Wednesday, November 5, 2008

Friedman's 10 World Flatteners

Thomas L. Friedman's "The World Is Flat" is probably the best non fiction book I have read so far. It gives an amazing insight into 21st century: starting from why things are the way they are, how they will be and what factors will shape them. Here the "flat" is in reference to level playing field where each nation has almost equal opportunity to be a player at a global level. He provides a list of ten forces that flattened the world.

  1. Fall of Berlin Wall (Nov 9, 1989)
  • It was not only blocking our way but was blocking our sight. World was sort of like a frog in a well. Demolition set the frog out of the well.
  • End of communism which in the simplest term is "a great system for making people equally poor".
  • Created a chain reaction of freedom.
  • Simultaneous birth and popularity of IBM PC/Microsoft Windows
2. Birth of Internet Browser Netscape
  • Created a dot com bubble which helped corporation realize the power of internet which ultimately resulted into huge investment in connecting the world through fiber optic network.
  • Dot com bust lead into cheap availability of these fiber optic data transmission network which third world countries could use.
3. Work Flow Software
  • Automated communication between different departments of a corporation. New standards for software to talk to each other (SOAP, XML for Web services etc)
4. Open Sourcing
  • Tell me about that. ;-)
5. Outsourcing
  • Definition: To take a limited function of a company that was being done in-house such as research, call centers and have another company perform the exact same function and then reintegrate their work back to overall operation.
  • Dot com allowed country like India, China and some Eastern European countries to use all the data line practically for free.
  • World could use India's millions of engineering brain power not only in software but in accounting, medical data analysis, customer support
6. Offshoring
  • Definition: When company takes one of its factories say in Canton, Ohio and moves the whole factory offshore to Canton, China.
  • China wanted to attract foreign manufactures not simply to manufacture 1 billion pair of undies for sale in China but to use low-wage Chinese pairs of undies to sell 6 billion pairs of undies to the works at price that were a fraction of what companies in Europe and America.
  • Companies started breaking their business into three parts: part to do in China, part to sell to China and part to buy from China.
  • China flattener has been wrenching for manufacturing workers but a godsend for all consumers. By mid-1990s alone, cheap imports from China have saves U.S consumers $600 billion and saved US manufactures untold billions in cheaper parts for their products. This saving in turn helped Federal Reserve to hold down interest rates longer, giving more Americans to finance home and new business.
7. Supply Chain Management (SCM)
  • Wal-Mart's uber cool efficiency on SCM. Its system is inter connected to such an extent that the moment a customer purchases something, the record goes to all the way to manufactures through corporate headquarter and wholesale dealer without a single intervention from a person.
8. In Sourcing
  • UPS story: When you return a Nikon camera, it does not go to Nikon headquarter all the way. UPS has certified engineers to fix the camera. If they can not fix it, they ship a new camera to customer thus saving on extra shipping that would have been needed otherwise.
  • Def: a new form of collaboration and creating value horizontally.
  • Even small companies can do business globally without opening a shop in rest of the world. UPS acts as your global supply chain manager.
9. In-Forming (easy access to knowledge - Think Google)

10. Influx of Gadgets - Digital, Mobile, Virtual
  • Being able to print boarding pass at home
  • Blogging from anywhere through various devices - even mobile phones.
  • Engines talking to computers, talking to people, talking back to the engines, followed by people talking to people - all done from anywhere to anywhere.
BTW, above is only one third of the book.