the world is flat

The World is FlatBook by Thomas L. FriedmanPresentation by Koren, Li, and Matt

Ten Flattening Forces11/9/89 – Fall of the Wall

8/9/95 – Netscape went publicWork Flow Software

Uploading

Outsourcing

Offshoring

Supply-Chaining

Insourcing

In-formingThe Steroids

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)

BERLIN WALL BLOCKED OUR VIEW OF THE ENTIRE WORLD AS A GLOBAL ECOSYSTEM.

“Flattened [the market] alternatives to free-market capitalism”

Tipped the balance in favor of capitalism

(creativity)

I’m going to get you! Now, I’m going to get you!

8/9/95 – Netscape Went PublicAllowed us to easily drive around the Internet.

It’s hard to give credit for the Internet to a specific personOne of the few things that was created by committee

Netscape started thedot-com bubble

Netscape helped guarantee that open protocols would remain

open. Led to the overinvestment of

telecommunications companies in fiber optic

Work Flow Software

Work Flow Software

Increased seamless

communication

Standardized Transmission

Protocols

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

India benefited more from dot-com bust than from boom

EXAMPLES

Healthscribe – medical transcriptions

• Dictations to text via India

Y2K – made America ready to do on a blind-date with India

Offshoring

+ =

Offshoring – So What is China?

ThreatCustomerOpportunity

= Threcustunity

Low-grade Product Manufacturing

High-grade, high-tech Product

Manufacturing

Services and Design

Seeking lower labor costs

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

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

“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

InsourcingEverything’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

Web-EnabledPlatform

HorizontalPlaying Field

New Players

Dot-Com Bust

9/11

Enron, Tyco,

WorldCom

Web-Enabled Platform

11/9/89 – Fall of the Wall

8/9/95 – Netscape went public

Work Flow Software

Uploading

Outsourcing

Offshoring

Supply-Chaining

Insourcing

In-forming

The Steroids

Platforms tend to endure

Horizontal Playing Field

“Command and Control”

“Connect and Collaborate”- Wikinomics

New Players

India, China, Russia

6 Billion

2.5 Billion

North America, Western Europe, Japan

The Great Sorting Out

• Sr. Executives are from all over the world• Headquarters in New York• Factories in Raleigh, NC and Beijing• Listed on Hong Kong stock exchange

global market

An American company?

Who owns what?• Legal barriers shifting• IP rights

• made to protect• Dr. King’s brown-bag• Open source

• who owns the SW

Sorting Out: Can’t Have Everything

Lower Prices

Lower Phone Bill

Mass Info Availability

Job Protection

Free Trade

Higher Wages

Human Operator

Info Accuracy

Global Competition

Job Security

Tata Consulting GroupSurya 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 TradeProtectionists

(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

Job Openings (000,000s)

2004 2014 Number %Professional and Related 28.5 34.6 6 21.2 13.2Service 27.7 32.9 5.3 19 11.5Management, Business and Financial 15 17.1 2.2 17.4 4.9Sales and Related 15.3 16.8 1.5 10.6 6.5Offi ce and Adm. Support 23.9 25.3 1.4 5.8 7.4Transportation and Material Moving 10.1 11.2 1.1 11.1 3.5Construction and Extraction 7.7 8.7 0.9 12 2.4Installation, Maintenance and Repair 5.7 6.4 0.7 11.4 2Farming, Fishing and Forestry 1 0.1 0 -1.3 0.3Production 10.6 10.5 -0.1 -0.7 2.9Total 145.6 164.5 18.9 12.9 54.7

Source: Dixie Sommers, “Overview of Occupational Projections, 2014,” 2007.

Employment (000,000s) Net Changes

In order to maintain or improve living standards, the American low-skilled workers will have to move vertically not horizontally

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

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

“Learn how to learn because what you know today will be out-of-date sooner than you think”

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 CrisisDirty Little Secret #1: The Numbers

GapSteady erosion of America’s scientific and

engineering base

The Quiet CrisisDirty 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 CrisisDirty 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 CrisisDirty 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 CrisisDirty 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 CrisisDirty Little Secret #4: The Education Gap at the

Bottom

The Quiet CrisisDirty Little Secret #4: The Education Gap at the

BottomProficiency Levels on Selected NAEP Tests for Students in Public Schools

The Quiet Crisis

Dirty Little Secret #5: The Funding Gap

The Quiet CrisisDirty Little Secret #6: The Infrastructure

Gap

The Quiet CrisisDirty Little Secret #6: The Infrastructure

Gap

This is not a TestMeet 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 TestLeadership

• 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?“

CBS News Poll. July 31-Aug. 5, 2008. N=1,034 adults nationwide. MoE ± 3.

Good % Bad % No Effect % Unsure %7/31/08 – 8/5/08 14 62 10 14

This is not a TestLifetime 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 TestGood 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 TestParenting

“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 TestAmericans 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:

“If you change the regulatory and business environment for the poor, they will do the best” – Hernando de Soto (Peru)

Country Days for starting a companyAustralia 2

Haiti 203Congo 215

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 middle-class 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 coverag

eChina 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