The World is Flat: Chapter 1,2
Friedman, Thomas L. The World is Flat: A Brief History of the Twenty-first Century. New York: Farrar, Strauss, and Giroux, 2006.
How the World Became Flat
Summary of Chapter One: While I Was Sleeping
Christopher Columbus and the explorers in the fifteenth century accepted the world as round, not flat, and proved it by sailing west to get to the east for trading with India and China. Friedman, a reporter, goes to India in 2004 to see how technology has connected the east and west today. He is surprised by his findings, declaring that the world has become flat again almost overnight. By flat he means time, distance, and differences are no longer barriers, for everyone worldwide has the same technology. In Bangalore, the Silicon Valley of India, he visits Infosys, a big Indian-owned IT (information technology) company and sees Indian engineers in a modern outsourcing industry with a video conference room where the entire global supply network can speak to one another in real time. Clocks on the wall show the time in India, Singapore, Australia, the United States, and Hong Kong. This kind of globalization in business happened around the year 2000 with a technological platform becoming available where work could be delivered to anywhere from anywhere.
Friedman concludes we are now in the era of Globalization 3.0. Globalization 1.0.lasted from 1492 to 1800 when the European powers were colonizing the world for the sake of trade and expansion. This phase involved competition between countries. Globalization 2.0, from 1800 to 2000 was the era of multinational companies, utilizing successive technologies from the steam engine and railroad to computers. Globalization 3.0 with personal computers, software work platforms, fiber-optic cable, and the Internet and World Wide Web have led to a maturation of a global economy where individuals from any part of the world can enter a leveled playing field with giant corporations.
Commentary on Chapter One: While I Was Sleeping
Though the world has been aware of the speed of technological progress, Friedman makes a case for a major shift to a new level of functioning since the year 2000 because of what he calls a triple convergence of the “personal computer,” “fiber-optic cable,” and “the rise of work flow software” allowing world-wide collaboration between individuals and companies (p. 10). He gives several examples such as Jerry Rao's accounting firm in Bangalore that does outsourced tax returns for the United States. This means, says Friedman, the American accounting firm will have to focus on higher, more creative work and let the ordinary work go to a cheaper outsourcing company somewhere in the developing world. No one has to lose. Call centers moving to India provide a way for a skilled middle class to arise in India, while freeing American business for creative innovation. Friedman gives other examples of international business moving to China, such as to the city of Dalian, north of Beijing, where one can see companies like GE, Microsoft, Dell, SAP, and Sony. China has the largest number of college graduates in the world now, and many are put to work by large companies for a fraction of the cost in their own countries.
Friedman gives “homesourcing” as the opposite side of the coin of outsourcing. For instance, JetBlue Airways uses housewives at home as ticket agents. They are cheaper, more productive, and can work with children at home. One surprising outcome of the flattening of the world is that even the military hierarchy has changed with the sharing of sensitive information among ranks and drone strikes in Iraq directed from a computer in Las Vegas.
Summary of Chapter Two: The Ten Forces that Flattened the World
The ten forces that flattened the world, according to Friedman, began with the fall of the Berlin Wall in 1989 that ended the Cold War and made the world into a field of global capitalism. No longer were there two sides, communism and capitalism, but only one, creating the need for common standards.
The second force was Netscape, the web browser launched in 1991, the beginning of the World Wide Web, where people could search and retrieve documents on their PCs hooked up to the global phone network. Internet only connected computers, but the web is a global hypertext system with hypertext links to bring information. This necessitated open standards, the Internet protocol codes, http, html, tcp/ip, jpeg, and pop, to name a few. These web protocols led to the third flattener: work-flow software that allowed people to collaborate on work projects, not just e-mail each other.
The fourth flattener was the power of uploading, or the power of communities. The big companies were the first to develop and cash in on the new technologies. Then came Apache shareware for free, developed by communities of engineers, not for competition but collaboration. Blogging, podcasting, Wikipedia, and Amazon publishing are all forms of free uploading open to all. The fifth flattener was outsourcing. Friedman gives the example of the Y2K crisis when all the computer clocks had to be reset when the year 2000 arrived. It was painstaking work but perfectly outsourced to India at that time whose own IT businesses took off because of the crisis. Outsourcing can thus be seen as a form of collaboration rather than a misfortune.
The sixth flattener was offshoring, when a company relocates its business to a cheaper country. China has been the country of choice for many American and Japanese companies. This has resulted in the opening of China to the rest of the world. Friedman sees China as an opportunity rather than a threat, a way to avoid trade barriers and to create more business.
The seventh flattener is supply-chaining, as in Walmart stores that are supplied in bulk by several companies around the world, allowing Walmart to pass on the savings to the customer. Supply-chains demand timing and common standards and global collaboration, though stores such as Walmart do not manufacture any product themselves. The eighth flattener is insourcing, demonstrated by UPS, United Parcel Service. They don't just deliver packages; they are a logistics firm, supplying needed links for businesses. UPS will manage a firm's global supply chain, enabling small businesses to be global. The ninth flattener is called in-forming, or web search through search engines like Google and Yahoo! This form of search allows an individual to find his or her own supply network or collaboration. The tenth flattener is what Friedman calls the “steroids” (p. 186): “digital, mobile, personal, and virtual.” Any person can do business or get information anywhere anytime from a personal cell phone or computer without needing a permanent base. This refers to wireless and other technologies that amplify the other flatteners.
Commentary on Chapter Two: The Ten Forces that Flattened the World
Friedman gives many examples of how individuals and businesses are operating differently in today's market and “flat” world. Thanks to the triple convergence (PCs, fiber optics, and work-flow software) and ten flatteners, nothing from education to the military will be the same in any country. While businesses use technology to streamline and collaborate or to compete, the exciting news is how all this technology empowers the individual to become a player in a world once deemed beyond anyone's control. The world has gone from enormous and intimidating to small and manageable. Most readers will be familiar with the companies and examples that Friedman gives, but the beauty of the analysis is how he puts it together into a total picture of a (mostly benign) globalized culture that creates more wealth and opportunity for more people than ever before. He identifies old and new principles of business, predicting who will be successful in this leveled playing field.
Friedman discusses at length the idea of free community-based shareware vs. commercial software. The phenomenon of uploading along with shared software platforms have created a shift from people being passive consumers to active participants and producers. Today, however, there seems to be a blended model emerging where companies like IBM build on what open-source companies like Apache have achieved.
The elaborate and extended examples of Walmart as supply-chain, and UPS as an insourcer, are fascinating. Friedman shows the precision and sophistication of Walmart's RFID, or radio frequency identification microchips inserted in every delivery pallet that allows information on every item to be communicated worldwide instantly, so there is always the correct amount of each item in stock.
UPS employees not only send packages, they also fix HP computers, put together a Nike shoe order and ship it from the warehouse, all without going through the company. They are inside the companies they serve, organizing their manufacture to delivery links. All of these developments allow individuals and small towns and underdeveloped countries to compete with very little money and without having to relocate to a big city or a Western country to be successful.