply ChainingFlattener #8 - InsourcingFlattener #9 – In-formingFlattener #10 – The Steroids
The fall of the Berlin Wall liberated many captive people of the Soviet Empire. It tipped the balance of power across the world. The power shifted to those in favor of democratic, consensual, free-market oriented governance. Until the fall of the Wall, the Cold War had been a struggle of between 2 economic systems- capitalism and communism. After the fall, communism diminished.
Finally, the fall of the wall paved the way for adopting common standards such as: * how economies should be run * how banking should be conducted * how PCs should be made * how economics papers should be written Enhanced the free movement of best practices
1 st version hit markets in 1985. Eliminated a barrier: the limit on the amount of information that an individual could amass, author manipulate and diffuse. The Windows-powered PC enabled millions of individuals, for the first time ever, to become authors of their own content in digital form, which meant that content could be shared far and wide Craig J. Mundie- CTO Microsoft This level of connectivity put the nail in the coffin of communism. Freidman
Breakthrough in Connectivity: World Wide Web and Netscape going public on 8/9/95 Netscape brought the internet alive and more accessible. Netscape demanded more computers, software and telecommunication networks that could digitize words, music, data and photos.
This flattener is responsible for the birth of AOL, newer versions of PC-Windows, Google, Yahoo and the dot- com boom. It also allowed the telecommunications giants such as the Baby Bells and AT&T to provide both phone service and infrastructure for internet.
Work Flow Software created the seamless transfer of work from place to place and continent to continent. This innovation allowed people to shape things, design, create, sell things, buy things, keep track of inventories, taxes, etc. The first big breakthrough was the combination of the PC and email - Windows enabled this. SMTP – simple mail transfer protocol – enabled the exchange of email between different computer systems.
Examples: Higglytown Heroes by Disney Pay Pal – 1998 – anyone with email can send money to anyone else with an email
Uploading is a term used for getting information and the ability for anyone to be a producer, not just a consumer Is potentially the most disruptive of the flatteners – how many people will be in the game? Types of uploading: Community Developed Software Movement Wikipedia Blogging/Podcasting
Also known as open-source communities Derived from the notion that companies and ad hoc companies should make available online source codes - the instructions that make software work Peer-reviewed science
Apache – Open Source Web server community Virtual, online, bottom-up software factory Single server that can host thousands of different virtual websites
Outsourcing- to purchase good or services from and outside source The US began purchasing serviced from India for one-fifth of the rate in the US – Y2K Example: Health Scribe India
Is when a company takes one of its factories that is operating in say Canton, Ohio and moves the whole factory offshore to Canton, China. There it produces the very same product in the very same way, only with cheaper labor, lower taxes, subsidized energy and lower health-care costs.
This has created a process of competitive flattening, in which countries scramble to see who can give companies the best tax breaks, education incentives, and subsidies, on top of their cheap labor, to encourage offshoring the their shores.
The average wage of a high-skilled machinist in America is $3,000 to $4,000 a month. The average wage for a factory worker in China is about $150 a month. If Americans and Europeans want to benefit from the flattening of the world and the interconnecting of all the markets and knowledge centers, they will all have to run at least as fast as the fastest lion – and I suspect that lion will be China, and I suspect that will be pretty darn fast. -Thomas Friedman
Is a method of collaborating horizontally – among suppliers, retailers, and customers – to create value. The more these supply chains grow and proliferate they force the adoption of common standards between companies and the more they encourage global collaboration.
No company has been more effective at improving and perfecting its supply chain than Walmart. Theyre a phenomenal channel but a tough customer. They demand excellence. -Joseph F. Eckroth Jr., CIO at Mattel Inc.
Is a whole new form of collaboration and creating value horizontally, made possible by the flat world and flattening it even more. It came about because once the world went flat, small companies could suddenly see around the world in a matter of seconds.
UPS now comes inside a lot of companies and takes over their branded vehicles to assure on-time delivery Papa Johns Nike Jockey HP, eBay Ford, (to name a few) UPS is the largest private user of wireless technology in the world.
Is the ability to build and deploy your own personal supply chain – a supply chain of information, knowledge, and entertainment. Informing is searching for knowledge.
There is no bigger flattener than the idea of making all the worlds knowledge, or even just a big chunk of it, available to anyone and everyone, anytime, anywhere. The access to the worlds knowledge is in our pockets. Google is now processing roughly one billion searches per day.
These are certain new technologies that are amplifying all other flatteners. They are: -Virtual – transmit content at very high speeds and with total ease -Mobile – with wireless technology all can be done from anywhere, with anyone, through any device, and can be taken anywhere -Personal – can be done by you, just for you, on your own device
Computing Instant Messaging and File Sharing Phone Calls over the Internet Video- conferencing Computer graphics
Who is Ricardo and why do we care what he thinks? David Ricardo (1772-1823) – English economist who developed the Free Trade theory: If each nation specializes in production of goods and then sells it to another nation at a comparative cost advantage, each nation will benefit. Americans fear free trade because they see outsourcing of jobs as a death toll to our economy.
Friedman says: Protectionism would be counterproductive, free trade will not work without a focused domestic strategy aimed at upgrading skills and the education of Americans. It must be accompanied by foreign strategy of opening restricted markets bringing more countries into the global free-trade system, increasing demand for goods and services, encouraging innovation and reducing unemployment and job migration.
People in India and China will work for less and will gobble up all the middle level jobs, leaving Americans with nothing. This theory assumes that everything that is going to be invented has already been invented resulting in a zero gain. Wages are low in other countries because they are trapped in a stifled economy. When borders open, salaries will rise. Free Trade – The Lump de-bunk
Commercials promote the comforts of serving your family Coffee At Home Starbucks promotes the instant gratification lifestyle. (Clinton loved it!) Starbucks Galore A Starbucks on every corner and barista becomes a common word and job description A Growth Explosion
Example – Semiconductors could be manufactured cheaper in other countries. As more chips became available more computer applications were created. Google, Yahoo, Microsoft offered video searches which required new chips... Companies were able to focus on other areas when one area disappeared. The Pie grows, but no one saw it.
People fear change Fear is good because it activates the fight or flight instinct That instinct allows for creation of new ideas and jobs that connect to others Upgrading skills, firing up imagination, seeing the bigger picture in a global society
New jobs will go to the best, smartest, most productive or cheapest worker, wherever these people reside Find ways to make yourself untouchable – doing something no one else can do or cannot be outsourced The flatter the world gets, the more digitized it becomes
Specialized or special Michael Jordan, Elton John, JK Rowling, your brain surgeon Localized or anchored Repairmen, a dentist, an audience, Formerly middle class jobs – these are at risk Assembly line workers, accounting, data analysis, radiology
U.S. economy used to be a bell curve – The bulge in the middle was the working class We are quickly become a bar bell. Our middle class is dwindling We have to embrace the ebb and flow of a moving economy
The NEW MIDDLE Synthesizers Collaborators and Orchestrators Explainers Passionate Personalizers Green People Math Lovers Localizers
In the future, how we educate our children may prove to be more important than how much we educate them Rich nations will have to transform the educational systems to produce a more flexible labor force
Learn How To Learn Navigation classes CQ+PQ>IQ Liberal Arts Right Brain thinking skills
The key to getting through the crisis is to: Have resources Have access to higher education Have flexibility Be open to new ideas Have high trust
We still believe we are invincible based off of past history The Olympic basketball team World War II We have a solid educational structure that cant be beat
First generation out – nose to the grind stone Second generation holds it together Third generation feels entitled, becomes complacent While we took things for granted, other countries were gaining on us. Years later, we are on the edge of crisis
…a pronounced tendency in recent years to extol consumption over hard work, and investment, immediate gratification over long- term thinking and sacrifice. When we got hit with 9/11, it was a once in a lifetime generation opportunity to summon the nation to sacrifice, to address some of its pressing fiscal energy, science and education shortfalls – all the things we had let slide…
… But our president did not summon us to sacrifice. He summoned us to go shopping. Thomas Friedman
The Numbers Gap – In 2004, nearly 40% of the people at NASA are age 50 or older – Only 4% of workers are under 30 – NASA is having trouble finding competent, sufficient science, engineering, and informational technology specialist that are crucial to its operations.
By 2010, two-thirds of the nations mathematics and science teaching force will retire We are educating fewer math/science students, but the need is growing The number of American 18-24 year-olds who receive science degrees has fallen to 17 th in the world – We were ranked 3 rd three decades ago
The education gap at the top – in 2004 the Intel Fair attracted 64,000 American students. In China there were 6 million kids competing. Our test scores are stagnant – Asian countries are setting the pace In 2005, The New York Times reported that college graduates were scoring lower in English literacy. There were steep declines in Hispanic and African American populations
The Ambition Gap – Our kids are not working hard enough. They are distracted by other things (video games, professional athletics, the music business)
The Ambition Gap at the Bottom – Find a way to educate every American – it will look diffent than we now know
The funding gap - Stop cutting the science and math funding
The Infrastructure Gap – We lack the digital capabilities of the rest of the world.
We have to focus on educating more people in science and math We have to be more creative, innovative We must open ourselves up to new ideas in business and education Everyone must have an opportunity to be retrained/educated We have to hire talent wherever it resides
What does flattening mean to countries, companies, communities, and individuals?
The how and why according to Thomas Friedman, globalization has shifted into warp overspeed due to technology and communications. What does this mean to countries, companies, communities, and individuals? How will governments and societies adapt?
Mexican journalist realized he was living in a flat world when he read on the internet that The Virgin of Guadalupe (Mexicos patron saint) statues were being imported into Mexico from China. In 2003, China replaced Mexico as the number two exporter to the United States. Canada remains number one. Chinese central bank official told a reporter in their relationship with the United States, First we were afraid of the wolf, then we wanted to dance with the wolf, and now we want to be the wolf.
The first thing any developing country needs to do is to engage in brutally honest introspection. Like an AA meeting, developing countries need to say, I am underdeveloped, I am underachieving, I have not lived up to my full potential. Each country needs to go through an x-ray examination and find out your limits. Take a brutally honest look at your strengths and weaknesses.
1. INFRASTRUCTURE Need infrastructure to connect more of your people with a flat world platform 2. EDUCATION The right education to get more of your people innovating and collaborating on the flat world platform 3. GOVERNANCE The right governance- from fiscal policy to the rule of law- to manage the flow between our people and the flat world platform in the most productive way possible
Egypt guarantees all college graduates a job each year. They have been mired in poverty with a slow-growing economy for 50 years. It is not just jobs, but increasingly productive employment that allows living standards to rise. It takes 2 days to start a business in Australia, but 203 days in Haiti and 215 in the Democratic Republic of Congo.
Make reform a continuous process Regulation must make it: Easy to start a business Easy to adjust a business Easy to close a business. Excessive regulation tends to hurt most of the very people it supposed to protect.
In late 1960s Irelands government eliminated the fee for secondary education. Joined European union. Slashed corporate taxes by 12.5% In 1996, Ireland made public college education basically free, creating an even more educated work force. Ireland is actively recruiting the best and brightest from all over the world to come and study and research in Ireland. They know industry will go to where major research is centered.
Key factors: internalize the values of hard work, thrift, honesty, patience, and tenacity as well as being open to change, new technology and equality for women. According to Jerry Rao, MphasiS CEO, Cultures that are open and willing to change have a huge advantage in this world. Culture matters but culture is nested in contexts not genes and as those contexts and local leaders change and adapt so too can culture.
Even if youre on the right track, youll get run over if you just sit there.
Rule #1: When the world goes flat-and you are feeling flattened- reach for a shovel and dig inside yourself. Dont try to build walls. Rule #2: And the small act big…One way small companies flourish in the flat world is by learning to act really big. And the key to being small and acting big is being quick to take advantage of all the new tools for collaboration to reach farther, faster, wider, and deeper Rule #3: And the big shall act small… One way that big companies learn to flourish in the flat world is by learning how to act really small by enabling their customers to act really big. Rule #4: The best companies are the best collaborators. In the flat world, more and more business will be done through collaborations within and between companies, for a very simple reason: The next layers of value creation-whether in technology, marketing, biomedicine, or manufacturing- are becoming so complex that no single firm or department is going to be able to master them alone.
Rule #5: In a flat world, the best companies stay healthy by getting regular chest x-rays and then selling the results to their clients. Rule #6: The best companies outsource to win, not to shrink. They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists- not to save money by firing people. Rule #7: Outsourcing isnt just for Benedict Arnolds. Its also for idealists.
Imagination: 11/9, vs 9/11 When the Berlin wall came down on 11/9 it spoke opportunity and creative imagination 9/11 brought fear of terrorism and destructive imagination of the worst that could happen We encourage creative imagination when authority comes from the bottom up, where people feel self-empowered to improve their lot Without this empowerment, people look for who to blame In this flat world, we need educational systems to inspire the creative imagination of the next generation by fostering this sense of self- empowerment We need to prepare kids to meet the challenges of this future world: Reach their full potential Get validation and respect from achievements in this world Foster them with more dreams then memories