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