The World Is Flat

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The World Is Flat

• A Brief History of
• The Twenty-First Century
• Thomas L. Friedman

Presented By Michael Edwards Manlu Liu Ping Yan
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Thomas L. Friedman

• Columnist for the NY Times
• Won third Pulitzer Prize in 2002
• Served as chief economic correspondent in the
  Washington bureau and was the chief White House
  correspondent.
• Other publications
• "From Beirut to Jerusalem" won the National Book
  Award for non-fiction in 1989
• "The Lexus and the Olive Tree" (2000) won the
  2000 Overseas Press Club award for best
  nonfiction book on foreign policy
• "Longitudes and Attitudes The World in the Age
  of Terrorism" (2002)
• Received a B.A. degree in Mediterranean studies
  from Brandeis University in 1975. In 1978 he
  received a Master of Philosophy degree in Modern
  Middle East studies from Oxford.

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While we were sleeping, what happened

• Order drive through food in Missouri via Colorado
  call center
• Your tax return is completed in India
• Your Jet Blue reservation is taken by Betty in
  her house coat and slippers in Salt Lake City
• Dads X-rays read overseas at 200 a.m.
• US share of papers in Physical Review fell from
  61 in 1983 to 29 in 2003

4

• Its not the strongest of the species that
  survives nor the most intelligentbut the one
  most responsive to change.
• - Charles Darwin

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How the World Became FlatTwo The Ten Forces
That Flattened the World - Summary

• Flattener 1 11/9/89
• The events of November 9, 1989, tilted the
  worldwide balance of power toward democracies and
  free markets
• Flattener 2 8/9/95
• The August 9, 1995, offering sparked
• massive investment in fiber-optic
• cables and connected the world

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How the World Became FlatTwo The Ten Forces
That Flattened the World - Summary

• Flattener 3 Work Flow Software
• The rise of apps from PayPal to VPNs enabled
  faster, closer coordination among far-flung
  employees.
• Flattener 4 Open-Sourcing
• Self-organizing communities, Linux,
• launched a collaborative revolution.

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How the World Became FlatTwo The Ten Forces
That Flattened the World - Summary

• Flattener 5 Outsourcing
• Migrating business functions to India saved
  money and a third world economy
• India - emerging IT center
• Flattener 6 Offshoring
• Contract manufacturing elevated
• China to economic prominence
• Asia - sourcing center of the world

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How the World Became FlatTwo The Ten Forces
That Flattened the World - Summary

• Flattener 7 Supply-Chaining
• Robust networks of suppliers, retailers, and
  customers increased business efficiency. See
  Wal-Mart.
• Flattener 8 Insourcing
• Logistics giants took control of customer
  supply chains, helping mom-and-pop shops go
  global. See UPS and FedEx.

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How the World Became Flat Two The Ten Forces
That Flattened the World - Summary

• Flattener 9 In-forming/Searching
• Power searching allowed everyone to use the
  Internet as a "personal supply chain of
  knowledge." See Google.
• Flattener 10 The Steroids
• Wireless technologies pumped up collaboration,
  making it mobile and personal.

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How the World Became FlatRecap

• Berlin Wall
• Netscape
• Work Flow
• Outsourcing
• Offshoring
• Open-Sourcing
• Insourcing
• Supply-Chaining
• In-forming
• Steroids

Platform
Collaboration
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How the World Became FlatThree The Triple
Convergence - Summary

• All flatteners converged, creating a global
  playing field for multiple forms of collaboration
• Both business and individuals moved from largely
  vertical means of creating value to more
  horizontal ones
• Several billion people in India, China, and the
  former Soviet Union are given access to this new
  playing field

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How the World Became FlatThree The Triple
Convergence - Summary

• The Other Triple Convergence
• The dot-com bust
• 9/11
• Enron, Tyco, WorldCom
• Because of these three, at the moment when the
  world was being flattened, most people missed it

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How the World Became FlatFour The Great Sorting
Out - Summary

• Multiple Personality Disorder
• Where do companies stop and start?
• From Command and Control to Collaborate and
  Connect
• Multiple Identity Disorder
• Who owns what?
• Death of the salesman

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America and the Flat WorldFive America and Free
Trade - Summary

• America as a whole will benefit more by sticking
  to the basic principles of free trade.
• Fiber-optic cable has allowed for knowledge work
  and services to become tradable.
• American low-skilled workers will have to upgrade
  their education/knowledge skills to maintain
  their standard of living.
• There is no limit to the number of idea-generated
  jobs in the world.

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America and the Flat WorldFive America and Free
Trade - Summary

• America integrated a broken Europe and Japan into
  the global economy after WWII, and our standard
  of living has increased every decade.
• Its easier to see people being laid off than
  being hired.
• Donaldson Co., Inc.
• Economists compare Chinas and Indias entry into
  the global economy to the railroad lines first
  connecting New Mexico to California.

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America and the Flat WorldFive America and Free
Trade - Impressions

• Although the overall viewpoint that a free and
  open society is beneficial in the long run, what
  about the details?
• It wont happen overnight, so some American
  knowledge workers may be affected in the
  transition, but the effect will not be
  permanent.
• Detroit and the automotive industry

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America and the Flat WorldSix The Untouchables
- Summary

• Untouchables are people whose jobs cannot be
  outsourced.
• You must be specialized
• Skills that are in high demand and non-fungible
• You must be anchored
• Must be done in a specific location, involving
  face-to-face contact
• Being adaptable and knowing how to learn how to
  learn will be the most important asset.

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America and the Flat WorldSix The Untouchables
- Summary

• The American system is ideally suited for
  nurturing individuals who can compete and thrive
  in a flat world
• Every state has institutions trying to generate
  economic growth and innovation
• Best-regulated and most efficient capital markets
  for turning ideas into products
• Security and regulation of our capital markets
• Openness of American society
• Quality of American intellectual property
  protection
• Flexible labor laws
• Largest domestic consumer market
• Political stability
• One of the great meeting points in the world

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America and the Flat WorldSix The Untouchables
- Impressions

• How does everyone become an untouchable?
• Is it realistic that every fungible part of every
  job will be outsourced for efficiency?

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America and the Flat WorldSeven The Quiet
Crisis - Summary

• The quiet crisis is the steady erosion of
  Americas scientific and engineering base.
• The source of our success is our ability to
  constantly innovate new products, services, and
  companies
• The Perfect Storm the U.S. is falling behind in
  its capacity for scientific discovery,
  innovation, and economic development.
• In the 2005, the budget of the NSF was cut by
  1.9, or 105 million.

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America and the Flat WorldSeven The Quiet
Crisis - Summary

• Dirty Little Secret 1 The Numbers Gap
• The generation of scientist and engineers that
  were motivated to go into science are reaching
  retirement and are not being replaced.
• The number of jobs that require SE will grow
  the number of people prepared will decline and
  the availability of people from other countries
  will decline.

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America and the Flat WorldSeven The Quiet
Crisis - Summary

• Dirty Little Secret 2 The Ambition Gap
• When jobs are sent abroad, there is a 75 savings
  in wages and a 100 increase in productivity.
• Average kids in U.S. grow up in a wealthy country
  with many opportunities and have a sense of
  entitlement.

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America and the Flat WorldSeven The Quiet
Crisis - Summary

• Dirty Little Secret 3 The Education Gap
• Many jobs that go abroad today are high-end
  research jobs.
• At Intel International Science and Engineering
  Fair, US had 65,000 participants. China had six
  million.
• Federal funding for research in physical and
  mathematical sciences and engineering declined by
  37 between 1970 and 2000.

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America and the Flat WorldSeven The Quiet
Crisis - Impressions

• The dropping enrollment of the MIS department.
• Demographics of our group.

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America and the Flat WorldEight This is Not a
Test - Summary

• Meeting the flat challenge requires a
  comprehensive, energetic, and focused response.
• National peril is a lot easier to convey than
  individual peril.
• Compassionate flatism
• Leadership
• Muscle Building
• Cushioning
• Social Activism
• Parenting

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America and the Flat WorldEight This is Not a
Test - Summary

• Compassionate flatism
• Leadership
• We need politicians who are able to both explain
  and inspire
• Lifetime employment vs. lifetime employability
• Legacy project of alternative energy and
  conservation
• Muscle Building
• Workers need portable benefits and opportunities
  for lifelong learning ? mobile and adaptable
• Everyone should have a chance to be educated
  beyond high school

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America and the Flat WorldEight This is Not a
Test - Summary

• Cushioning
• Wage insurance
• Model proposed by Kletzer and Litan
• Social Activism
• McDonalds socially responsible food supply
• HP-Dell-IBM supply chain standards

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America and the Flat WorldEight This is Not a
Test - Summary

• Parenting
• We need a new generation of parents willing to
  administer tough love
• Education, in addition to cognitive skills, must
  include character building
• Push young people to go beyond comfort zones, do
  things right, and endure short-term pain for
  long-term gain.
• A crisis is a terrible thing to waste

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Summary

• Two examples of where people were when they
  first discover that the world is flat
• Some statuettes of Mexicos patron saint, the
  Virgin of Guadalupe, were being imported into
  Mexico from China
• plastic Chinese-made Ramadan lanterns crippled
  the traditional Egyptian workshop
• When developing countries start thinking about
  the challenge of flatism, the first thing they
  need to do is engage in some brutally honest
  introspection

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Summary

• Reform wholesale
• Broad macroeconomic reform
• Initiated by leaders in countries like China,
  Russia, Mexico, Brazil, and India
• They pushed their countries into more
  exported-oriented, free-market strategy, the top
  down
• As the world started to get smaller and flatter,
  reform wholesale was no longer sufficient to keep
  countries on a sustainable growth path

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Summary

• Reform retailer
• Looking at four key aspects of your society
  infrastructure, regulatory institutions,
  education, and culture, upgrading each one to
  remove as many friction points as possible
• Enable the great number of people to have the
  best legal and institutional framework
• Reform from the bottom up
• Push the reform in a democratic context

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Summary

• Culture matters glocalization
• As the world goes flat, and more and more of the
  tools of collaboration get distributed and
  commoditized, the gap among different cultures
  will make difference
• The more you have a culture that naturally
  glocalizes, the greater advantage you will have
  in a flat world
• This explain why so many Muslim countries have
  been struggling as the world goes flat
• Culture tolerance is one of the greatest virtues
  a country and community can have, tolerance
  breeds trust, and trust is the foundation of
  innovation and entrepreneurship
• Culture can change

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Summary

• The intangible things
• A societys ability and willingness to pull
  together and sacrifice for the sake of economic
  development and the presence in a society of
  leaders with the vision to see what need to be
  done in terms of development and the willingness
  to use power to push for change rather than to
  enrich themselves and preserve the status quo
• How much your culture prizes education
• Comparison of Mexico and China

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Developing Countries and the Flat WorldNine The
Virgin of Guadalupe - Impressions

• Current situation developing countries like
  China, Russia, Mexico, Brazil, and India are
  taking advantage of globalization, and catching
  up rapidly
• Problem
• more difficult to reform retail than reform
  wholesale
• Different cultures in different countries affect
  the future development
• Future trend of different countries will also
  rely on different leaderships

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Companies and the Flat WorldTen How Companies
Cope - Summary

• Rule 1 when the world goes flat and you are
  feeling flattened reach for a shovel and dig
  inside yourself.
• Rule 2 And the small shall act big
• Rule 3 And the big shall act small
• Rule 4 The best companies are the best
  collaborators.
• 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.
• Rule 7 outsourcing isnt just for Benedict
  Arnolds. Its also for idealists

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Companies and the Flat WorldTen How Companies
Cope - Impressions

• If a company want to grow and flourish in a flat
  world, you better learn how to change and align
  itself with it

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Geopolitics and the Flat WorldEleven The Unflat
World Summary

• There is absolutely no guarantee that everyone
  will use these new technologies, or the triple
  convergence, for the benefit of themselves, their
  countries, or humanity.
• No guns or cell phones allowed
• Too sick
• There is no question that poverty causes ill
  health, but ill health also traps people in
  poverty, which in turn weakens them and keeps
  them from grasping the first rung of the ladder
  to middle-class hope
• Too disempowered
• They have just enough information to know that
  the world is flattening around them and that they
  arent really getting any of the benefits
• The antiglobalization movement lost touch with
  the true aspirations of the worlds poor

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Geopolitics and the Flat WorldEleven The Unflat
World Summary

• Too frustrated
• One of the intended consequences of the flat
  world is that it puts different societies and
  cultures in much greater direct contact with one
  another
• Muslim world and Muslim communities are
  threatened, frustrated, and even humiliated by
  this close contact.
• Too many Toyotas
• Natural resource constraint
• We will be strengthening the very worst political
  systems in the world like Sudan, Iran, and
  Saudi Arabia

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Geopolitics and the Flat WorldEleven The Unflat
World - Impressions

• How the flattening could go wrong is a subject
• To approach it by trying to answer the following
  questions
• What are the biggest constituencies, forces, or
  problems impeding this flattening process, and
  how might we collaborate better to overcome them?

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Geopolitics and the Flat WorldTwelve The Dell
Theory of Conflict Prevention

• How these classic geopolitical threats might be
  moderated or influenced by the new forms of
  collaboration fostered and demanded by the flat
  world particularly supply chaining
• No two countries that are both part of a major
  global supply chain, like Dells, will ever fight
  a war against each other as long as they are both
  part of the same global supply chain
• How these classic geopolitical threats might be
  moderated or influenced by the new forms of
  collaboration fostered and demanded by the flat
  world (like mainland versus Taiwan)

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Conclusion ImaginationThirteen 11/9 Versus
9/11 Summary

• 11/9 versus 9/11
• The dismantling of the Berlin Wall on 11/9 was
  brought about by people who dare to imagine a
  different, more open world.
• The destructive imagination of 9/11 brought down
  the World Trade Center,closing its Window on the
  World restaurant forever and putting up new
  invisible and concrete walls
• eBay
• eBay didnt just create an online market. It
  created a self-governing.
• India
• The second largest Muslim country
• No Indian Muslims that we know of in al_Qaeda, in
  Americas Guantanamo Bay post-9/11 prison camp.
  No Indian Muslim have been found fighting
  alongside the jihadists in Iraq
• Reason the secure, free-market, democratic
  context of India

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Conclusion ImaginationThirteen 11/9 Versus
9/11 Summary

• The curse of oil
• If America and its allies will not collaborate in
  bringing down the price of crude oil, their
  aspirations for reform in all these areas will be
  stillborn
• Just one good example
• Aramex, the only one Arab company that developed
  a world-class business strong enough to get
  itself listed on Nasdaq
• From untouchables to untouchables
• An Indian man started a software firm , sold it
  in 1998, and decided to come back to India and
  use his American-made fortune to try to change
  India from the bottom up, So he started a
  journalism school
• Interviewed with three young Palestinian
  militants, who spent a lot of their time
  imagining how to unleash their anger, not
  realizing their potential

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Conclusion

• The IT Revolution of the last 20 years was only
  the warm-up the real revolution is starting
  now.
• The most important attribute is creative
  imagination, which has always been, and should
  always be, Americas great strength.

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Final Thoughts

• Individual overall impressions Ping
• the idea of this book is not that novel, in fact,
  free trade marketand the emergence of the
  economy of China and India have been talked about
  for some while.
• http//www.washingtonpost.com/wp-dyn/articles/A173
  14-2005Mar31.html
• Individual overall impressions Michael
• Verbalizes issues that were aware of, but with a
  greater sense or urgency
• Written from an overhead, long-term point of
  view, but the devil is in the details
• Individual overall impressions Manlu
• This world is going to be more and more global.
  As MIS PhD students, we should think about how we
  could take advantage of this trend
• The problems regarding the untouchable groups
  will become a serious issue if the flattened
  world can not be handled well.

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If you need more

• MIT World has streaming video of a presentation
  given May 16, 2005.
• http//mitworld.mit.edu/video/266/