The World is Flat A compilation for a book review presentation done by: Saurabh Dixit December 2008

The World is Flat A Brief History of the Twenty-First Century By Thomas L Friedman Friedman has won the Pulitzer Prize three times for his work at the New York Times, where he serves as the foreign affairs columnist. He is the author of three best selling books. He lives in Bethesda, Maryland. 2005

Thomas Friedman “While visiting in Bangalore, India someone commented that the playing field is being flattened... My God, he’s telling me that world is flat!... The global competitive playing field was being leveled. The world was being flattened.”

Playing Golf No one gave me directions like this before: Aim at either Microsoft or IBM I was standing on the first tee at the KGA Golf club in downtown Bangalore. The Goldman Sachs building wasn’t done yet and HP and Texas Instruments had their offices on back nine. That wasn’t all – the tee markers were from EPSON, a caddy was wearing a 3M hat and outside the Pizza hut billboard showed a headline ”Gigabites of Taste”

The world is flat Nilakani said: “Tom the playing field is being leveled.There was a massive investment in technology, broadband connectivity around the world, coupled with the PCs becoming cheap, there was an explosion of software, , search engines like Google

The world is flat We then had software that can chop up any piece of work and send one part to Boston, one to Bangalore, one to Beijing making it easy for anyone to do remote development all these came togather creating a platform where intellectual work, intellectual capital, could be delivered from anywhere. Tom and Nilekani were sitting in the Massive conference room of Infosis in Banglore.

The world is flat Flattening of the world means that we are now connecting all the knowledge centers of the world together into a single global network, which if politics and terrorism do not get in the way – could usher in an amazing era of prosperity and innovation.

The Three Eras of Globalization 1492 – 1820 Globalization 1.0 World shrank from Size large to size medium Exploration and colonization drive success Countries think globally to thrive 1820 – 2000 Globalization 2.0 World shrank from size medium to size small. Collaboration between international companies Companies must think globally to survive First half falling transportation cost and second half falling telecom costs – Present Globalization 3.0 World shrank from size small to size tiny. Individuals and small groups globalize Driven by diverse group of all nationalities

Everyday Examples Jet Blue Reservation System Retirees and housewives take airplane reservations from their homes McDonald’s Call Center Drive-thru customers across the country give their order to a worker in Colorado Springs Indian Technicians and Engineers Read X-rays, write software, provide administrative support to US companies from Bangalore Chinese Workers and Technicians Japanese speaking Chinese workers provide backroom support to American and Japanese companies

The Ten Forces That flattened The World

The 10 World Flatteners 11/9/1989: Berlin Wall came down Worldwide balance of power shifted to free markets Each outbreak of freedom stimulated another outbreak 8/9/1995: Netscape IPO Sparked the dot com boom and over-investment in fiber optic cable (connected the world) Dot com bust made cost of using fiber optic cable virtually free First commercial browser, invigorated internet use Workflow Software Developed Software and standards developed that allow people to work together Created a global platform that enabled collaboration 1 3 2

The 10 World Flatteners Open-Sourcing Self-organizing collaborative communities Free code written by individuals and shared openly Peer review provides rewarding gratification Out-Sourcing Any service, call center, business support operation, or knowledge work that can be digitized can be sourced globally Opportunity to seek cheapest, smartest, most efficient providers Invigorated by Y2K computer date crisis (India) Off-Shoring Companies move entire factory or operation offshore to foreign country Same product produces in same way with cheaper labor, lower taxes, etc. Invigorated by China joining the World Trade Organization (Dec 2001)Zx 4 6 5

The 10 World Flatteners Supply-Chaining Wal-Mart pioneered global supply chain efficiency Wal-Mart trucks deliver products to stores, pick up goods from manufacturer on return to distribution center An item is purchased in Wichita, KS and another one is instantly produced in Beijing Prediction of hurricane causes specialized products to be shipped to affected stores (Pop Tarts, toys, beer) In-Sourcing Logistics giants take control of customer supply chains UPS provides internal logistics support for other companies Toshiba laptops sent directly to UPS where a UPS employee repairs it and return ships to customer 8 7

The World is Flat Flatteners #7 & #8 Thomas Friedman

Flattener #7 – Supply Chaining Wal-Mart Prophet?

Flattener Key Points Resourcefulness versus opportunity Businesses in Difficult situations or insecure in the marketplace will innovate and educate the industry Small efficiencies via technology Enhanced communication, leads to identification of more instances to cut costs Smart products and meta data Microchip Smart products RFID tags Streamline their supply chain

What are the implications for the US economy and position in the world? Adoption is a necessity Resistance is futile. A place in the business world is solidified by adoption and innovation. Catch-22, Hegemony, Tiny gains Demand models, anticipation techniques and trend analysis makes meta data key in highly competitive markets

Wal-Mart Profit.

Flattener #8: UPS: In-Sourcing

Example #1: UPS fixes laptops for companies to speed up service. 3 day turn-around, instead of week (s) for product repairs Point 1 - UPS is not only shipping parcels, but also providing smart business solutions

Example #2: Take orders from Nike.com, fill the order from a warehouse staffed and operated by UPS and ship with UPS.

Point 2 UPS makes big companies act small + small companies act big If you are a seller on EBay, the buyer pays through PayPal, you print UPS label through PayPal and tracking number is ed to the customer so they can track online and know when it ’ s being delivered

Point 3 UPS is creating enabling platforms for anyone to take their business global. Provides funds for small businesses for computers, scales, printers to help grow your business Provides banking solutions for businesses

Point 4 UPS makes delivery super efficient & super fast, and does this in high volumes. Figured out a way to track packages more efficiently. Allow customers to track their own packages online. Coding system to track packages - saves money and speeds up delivery delivery. Lowered price from $2+ to 5 cents

Point 5 UPS is now basically an extension of departments within other companies UPS tracks weather and geopolitical disturbances to make sure they ’ re prepared for that days business. 2% of global GDP is being transferred through UPS at any given moment. Largest user of wireless technology in the world. Cell Phones/DIADs (Driver Delivery Information Acquisition Devices) UPS Companies UPS Air Cargo UPS Capital Corporation UPS Consulting UPS Mail Innovations Mail Boxes Etc., Inc. Motor Cargo, A UPS Company Overnite, A UPS Company UPS Professional Services UPS Supply Chain Solutions UPS Air Cargo UPS Capital Corporation UPS Consulting UPS Mail Innovations Mail Boxes Etc., Inc. Motor Cargo, A UPS Company Overnite, A UPS Company UPS Professional Services UPS Supply Chain Solutions

And Flattening Capabilities…..

The 10 World Flatteners Informing Search engines (Google, Yahoo!, etc) provide universal access to information Individuals empowered to find information Steroids Wireless, VoIP, file sharing that enhance the collaboration tools Digital, mobile, virtual and personal technologies explode 9 10

The Triple Convergence Vertical (command and control) value-creation model Horizontal (connect and collaborate) value-creation model All 10 flatteners converged in 2000 and worked together to create the flat world Horizontalization – Emergence of management practicesand infrastructure to boost productivity India, China, and former Soviet Empire are joining the Flat world (300 million people)

The Quiet Crisis Friedman argues that the US is in a “quiet crisis” caused by 3 issues The Numbers Gap US is no longer producing adequate number of educated workers and engineers India and China overshadow US demographically The Ambition Gap Americans believe they are “entitled” to certain jobs Some companies believe productivity higher in other countries The Education Gap US education system is not preparing young people for new types of work Funding levels for education are inadequate

Impact on Jobs Three types of jobs in current market Fungible Jobs Repetitive and skill-based work Easily digitized and not tied to a particular location Easily outsourced Anchored Jobs Must be performed in a particular location Value-add Jobs Require specialized skills and knowledge Knowledge must be across a number of disciplines and deep The individual worker is responsible for managing his or her own career, risks, and economic security

Becoming an “Untouchable” Four types of workers in current market Special Workers Special people like sports stars, movie actors, etc. Specialized Workers Work cannot be outsourced Skills in high demand and not fungible Anchored Workers Tied to a specific location Really Adaptable Workers Constantly acquire new skills, knowledge, expertise Look for unique and creative components of job Untouchables are people whose jobs cannot be outsourced, digitized, or automated

Help Wanted Ads in a Flat World Great Collaborators and Orchestrators Collaborating within and between companies Managers who can work in 24/7 supply chains Great Synthesizers Putting disparate and unusual things together Example: Search engines require mathematicians and marketing experts Great Explainers Ability to explain complex concepts with simplicity Great Leveragers Optimizing the interface between people and machines

Help Wanted Ads in a Flat World The Great Adapters Employees must be adaptable and versatile Specialists have deep skills and narrow scope Generalists have shallow skills and broad scope Versatilists apply depth of skill to widening scope through constant learning and growing The Green People Industry of creating renewable energies and environmentally sustainable systems will grow Three-billion people in China, India, and former Soviet Empire are joining the flat-world – will create more demand for energy and products The Great Localizers Local businesses will still drive majority of jobs Successful people will understand global infrastructure and adapt to local needs and demands

Taking Advantage of a Flat World Utilize information resources AIAA Electronic Library, other internet sources Utilize international network Colleagues at Universities, industry partners International members at AIAA conferences Look for opportunities to learn from and collaborate with others Become Really Adaptable Never stop learning Participate in continuing education events Conduct research, write a paper for AIAA Journal or Conference Build a global network Participate in AIAA conferences, section meetings, etc. Become a member on an AIAA Technical Committee Find a mentor Take control of your own career

A Flat World – Implications for Education

The Quiet Crisis 40% of the 18,146 NASA employees are age 50 or older NASA employees over 60 out number those under 30 by a ratio of 3:1 The National Commission on Mathematics and Science Teaching for the Twenty-first Century found that 2/3’s of the nation’s mathematics and Science teaching force will retire by 2010

“When they send jobs abroad, they not only save 75% on wages, they get a 100% increase in productivity.” “Young Chinese, Indians, and Poles are not racing us to the bottom. They are racing us to the top.” “In China today, Bill Gates is Britney Spears. In America today, Britney Spears is Britney Spears – and that is our problem.”

The Annual worldwide Intel International Science and Engineering Fair Forty countries participated In 2004 – 65,000 American kids participated In China – 6,000,000 Chinese kids participated

Federal Funding...for research in physical and mathematical sciences and engineering as a share of the GDP declined by 37% between 1970 and National Science Foundation funding for 2005 cut

Where to Learn More “The World is Flat – A Brief History of the Twenty-First Century” by Thomas L. Friedman, MIT Lecture by Thomas Friedman, May 16, 2005, available at the MIT Open Course website “The Untouchables: Finding the New Middle” by Thomas Friedman, available at