The World is Flat
Book by Thomas L. Friedman
Presentation by Koren, Li, and Matt
Ten Flattening Forces
Uploading
The Steroids
Offshoring
11/9/89 – Fall of the Wall
Supply-Chaining
In-forming
8/9/95 – Netscape went public
Work Flow Software
Outsourcing
Insourcing
11/9/89 – Fall of the Wall
Release of
Windows 3.0
six months
later
Dial-up followed
shortly after.
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.
I’m going to get you!
Now, I’m going to get you!
8/9/95 – Netscape Went Public
Allowed us to easily drive
around the Internet.
It’s 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
Netscape helped
guarantee that
open protocols
would remain open.
Led to the overinvestment
of telecommunications
companies in fiber optic
Work Flow Software
Increased
seamless
communication
Standardized
Transmission
Protocols
Work Flow Software
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…
Outsourcing
“…always want to be the second buyer…”
• America  India’s 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
Offshoring
+
=
Offshoring – So What is China?
Threat
Customer
Opportunity
=
High-grade,
high-tech
Product
Manufacturing
Threcustunity
Services and
Design
Seeking lower labor costs
Low-grade Product
Manufacturing
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.
Supply-Chaining
“Making stuff – that’s 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
Insourcing
Everything’s 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
 UPS’s 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
In-forming
THE DEMOCRITIZATION OF INFORMATION
“Google…equalizes access to information – it has no class
boundaries, few education boundaries, few linguistic
boundaries, and virtually no money boundaries.”
The Steroids
Connectivity
Computing Power
Storage
Sharing
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 India’s
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
Triple Convergence
9/11
WebEnabled
Platform
Dot-Com
Bust
Horizontal
Playing
Field
New
Players
Enron,
Tyco,
WorldCom
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
Horizontal Playing Field
“Command and Control”
“Connect and Collaborate”
- Wikinomics
New Players
North America,
Western
Europe, Japan
2.5 Billion
6 Billion
The Great Sorting Out
global market
Who owns what?
• Legal barriers shifting
• IP rights
• made to protect
• Dr. King’s 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?
Sorting Out: Can’t Have Everything
Lower Prices
Lower Phone Bill
Mass Info
Availability
Higher Wages
Human Operator
Info Accuracy
Job Protection
Global
Competition
Free Trade
Job Security
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
America and the Flat World
America and Free Trade
 When you lose your job, the unemployment rate is
not 5.2 percent, it’s 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.”
America and Free Trade
Protectionists
(Anti-outsourcing)
• Fixed lump of labor in
the world and once that
lump is gobbled up,
there won’t be any more
jobs to go around
Free Trade
(Outsourcing)
• 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
America and Free Trade
In order to maintain or improve living
standards, the American low-skilled
workers will have to move vertically not
horizontally
Employment
Job Openings
Professional and Related
Service
Management, Business and Financial
Sales and Related
Office and Adm. Support
Transportation and Material Moving
Construction and Extraction
Installation, Maintenance and Repair
Farming, Fishing and Forestry
Production
Total
(000,000s)
Net Changes
2004
2014 Number
%
28.5
34.6
6
21.2
27.7
32.9
5.3
19
15
17.1
2.2
17.4
15.3
16.8
1.5
10.6
23.9
25.3
1.4
5.8
10.1
11.2
1.1
11.1
7.7
8.7
0.9
12
5.7
6.4
0.7
11.4
1
0.1
0
-1.3
10.6
10.5
-0.1
-0.7
145.6 164.5
18.9
12.9
Source: Dixie Sommers, “Overview of Occupational Projections, 2014,” 2007.
(000,000s)
13.2
11.5
4.9
6.5
7.4
3.5
2.4
2
0.3
2.9
54.7
Untouchables
“Special”
Have a global market for their goods and services
and can command global-sized pay packages
Untouchables
“Specialized”
Skills that are always
in high demand and
are not fungible
• Brain surgeons
• Specialized lawyers
• Cutting-edge
computer architects
and software
engineers
Untouchables
“Anchored”
Jobs must be done in a specific location, involving
face-to-face contact with a customer, client, patient
or audience
Untouchables
“Old middle”
Formerly middle-class jobs that were once deemed
nonfungible (freely exchangeable)
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
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
The Right Stuff
Put up walls of
protection or
keep marching
forward to
nurture
individuals who
can compete and
thrive in a flat
world?
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 > IQ
• Curiosity Quotient + Passion Quotient matters even more
than intelligence quotient
 Stressing Liberal Arts
• Teach people how to think horizontally and connect
disparate dots
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
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
The Quiet Crisis
Dirty Little Secret #1: The Numbers Gap
Steady erosion of America’s scientific and
engineering base
The Quiet Crisis
Dirty Little Secret #1: The Numbers Gap
 26% of all S&E degree holders in the labor force
are age 50 or over. Among S&E doctorate holders
in the labor force, 40% are age 50 or over.
The Quiet Crisis
Dirty Little Secret #2: The Education Gap at the Top
 Twenty-five percent of all college-educated
workers in S&E occupations in 2003 were foreign
born, as were 40% of doctorate holders in S&E
occupations.
 The United States continues to have the highest
percentage of the population ages 25–64 with a
bachelor’s degree or higher. However, among the
population ages 25–34, the United States (30%)
lags behind Norway (37%), Israel (34%), the
Netherlands (32%), and South Korea (31%) in the
percentage with at least a bachelor’s degree.
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 S&E faculty in 2003, up from 21% in
1992.
 In the physical sciences, mathematics, computer
sciences, and engineering, 47% of full-time doctoral
S&E faculty in research institutions were foreign born,
up from 38% in 1992.
 Men earned the majority of bachelor’s degrees awarded
in engineering (80%), computer sciences (78%), and
physics (79%).
The Quiet Crisis
Dirty Little Secret #3: The Ambition Gap
The “American Idol
problem”
• Many Americans can’t
believe they aren’t
qualified for high-paying
jobs
• Low education means
low-paying jobs, plain
and simple
The Quiet Crisis
Dirty Little Secret #4: The Education Gap at the Bottom
The Quiet Crisis
Dirty Little Secret #4: The Education Gap at the Bottom
Proficiency Levels on Selected NAEP Tests for Students in Public Schools
The Quiet Crisis
Dirty Little Secret #5: The Funding Gap
The Quiet Crisis
Dirty Little Secret #6: The Infrastructure Gap
The Quiet Crisis
Dirty Little Secret #6: The Infrastructure Gap
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”
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
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?“
7/31/08 – 8/5/08
Good %
Bad %
No Effect %
Unsure %
14
62
10
14
CBS News Poll. July 31-Aug. 5, 2008. N=1,034 adults nationwide. MoE ± 3.
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
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
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”
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)
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.
The World is Flat:
Developing Countries,
Geopolitics and Companies
LI FAN
The World According to Americans
The World According to Taiwan People
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 everyone’s opinion is biased, we cannot
see the dark side of our home country
• Educational opportunity is unfair
• Discrimination and misunderstanding happened
everywhere
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
How Developing Countries Survive (Cont.)
To be open
• China’s 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
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
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
How Developing Countries Survive (Cont.)
Infrastructure and regulation
• Better infrastructure will give you more opportunity
• Make regulation more efficient
Example:
Country
Days for starting a company
Australia
2
Haiti
203
Congo
215
“If you change the regulatory and business environment for the poor, they will
do the best” – Hernando de Soto (Peru)
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 middleclass hope
poverty distribution map
malaria distribution map
Geopolitics – The world is not flat (Cont.)
• Too Disempowered
• They aren’t really getting any of the benefits
• The anti-globalization movement
Example: China exports
disposable chopsticks to Japan
Country
Forest
coverage
China
16%
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?
Companies
• Rule #1: Don’t 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
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)
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
Thank you