The World is Flat – Thomas
Friedman
Doug Derrick
Shaokun Fan
Kunpeng Zhang
Aaron Elkins
Noyan Ilk
David Zimbra
Agenda
Introduction
 Section Reviews

Ten Flatteners – Doug
 Triple Convergence and Sorting Out – Noyan
 America and the Flat World – David
 Developing Countries – Shaokun
 Companies and the Flat World – Kunpeng
 Geopolitics and the Flat World – Aaron


Conclusion
2
Book Overview
“It’s not the strongest of the species that
survives… nor the most intelligent… but
the one most responsive to change.”
- Charles Darwin
3
When I was sleeping

Jet Blue Airlines reservations are taken by
“housewives” in Salt Lake City

Order drive through food in Missouri via
Colorado Call center

Your tax return is completed in India
4
SECTION 1
THE TEN
FLATTENERS
5
The Ten Flatteners – Number 1

11/9/89 – The New Age of Creativity
Fall of the Berlin Wall
 Rise of PCs and Microsoft Windows

6
The Ten Flatteners – Number 2

8/9/95 – The New Age of Connectivity
Netscape goes public – A “Browser”
 The rise of the World Wide Web
 The Internet Goes Mainstream
 Interoperability
 Fiber Optic Cable Explosion

7
The Ten Flatteners – Number 3

The New Age of Compatibility
Automating work flows
 Started with PCs and email
 Standardized Protocols (i.e., HTML,
HTTP, XML, TCP/IP)
 Integration and Collaboration
 Service-Oriented Architectures

8
The Ten Flatteners – Number 4

The New Age of Participation

Community Generated Software


Open-Sourcing
Community Generated Answers

Blogs and forums
Self-organizing communities
 A collaborative revolution

9
The Ten Flatteners – Number 5

The New Age of New Participants
Outsourcing
 Partially due to the Dot Com Boom,
Bust Cycle

Migrating business functions
 New players could now
participate

10
The Ten Flatteners – Number 6

The New Age of Competition

Offshoring

Good for consumers, bad for some
workers

Lions and Gazelles

China joins the WTO
11
The Ten Flatteners – Number 7

The New Age of Global Supply Chains
Products are transformed from innovations
to commodities faster and faster
 Good for consumers
 Drives for efficiencies

12
The Ten Flatteners – Number 8

The New Age of Supply Chain
Management
In-sourcing
 Big can act small
 Small can act big

13
The Ten Flatteners – Number 9

The New Age of Individual
Information Supply Chains
In-forming / Searching
 Knowledge available to
everyone, all the time
 Individual supply chains of
knowledge, entertainment,
information

14
The Ten Flatteners – Number 10

Enablers of the New Age







Computing and circuits get smaller
File Sharing – Peer to Peer
Calls over the Internet (VOIP, SKYPE)
Video Conferencing
Improved Computer Graphics
Wireless technologies
PDA, Mobile, Personal
15
SECTION 2
THE TRIPLE
CONVERGENCE
16
How the World Became Flat
The Triple Convergence
17
Convergence of Flatteners
18
Horizontalization

Horizontal
Collaboration and
value-creation
processes

Productivity boost
from the IT revolution
not too distant
19
New Playing Field
20
The Other Side
21
How the World Became Flat
The Great Sorting Out
“Some
sources of friction are
worth protecting, even in the face
of a global economy that
threatens to flatten them”
22
The Great Sorting Out

India versus Indiana

Multiple Identity Disorder

Death of the Salesman
23
SECTION 3
AMERICA AND
THE FLAT WORLD
24
America and Free Trade
“America as a whole will benefit more by
sticking to the general principles of free
trade, than by trying to erect walls”
 “Protectionism would be
counterproductive, but a policy of free
trade is not enough by itself”
 “To maintain their living standards,
Americans will have to move vertically, not
horizontally”

25
Untouchables & Old Middle



The specialized
 Functions can never
be outsourced,
automated, or traded
by electronic markets
The localized
 Jobs must be done in
a specific location
The old middle
 Pressured by
flatteners
26
The New Middle

Collaborators
 Between companies, international
workforces
 Synthesizers
 Integrating disparate fields
 Explainers
 Simplify complex topics
 Leveragers
 Combining technologies and people
27
The New Middle (cont.)

Adapters
 Versatile, constantly learning
 Green
 Sustainable, renewable business
 Passionate personalizers
 Add flavor to vanilla tasks
 Localizers
 Adapt global businesses to local markets
28
The Right Stuff
What is the right education to prepare
for a flat world?

Learn how to learn
 CQ + PQ > IQ
 Curiosity and passion
 Interacting with people
 Nurture the “right brain”
29
America – The Right Country

Best market for taking new ideas and
turning them into products and services
 Openness of society
 Political stability
 Quality of intellectual property protection
 Trust – essential in a world of collaboration
 A framework of rules and principles to
govern personal and business lives
30
The Crisis

“Post-World War II America reminds me of
the classic wealthy family that by the third
generation squanders its wealth”
 First generation:


Second generation:


hard working entrepreneurs
holds it all together
Third generation:

fat, dumb, and lazy
31
The Crisis (cont.)

Numbers gap
Number of Americans trained in science and
engineering declining
 Number of jobs requiring these skills
increasing
 Furthermore, number of immigrants entering
and staying in US with these skills declining

32
The Crisis (cont.)

Education gap at the top
Highest goal for Americans to be doctor,
lawyer, banker – not engineer or scientist
 Takes hard work and perseverance



Through uninteresting subject matter
Where will innovation come from?
33
The Crisis (cont.)

Ambition gap
Poorly regarded jobs in America are
coveted in India and China
 Leisure-time society
 Values upheld by parents of young children


Education gap at the bottom
School districts were organized by wealth
 Disparities in funding


Poorer schools produce victims of flattening
34
The Crisis (cont.)

Funding gap
Government funding of research stagnant or
being reduced
 Publications by Americans dropping steadily


Infrastructure gap

Broadband technologies in America are
slow in speed and proliferation
35
This is Not a Test

Flattening requires drastic reaction
from country, similar to communism
in 1960’s
Leadership
 Individual responsibility
 Compassion
 Parenting

36
This is Not a Test (cont.)

Leadership
“Transformation of an enterprise begins with
a sense of crisis or urgency”
 “No institution will go through fundamental
change unless it believes it is in trouble and
must do something different to survive”
 “We need politicians who are willing and
able to explain and inspire”
 American politicians: lawyers, not scientists

37
This is Not a Test (cont.)

Individual responsibility


Manage own career, risks, and economic
security
Government and businesses

Provide individuals opportunities to do that
Flexibility: portable benefits, lifelong learning
 Upgrade entire workforce level of education


Import and retain foreign talent
38
This is Not a Test (cont.)

Compassion
The balance of power between companies
and individual communities is tilting in the
favor of the companies
 Compassionate flatism
 Unemployment insurance for those
displaced by flattening

39
This is Not a Test (cont.)

Parenting

“We need a new generation of
parents to administer tough love”


Put away the video games,
television, Ipod, and get to work
Parents must lead by example
40
SECTION 4
DEVELOPING COUNTRIES
AND
THE FLAT WORLD
41
The Virgin of Guadalupe

Developing countries in the flat world:

The Virgin of Guadalupe were being imported into Mexico
from China.

Plastic Ramadan lanterns in Egypt are also made in
China
42
Introspection
 When developing countries start thinking about
the challenge of flatism, the first thing they need to
do is engage in some brutally honest introspection.
43
Reform Wholesale

Broad macroeconomic reform

Initiated by a small handful of leaders in countries
(China, Russia, Mexico, Brazil, and India)

Push counties into more export-oriented, freemarket strategies-base on privatization of state
companies
44
Reform wholesale

More open and competitive
markets are the only sustainable
vehicle for growing a nation out of
poverty

Decisions to open the Mexican economy

"To get rich is glorious,“---Deng Xiaoping

India's finance minister, Manmohan Singh,
opened India's economy
45
Reform Wholesale

As the world started to get smaller and
flatter, reform wholesale was no longer
sufficient to keep countries on a
sustainable growth path

A deeper process of reform was
required-a process called reform retail
46
Reform Retail

Every region of the world has its strengths and
weaknesses, and all are in need of reform retail to
some degree

Reform retail requires a much wider base of public

It involves looking at four key aspects of your society:




Infrastructure
Regulatory institutions
Education
Culture
47
Reform Retail

Five-step checklist for reform retail:

Simplify and deregulate wherever possible in competitive
markets

Focus on enhancing property rights

Expand the use of the Internet for regulation fulfillment

Reduce court involvement in business matters

Make reform a continuous process
48
Culture Matters: Glocalization

Two aspects of culture are particularly
relevant in the flat world:

To what degree is it open to foreign
influences and ideas.

How inward the culture is
49
Culture Matters: Glocalization

Exclusivity is a dangerous thing. (Former
Chinese emperor)

Culture can change. It is a product of the
context-geography, education level, leadership,
and historical experience-of any society
50
The Intangible Things

Why does one country's skyline change
overnight and another's doesn't change over
half a century?------intangible things
China
Thousands of miles away
Burdened by overpopulation
Few natural resources
Burdensome debt legcy
Mexico
Right next door to America
Free-trade agreement
Valuable natural resource
51
The Intangible Things

Qualities of intangible things:

A society's ability and willingness to pull together
and sacrifice for the sake of economic development

The presence in a society of leaders with the vision
to see what needs 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
52
SECTION 5
COMPANIES AND
THE FLAT WORLD
53
How Companies Cope
If you want to grow and flourish in a flat
world, you better learn how to change
and align yourself with it
 Rules and Strategies

54
Rule #1:Reach for shovel and dig
inside yourself.
Competition is everywhere and the way
is changing
 Facing challenge brought by
competition
 your personality and
creative flair

55
Rule #2: The small shall act big

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
56
Rule #2: The small shall act big

How could the small move to big so
quickly?
Software and industrial engineers
 Not stuck with any “legacy” system (web)

57
Rule #3: 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
58
Rule #3: The big shall act small

What the company should do is to
create a digital buffet to serve
consumers (“self-directed”)
59
Rule #4: The best companies are
the best collaborators

The next layer of value creation are
becoming so complex that no single
firm is going to be able to master them
alone
60
Rule #4: The best companies are
the best collaborators

Combining more granular specialties to
come up with valuable breakthrough

Case: “Rolls-Royce”
61
Rule #5: Getting regular chest Xrays and selling the results
X-ray your company and break down
every component to identify “hot spots”
 Keeping core competency and
outsourcing the things that no longer
made sense to do itself

62
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 more
people
63
Rule #6: The best companies
outsource to win, not to shrink

Two things to be done
Defending and extending core business and
continue to take care of customers;
 Making a giant leap to offer customers what
they are seeking for next.


Using outsourcing is not defense but
playing offense
64
SECTION 6
GEOPOLITICS AND
THE FLAT WORLD
65
Geopolitics and the Flat World
The Unflat World
Too Sick
 Disempowered
 Too Frustrated
 Too Many Toyotas

Globalization of the Local
The Dell Theory of Conflict Prevention

Infosys Versus Al-Qaeda
66
The Unflat World
The world isn’t flat!
 Middle class is a state of mind
 A flat world presupposes a similar
state of mind

67
AIDS Pandemic
Based on data from UNAIDS
68
Too Sick
Who cares about the flat world when
50% have AIDS?
 The next grand challenge
 Pandemics in the flat world

69
Disempowered
No access to the flat world
 Local governance
 Modern antiglobalism
 Private industry

70
Too Frustrated
The flat world’s polarizing effect
 Humiliation breeds terrorism
 Intractable dilemma?
 Will it get better?
 What is the answer?

71
Too Many Toyotas
What if the rest of the world becomes
flat?
 Struggle over natural resources
 The US must lead embracing
alternative energy

72
Globalization for the Local
Globalization = Americanization?
 Globalizing in reverse
 It’s not all economic
 The dark side

73
The Dell Theory of Conflict
Prevention
The golden arches theory
 Global supply chains and geopolitical
adventurism
 China v. Taiwan
 India v. Pakistan

74
Infosys Versus Al-Qaeda
Non-state actors
 Virtual Caliphate understand the flat
world as well as Dell and Infosys
 Suicide Supply Chains


Nuclear threat to the
flat world
75
CONCLUSION
CONCLUSION
76
Conclusion
The flattening of the world has
presented us with new
opportunities, new challenges,
new partners but also new
frustrations.
77
Conclusion

“Even if you're on the right track, you'll
get run over if you just sit there.”
-----Will Rogers
78