Monday, January 16, 2006

The World is Flat

I just finished reading Thomas Friedman's bestselling, The World is Flat: A Brief History of the 21st Century and I am afraid...very, very afraid. This is a MUST read. Now. You can go download an article he wrote for the New York Times called "It's a Flat World, After All" which is a 6-page summary of the book but it won't have the same impact as the book.

The Top 10 Forces That Flattened the World:

1. 11/9/89 - The Berlin Wall came down. Setting off a chain reaction that reaches China. 6 months later, Microsoft releases Windows 3.0. People, other than scientists, can connect PCs to telephones and send emails and view content via the likes of CompuServe and AOL.

2. 8/9/95 - Netscape goes public. This IPO tiggered the dot-com boom, which triggered the dot-com bubble, which triggered the massive overinvestment (billions!) in fiber-optic cable. Then the bubble burst leaving the banks owning a lot of fiber which they were happy to sell for pennies on the dollar.

3. Work Flow Software - As the walls went down and the PC, Windows and Netscape enabled people to connect with other people as never before. We found ourselves needing programmers to develop new applications. We needed to get everyone's applications talking to each other. XML and SOAP allowed application to application interaction which is the foundation for web-enabled work-flow.

4. Open-Sourcing - Linux.

5. Outsourcing Y2K - businesses wanted to fix the Y2K problem quickly and cheaply. They turned to India. Then the e-commerce push came. Both HUGE opportunities for India. They delivered mission-critical, high-quality products. By the time the dot-com bubble burst, India had developed a great reputation. With companies forced to cut IT budgets, India was there to do the work that needed to get done cheaper AND better.

6. Offshoring - In a range of industries. Not just call centers. China arrives on the scene once they joined the WTO in 2001.

7. Supply-Chaining - Wal-Mart's basic method of buying directly from the manufacturer to get the deepest discounts possible. They got the manufacturer's to cut their costs; they worked the supply chain with those manufacturers to further reduce cost and friction; and constantly improve Information Systems so it knew EXACTLY what it's customers were buying and could feed that info to all the manufacturers.

8. In-courcing - FedEx/UPS provide the means to develop and support a complex global supply chain for the little guy. Small companies can now act big. They can sell in places never before possible. You've seen the commercials.

9. In-forming - Google. Yahoo. Search engines. It the ability to build and deploy your own personal supply chain of information, knowledge and entertainment. It is about SELF-collaboration.

10. The Steroids. Digital, mobile, personal, virtual. All analog content is being digitized. And it can be manipulated quickly, and sent anywhere wirelessly.

Triple Convergence

1. Around the year 2000, all these flatteners started to converge and work together to create a new, flatter, global playing field. As this happend, both businesses and individuals began to adopt new habits, skills and processes to exploit it. They moved from largely vertical means of creating value (command and control) to more horizontal ones (connect and collaborate).

2. This merger of the new playing field with the new WAYS of doing business was the second convergence. This continued the flattening process.

3. While this was going on severl BILLION new people walked on the the field of play. They were from China, India, the former Soviet Union, South and Central America.

All of this doesn't just affect people and companies. It will and is effecting how countries organize their economies and geo-politics.

How will America compete? This book is scary enough until you hit this point. We are WAY behind in education. You have to constantly upgrade your skills. How do you become "untouchable":

  • Workers who are "special" - Peyton Manning, Bill Gates, Bruce Springsteen. These jobs can never be outsourced.
  • Workers who are "specialized" - knowledge workers who are specialized and have a niche. Their skills are always in high demand.
  • Workers who are "anchored" - barber, waitress, doctors (sometimes). Their jobs have to be done in specific locations.
  • Workers who are "really adaptable" - they constantly acquire new skills, knowledge and expertise that allow them to constantly create new value.
We are BEHIND. Friedman points to three gaps we are currently facing. The ambition gap, the numbers gap in the lack of scientists and engineers we are producing, and, finally, an education gap. The longer American kids stay in school, the worse they perform.

As he says..."this is not a test. This is the beginning of a crisis..."

No comments: