The World Becomes Flat

BUSINESS THOMAS L FRIEDMAN

WORDS BY TIMOTHY S. MESCON, PH.D.

How Flat is Your World?

Celebrated New York Times columnist and three-time Pulitzer Prize-winning author, Thomas L Friedman has nailed it with his red-hot national bestseller, The World is Flat: A Brief History of the Twenty-First Century (www.fsgbooks.com). Comparing his global exploration to that of Columbus in 1492, Friedman sets out to determine how entrepreneurs in India and beyond have become so important for the outsourcing of information systems, technology and services from the US and other industrialized countries. Five hundred years ago, Columbus proudly confirmed the world to be round. Today, Friedman, with equal aplomb, concludes that the world is, in fact, flat.

Friedman intricately details the convergence of 10 monumentally important innovations, corporations and socioeconomic and political events that have flattened the world and leveled the playing field, creating the restructuring of global enterprise that we know today—and probably will forever more.

The first two “flatteners” cited are 11/9/89 and 08/9/95. On November 9, 1989, the Berlin Wall came crashing down. To Friedman, this represented the phoenix of capitalism rising from the communist ashes around the world. In the 16 years following the historical razing of this symbol of communism, there was an explosion of capitalism and private enterprise around the globe that would have made Adam Smith proud. Don’t believe it? Visit Prague, Bucharest, Shanghai or Dalian, China. Travel to Belarus, Estonia or the Ukraine, and you will be mesmerized by the flurry of entrepreneurship and global enterprise.

Likewise, August 9, 1995 was a notable day in Friedman’s history. On that day, Netscape CEO Jim Barksdale and venture capitalist John Doerr took Netscape public. This IPO signaled to the world the rise of the internet, and was the true beginning of the dot.com explosion that still rocks our world.

Flattener number three is workflow software. Today, software allows the development of products to take place in different countries by different professionals across different time zones—all linked by a common business objective and financial incentives. According to Friedman, shared standards are a tremendous flattener because they force people to communicate and to constantly innovate over larger platforms. PayPal, for example, is a money transfer system that allows two parties with email addresses to transfer funds. This has created a seamless universe, where anyone with an email account can buy any product or service from anyone else with an email account, anywhere in the world.

Flattener number four is open-sourcing. Imagine a universe where software codes and applications are developed online, where anyone can make an enhancement at any time. Global collaboration, fueled by technologists and information systems geeks driven by the need for achievement has led to the Linux revolution and such exceptional products as Wikipedia (www.wikipedia.org), “the people’s encyclopedia.”

Flattener five is outsourcing. While we all know about the super-successful outsourcing efforts in India, fewer are aware of the outsourcing by Japanese companies to Dalian. Outsourcing is a global phenomenon that is reshaping business processes and creating huge opportunities across the planet.

As a counterpoint to the wonder of outsourcing, Friedman hails another flattener (actually number eight), the power of “insourcing.” The insource champion, or guru of logistics and distribution worldwide, is Atlanta-based UPS. UPS, through its network of global logistics and freight-forwarding enterprises, provides supply-chain expertise and adds enormous value for a worldwide array of businesses. On any given day, UPS trucks are moving 2% of the world’s GDP, most of it for small businesses. This is flattening at its finest.

Friedman presents flattener six, “offshoring,” with a detailed review of offshore production, while flattener seven, “supply-chaining,” pays homage to Wal-Mart and the supply-chain revolution, which links suppliers and customers in a manner that creates huge value for all parties involved. He calls Wal-Mart the “China of companies.”

Flattener nine, “in-forming,” is all about access to information in real time, whether it’s via Google, Yahoo!, Dogpile, Mozilla or MSN. Yahoo! has over 300 million users, all seeking information that is more quickly accessed and more accurate than what was perceived to be available yesterday. Friedman’s flattener ten is “the steroids” of technology. In the flat world, steroids are digital, mobile, personal and virtual. The Wi-fiworld is our world, and this world is flat.

Friedman’s insights are brilliant and timely. The personal challenge for us all in this flat world is to embrace change. The management challenge is to help your enterprise overcome the onerous challenges of resistance to change and ride the enormous wave of opportunities presented by this “flattened” world.

The insource champion, or guru of logistics and distribution worldwide is Atlanta-based UPS. On any given day, UPS trucks are moving 2% of the world’s GDP, most of it for small businesses. This is flattening at its finest.