The World is Flat

1
The World is Flat

• Book by Thomas L. Friedman
• Presentation by Koren, Li, and Matt

2
While I Was Sleeping
3
Ten Flattening Forces
Uploading
11/9/89 Fall of the Wall
In-forming
Supply-Chaining
The Steroids
8/9/95 Netscape went public
Offshoring
Work Flow Software
Outsourcing
Insourcing
4
11/9/89 Fall of the Wall
Release of Windows 3.0 six months later
Dial-up followed shortly after.
5
11/9/89 Fall of the Wall (Implications)
Tipped the balance in favor of capitalism
(creativity)
Flattened the market alternatives to
free-market capitalism
Berlin wall blocked our view of the entire world
as a global ecosystem.
Now, Im going to get you!
Im going to get you!
6
8/9/95 Netscape Went Public
Allowed us to easily drive around the Internet.
Its hard to give credit for the Internet to a
specific person
One of the few things that was created by
committee
Netscape started the dot-com bubble
FTP
Netscape helped guarantee that open protocols
would remain open.
HTTP
TCP
Led to the overinvestment of telecommunications
companies in fiber optic
IP
7
Work Flow Software
Work Flow Software
Increased seamless communication
Standardized Transmission Protocols
XML/ SOAP
WEB SERVICES/ PLATFORMS
AJAX
8
Uploading

• Allowed the creation of online communities
• people could participate, instead of just observe

• Open-Source
• nothing more than peer-reviewed science.
• Blogging
• Citizen Journalists
• Podcasting
• Gold Corp (open-source answers)
• Community-Uploaded Content (Wikipedia)

Think of what we can find on the Internet now
9
Outsourcing

• always want to be the second buyer
• America ? Indias intelligence.
• India ? dot-com boom fiber-optic network
• Brainpower from India ? Brainpower in India

• EXAMPLES
• Healthscribe medical transcriptions
• Dictations to text via India
• Y2K made America ready to do on a blind-date
  with India

India benefited more from dot-com bust than from
boom
10
Offshoring


Offshoring
11
Offshoring So What is China?
Threat

Customer
Threcustunity
Opportunity
Seeking lower labor costs
12
Offshoring Challenges in China

• Easy Part ? setting up shop in China
• Hard Part ? finding the right local managers
• Finding the happy medium between too
  entrepreneurial and too bureaucratic.

13
Supply-Chaining
Making stuff thats easy. Supply chain, now
that is really hard. Yossi Sheffi, Professor
of Engineering Systems at MIT

• Wal-Mart is its supply chain
• Built out of necessity, not so much out of
  intention.
• Coefficient of flatness
• Replaced inventory with information

• Implications of Supply Chains
• Must take advantage of lowest global prices
• otherwise your competitor will
• Shifts concern to total cost of delivery
• Therefore, must have global optimization

14
InsourcingEverythings on the UPS UPS

• Toshiba
• repairs laptops
• Nike.com, Jockey.com
• picks, inspects, packs, and delivers product
• HP (in Europe and Latin America)
• field service repairman

• UPSs Core Competency
• Analyzes, re/designs, (even finances!), then
  manages parts of company supply chains.
• End of Runway Services push specialization to
  end of supply chain

15
In-forming
The Democritization of Information
Googleequalizes access to information it has
no class boundaries, few education boundaries,
few linguistic boundaries, and virtually no money
boundaries.
16
The Steroids
Connectivity
Computing Power
Storage
Sharing
17
Future Flatteners?

• Financial Crisis
• Healthcare Crisis
• Energy Crisis
• All of this might cause us to clean out
  regulation, government, etc. and following the
  Wikinomic trends by putting more power in the
  collaborative hands of the people. Much like
  Indias government changed only when it had to.
• Micrologistics transportation/shipping driven
  by the people.
• True democracies built on secure web-enabled
  system, the people will really start making the
  decisions
• Agents

18
Triple Convergence
9/11
Web-Enabled Platform
Horizontal Playing Field
Dot-Com Bust
Enron, Tyco, WorldCom
New Players
19
Web-Enabled Platform
8/9/95 Netscape went public
In-forming
Uploading
Insourcing
The Steroids
Work Flow Software
Offshoring
Outsourcing
Supply-Chaining
11/9/89 Fall of the Wall
Platforms tend to endure
20
Horizontal Playing Field
Command and Control
Connect and Collaborate - Wikinomics
Bye, Bye, Hierarchies!
21
New Players
India, China, Russia
22
The Great Sorting Out
global market

• Who owns what?
• Legal barriers shifting
• IP rights
• made to protect
• Dr. Kings brown-bag
• Open source
• who owns the SW

• Sr. Executives are from all over the world
• Headquarters in New York
• Factories in Raleigh, NC and Beijing
• Listed on Hong Kong stock exchange

An American company?
23
Sorting Out Cant Have Everything
Lower Prices Lower Phone Bill Mass Info
Availability Job Protection Free Trade
Higher Wages Human Operator Info
Accuracy Global Competition Job Security
24
Tata Consulting Group

• Surya Kant President, North America
• Tata Group
• 62.5 billion revenue
• 3.6 billion profit
• 5 in the world
• Tata Consulting
• Pioneered outsourcing before internet, fax or
  direct dial phones
• 150,000 employees (Recruited 35,000 new employees
  in 2007)
• Grew revenue from 500m in 2005 to 2bn in 2007

25
America and the Flat World
26
America and Free Trade

• When you lose your job, the unemployment rate is
  not 5.2 percent, its 100 percent
• As the world gets flat, America as a whole will
  benefit more by sticking to the basic principles
  of free trade, as it always has, than by trying
  to erect walls.

27
America and Free Trade

• Protectionists
• (Anti-outsourcing)

• Free Trade (Outsourcing)

• Fixed lump of labor in the world and once that
  lump is gobbled up, there wont be any more jobs
  to go around

• As lower-end service and manufacturing jobs move
  out of Europe, America and Japan to India, China
  and the former Soviet Union, the global pie grows
  larger and more complex

28
America and Free Trade
In order to maintain or improve living standards,
the American low-skilled workers will have to
move vertically not horizontally
29
Untouchables

• Special
• Have a global market for their goods and services
  and can command global-sized pay packages

30
Untouchables

• Specialized
• Skills that are always in high demand and are not
  fungible
• Brain surgeons
• Specialized lawyers
• Cutting-edge computer architects and software
  engineers

31
Untouchables

• Anchored
• Jobs must be done in a specific location,
  involving face-to-face contact with a customer,
  client, patient or audience

32
Untouchables

• Old middle
• Formerly middle-class jobs that were once deemed
  nonfungible (freely exchangeable)

33
Untouchables

• New middle
• The Great Synthesizers
• Mash-up disparate parts together
• The Great Explainers
• See the complexity but explain it with simplicity
• The Great Leveragers
• People who can not only catch a problem, but
  quickly come up with a solution that will fix the
  problem for good
• The Great Adapters
• Apply depth of skill to a progressively widening
  scope of situations, gaining new competencies,
  building relationships and assuming new roles

34
Untouchables

• New middle (cont.)
• The Green People
• Focus on renewable energies and environmentally
  sustainable systems
• The Passionate Personalizers
• Give a job something personal, something special,
  some real passion
• Math Lovers
• Come up with the right mathematical formulas and
  apply them, to get a jump of everyone else
• The Great Localizers
• Understand the emerging global infrastructure and
  adapt it to local needs and demands

35
The Right Stuff

• Put up walls of protection or keep marching
  forward to nurture individuals who can compete
  and thrive in a flat world?

36
The Right Stuff
Learn how to learn because what you know today
will be out-of-date sooner than you think

• Navigation
• Teach students how to navigate the virtual world
• CQ PQ gt IQ
• Curiosity Quotient Passion Quotient matters
  even more than intelligence quotient
• Stressing Liberal Arts
• Teach people how to think horizontally and
  connect disparate dots

37
The Right Stuff

• Right Brain
• Focus education on developing right-brain skills
• Now that foreigners can do left-brain work
  cheaper, we in the US must do right-brain work
  better.
• Tubas and Test Tubes
• Give students a broad collection of skills and
  learning experiences they need to thrive in the
  globally competitive conceptual age

38
The Right Stuff

• The Right Country
• America has the best-regulated and most efficient
  capital markets in the world for taking new ideas
  and turning them into products and services
• Intellectual property protection
• Flexible labor laws
• Largest domestic consumer market
• Political stability

39
The Quiet Crisis

• Dirty Little Secret 1 The Numbers Gap
• Steady erosion of Americas scientific and
  engineering base

40
The Quiet Crisis

• Dirty Little Secret 1 The Numbers Gap
• 26 of all SE degree holders in the labor force
  are age 50 or over. Among SE doctorate holders
  in the labor force, 40 are age 50 or over.

41
The Quiet Crisis

• Dirty Little Secret 2 The Education Gap at the
  Top
• Twenty-five percent of all college-educated
  workers in SE occupations in 2003 were foreign
  born, as were 40 of doctorate holders in SE
  occupations.
• The United States continues to have the highest
  percentage of the population ages 2564 with a
  bachelors degree or higher. However, among the
  population ages 2534, the United States (30)
  lags behind Norway (37), Israel (34), the
  Netherlands (32), and South Korea (31) in the
  percentage with at least a bachelors degree.

42
The Quiet Crisis

• Dirty Little Secret 2 The Education Gap at the
  Top
• Total world article output between 1995 and 2005
• U.S. share fell from 34 to 29
• European Union share fell from 35 to 33
• Asia-10 share increased from 13 to 20
• Foreign-born scientists and engineers were 28 of
  all full-time doctoral SE faculty in 2003, up
  from 21 in 1992.
• In the physical sciences, mathematics, computer
  sciences, and engineering, 47 of full-time
  doctoral SE faculty in research institutions
  were foreign born, up from 38 in 1992.
• Men earned the majority of bachelors degrees
  awarded in engineering (80), computer sciences
  (78), and physics (79).

43
The Quiet Crisis

• Dirty Little Secret 3 The Ambition Gap

• The American Idol problem
• Many Americans cant believe they arent
  qualified for high-paying jobs
• Low education means low-paying jobs, plain and
  simple

44
The Quiet Crisis

• Dirty Little Secret 4 The Education Gap at the
  Bottom

45
The Quiet Crisis

• Dirty Little Secret 4 The Education Gap at the
  Bottom
• Proficiency Levels on Selected NAEP Tests for
  Students in Public Schools

46
The Quiet Crisis

• Dirty Little Secret 5 The Funding Gap

47
The Quiet Crisis

• Dirty Little Secret 6 The Infrastructure Gap

48
The Quiet Crisis

• Dirty Little Secret 6 The Infrastructure Gap

49
This is not a Test

• Meet the challenges of flatism
• Summon the nation to get smarter and study harder
  in science, math and engineering
• Build the infrastructure, safety nets and
  institutions that will help Americans become more
  employable in an age when no one can be
  guaranteed lifetime employment
• Compassionate Flatism

50
This is not a Test

• Leadership
• Would be helpful if the politicians had a basic
  understanding of the forces that are flattening
  the world
• Seem to go out of their way to make their
  constituents stupid encouraging them to
  believe that certain jobs are American jobs and
  can be protected from foreign competition

51
This is not a Test

• "Do you think the recent economic expansion in
  countries like China and India has been generally
  good for the U.S. economy, or bad for the U.S.
  economy, or had no effect on the U.S. economy?
• CBS News Poll. July 31-Aug. 5, 2008. N1,034
  adults nationwide. MoE 3.

52
This is not a Test

• Lifetime employability
• Portable benefits
• Opportunities for lifelong learning
• Make tertiary education government subsidized for
  at least two years
• Expand research universities on high end but also
  expand availability of technical schools and
  community colleges
• Immigration policy that gives five-year work visa
  to any foreign student who completes a Ph.D. at
  an accredited American university

53
This is not a Test

• Good fat
• Social security
• Wage insurance
• Social Activism
• Collaborate to make companies more profitable and
  earth more livable
• HP-Dell-IBM alliance promotes a unified code of
  socially responsible manufacturing practices
  across the world

54
This is not a Test

• Parenting
• The sense of entitlement, the sense that because
  we once dominated global commerce and geopolitics
  we always will, the sense that our kids have to
  be swaddled in cotton wool so that nothing bad or
  disappointing or stressful ever happens to them
  at school, is quite simply, a growing cancer on
  American Society

55
This is not a Test

• I see no hope for the future of our people if
  they are dependent on the frivolous youth of
  today, for certainly all youth are reckless
  beyond words. When I was a boy, we were taught to
  be discrete and respectful of elders, but the
  present youth are exceedingly wise and impatient
  of restraint.
• Hesiod (Greek poets, "the father of Greek
  didactic poetry", 700bc)

56
This is not a Test

• Americans are the ones who increasingly need to
  level the playing field not by pulling others
  down, not by feeling sorry for themselves, but by
  lifting ourselves up.

57
The World is Flat Developing Countries,
Geopolitics and Companies

• LI FAN

58
The World According to Americans

59
The World According to Taiwan People

60
Developing Countries

• The world is flat
• Almost everyone can talk about something happened
  in other countries.
• My grandma told me she believed Obama will win
• For Chinese young people, the hottest sports game
  is NBA
• The world is not flat
• Almost everyones opinion is biased, we cannot
  see the dark side of our home country
• Educational opportunity is unfair
• Discrimination and misunderstanding happened
  everywhere

61
How Developing Countries Survive

• Constantly focus on Education
• John F.Kennedy, space race and American education
  (pp.326)
• Education level determines development level.
• For Chinese people, go abroad and learn from
  America is a good way

62
How Developing Countries Survive (Cont.)

• To be open
• Chinas open up policy
• black cat, white cat, all that matters is
  that it catches mice
• 
  Deng, Xiaoping
• Bad Example North Korea closes the door for more
  than 50 years

63
How Developing Countries Survive (Cont.)

• International collaboration
• Microsoft Research Asia (MSRA) is a very
  productive research institute founded in Beijing
  in November 1998
• In my undergraduate department, many CS core
  courses are borrowed from CMU, 1/3 courses are
  taught by foreign teachers (from USA, Ireland and
  France), each year we have exchange students go
  to Yale or Stanford

64
How Developing Countries Survive (Cont.)

• Culture
• Culture tolerance is the greatest virtue,
  Willingness to pull together and sacrifice is
  also important
• Example Indian Companies get more
  opportunities
• For some countries, it is hard to accept
  different opinion, for some others they are not
  hardworking enough

65
How Developing Countries Survive (Cont.)

• Infrastructure and regulation
• Better infrastructure will give you more
  opportunity
• Make regulation more efficient
• Example
• If you change the regulatory and business
  environment for the poor, they will do the best
  Hernando de Soto (Peru)

66
Geopolitics The world is not flat

• 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
• poverty distribution map
  malaria distribution map

67
Geopolitics The world is not flat (Cont.)

• Too Disempowered
• They arent really getting any of the benefits
• The anti-globalization movement
• Example China exports
• disposable chopsticks to Japan

68
Geopolitics The world is not flat (Cont.)

• Too Frustrated
• Flat world puts different societies and cultures
  in much greater direct contact with one another
• Arabic country
• Americans want to control
  our oil! Get out of Middle East!!
• United States
• Afghanistan, Iran and Iraq
  are the Axis of Evil !!
• What is the outcome of such direct contact ?
• Terrorism and War?

69
Companies

• Rule 1 Dont try to build walls
• Competition is everywhere and the way is changing
• Reach for shovel and dig inside yourself
• Rule 2 The small shall act big
• Being quick to take advantage of all the new
  tools for collaboration
• Having an international perspective

70
Companies (Cont.)

• Rule 3 The big shall act small
• Try to act small and enable their customers to
  act real big
• Example STARBUCKS
• Rule 4 The best companies are the best
  collaborators
• Example Rolls Royce
• One of the core competencies of the business
  today is partnering Rose (Rolls Royce)

71
Companies (Cont.)

• Rule 5 Getting regular chest X-rays and then
  selling the results to their clients
• X-ray your company and break down every component
  to identify hot spots
• Keeping core competency and outsourcing others
• Rule 6 The best companies outsource to win, not
  to shrink
• Rule 7 Outsourcing is also for idealist
• Social entrepreneurs combine business with
  social works
• A win-win game

72

• Thank you