Last night I started reading The World is Flat by Thomas Friedman and I went through fifty pages before I could set the book down. I haven't been this invigorated at the prospect of learning new ideas from a book since reading Malcolm Gladwell. He starts with a visit to Bangalore, India, visiting call centers and engineering companies, only to learn that his CPA is outsourcing the tax-preparation to India as well. Technology has allowed for seamless globalization, so that whoever can do a job the most effectively and efficiently will get the job, regardless of the continent on which they reside. Housewives in Salt Lake City or taking reservations for JetBlue, a call center in Colorado is taking your drive-thru order from a McDonald's in Missouri, and Osama bin Laden can coordinate 9/11 without ever leaving the cave.
I don't plan on doing a chapter by chapter breakdown a la Royce, but I will try to share the thoughts it provokes within me.
I read this a few years back and annoyed the crap out of those around me cause I kept spouting out all the neat little factoids Friedman was able to compile into the book. One of my favorite stories surrounded the distribution centers of Walmart, and how they evolved to what they are today. That whole chapter boggled my mind.
ReplyDeleteI'll look through the book in the coming weeks now that I know you're reading it to find more golden nuggets.
While talking to a call-center company exec in India, the VP tells him that "communications technology has leveled the field." It's not the case that transportation is so easy...it's that transportation is now irrelevant. Friedman didn't think that 'globalization' could properly emphasize the current world. Globalization 1.0 was from 1492 to 1800, where is was about size and strength and expansion by countries. From manual, sail, and horse power to steam, efficiency was how fast and effectively you could get from one place to the next, from one country or continent to another. Think Columbus & Magellan, British imperialism and Manifest Destiny. Globalization 2.0 was multinational companies with different divisions on different continents. Think Parisian shirts being sold in San Francisco during the gold rush, "speak softly and carry a big stick", and "Made in China". Now Globalization 3.0 is here because the tech bubble led communication companies to over-expand and lay more fiber-optic cables all over the world. Now you can send a terabyte of information from Boston to Tokyo in less than a second. But 'Globalization 3.0' didn't portray how much of a fundamental change had occurred. We have moved beyond exports and imports. We are now in a true market economy where resources go to the most efficient producer. The world is more than just seamless globalization...the world is flat.
ReplyDeleteI thought I posted that comment 4 hours ago, only to come back after lunch and realize it never posted.
ReplyDeleteUmm, thanks for quoting the book for us?
ReplyDeleteAhahaha
ReplyDeleteScott has a different style than you and me, Aaron, when it comes to this stuff. Scott likes the more general, summary-oriented discussion. You and I like to pull some specific examples and then extrapolate bigger meanings for our world.
In short, we are much deeper thinkers than Scott (kidding).
I'm not sure whose voice was dominant in your big quote there, Aaron, but I assume it was Friedman's. If so, I think he is overstating the degree to which "the world is flat." Technological distribution of information and instantaneous communication accounts for a LOT, but not everything. Face-to-face meetings and a level of trust are still the backbone of business, at least in my experience. Of course I also work in real estate, which is a more localized business.
In fact, I think I just broached the subject of how there are many major localized businesses which resist a certain level of globalization. Of course there many counter-examples of this even in real estate, but I'll let you respond first. Do you think he is overstating the globalization of business, or do you think it's truly as flat as he says?
Friedman directly addresses that jobs are not being shipped over-seas per se. Rather, by outsourcing any task that can be digitized (data, image, voice, picture/video, etc.) professionals have more time for the face to face meetings. CPAs can outsource the tax return preparation to spend more time sitting with clients discussing more complex estate strategies. A realtor can spend more time doing open houses instead of putting pictures up on the website and dealing with title companies.
ReplyDeleteHis point (so far) is that you need to understand how to take advantage of the flat world, because those who refuse will end up like mills and canneries and shoe factories.
I'm not 100% sure what that means... if a CPA is outsourcing a tax return, doesn't that mean he isn't doing that in his office, where some low-level accountant would have been working for him? Is that not a job shipped overseas?
ReplyDelete(I'm not complaining about this, just trying to understand)
Correct, the CPA could either do the tax-return himself (or herself...we're not sexist here), hire a low-level accountant to prepare the tax-return, or out-source the preparation to a company in India. This means the CPA has more time to meet with more clients and make more money. The low-level accountant then needs to step up and become a high level accountant to add more value to the CPA than simply preparing tax-returns.
ReplyDeleteThat seems to be the implied (or even foreshadowed) message that he may address specifically later in the book. Intellectual, low-level, busy work is going to be outsourced, so Americans need to develop more high level analytical skills AND focus on improving face to face interpersonal skills.
The second implication I draw that I don't think Friedman will, is that the tasks being outsourced will eventually be entirely replaced by a computer in another generation or two. As computer programs become more intuitive, and data-entry becomes easier (such as scanning and 'reading' hand-written notes or getting data from voice entry) the tasks that American companies are asking India to do will become obsolete. Intellectual employees will need to move to higher level analysis to provide value.
The ten forces Friedman identifies that flattened the world. The Berlin Wall, Netscape, PayPal, Wikipedia, India, China, Wal-Mart, UPS, Google, Blacberry/iPhone.
ReplyDelete1) The Berlin Wall fell...this is the most visible and memorable indicator that communism died and capitalism won.
2)Netscape: Their new web browswer that allowed every computer to talk to every other computer. Before Netscape, computers, email, browsers, web sites, etc. all had to be compatible to be read. Now, someone using a Mac, could email someone using Windows and view a site hosted on an IBM server, through standardized protocols; FTP, HTTP, SSL, SMTP, POP, TCP/IP, HTML...don't those look familiar?
3) PayPal: Work flow software allowed tasks to de-aggregated, while maintaining constant communication, and improving efficiency. An animator can have an artist in New York draw a cell, the color guy in Chicago paint it, and the motion guy in India put it all together, so the next morning the production company in LA can edit it and then China will produce the film from the digital movie. eBay was nice and helpful, but PayPal working in conjunction with eBay allowed e-commerce to truly take off.
4) Wikipedia: Open-sourcing made it so that free software was often better than software that large companies could provide for a cost, which meant companies had to be even better if they wanted to make a profit. Wikipedia is now better than Britannica.com
5)India: When Y2K was an issue, many companies would outsource the menial, profitless task of converting programs from 99 to 2000, to India, where there were enough basic programmers to take on the menial task and the fiber optic cable was laid to connect India in the first place. After 2000, India had all these competent programmers and a way to connect with companies in America.
6) China: China joined the World Trade Organization. Instead of moving specific tasks to India, companies are able to move entire factories to China. The WTO membership provided some protection from the political instability and reduced the risk of more and more companies establishing branches in the country woth the largest population.
7) Wal-Mart: Cash registers in Wal-Mart, upon selling a product, immediately inform headquarters and the manufacturer of the product sold. Now executives have accurate, real-time data and can adjust their strategies and at the same time, manufacturers, shippers, and buyers have a better grasp of the supply in any given store, meaning they can keep inventories lower, but still meet demand.
8)UPS: In addition to the package delivery that everyone knows about, small companies can insource UPS and FedEx. That is, they can have UPS come into their company and take over all the logistics of companies big and small. UPS repairs Toshiba computers instead of sending then back to the Toshiba plant. UPS coordinates the timing of the delivery of dough for Papa Johns stores. Small companies can devote resources to creating a better product, rather than figuring out how to get that product to anyone in the world. UPS will figure all of that out for you.
9) Google: Yahoo, MSN Search, and Google in-form individuals better than anything since the Gutenberg's printing press. Google has done for individuals and information, what everything else on this list has done for companies and economics.
10) Blackberry/iPhone: Now mobile devices have expanded everything to another degree. Small companies can take an order in a meeting, and immediately inform UPS, who gets the product shipped to the new customer faster than ever before. People can work during their commute without any diminshed capacity. DoCoMo, a Japanese company is working on a technology that will allow pedestrians to see a poster of a concert on the street and be able to scan the bar code on the poster and purchase the tickets from their phone. No sense getting that person excited, only for them to forget to buy tickets when they get home.
Based on these 10 items and the name of the book, it sounds like Friedman has 2 basic points: that the world is super connected now, and that utilizing the power of that connectedness means plugging into the huge network of people that can contribute to any given issue.
ReplyDeleteThis all seems rather obvious to me. It doesn't make me feel I should read the book. Can I ask you this Aaron - what in the book really surprised you and made you go "woah" (a la the Matrix)? Did anything in the book make you look at things in a new way?
I refuse to let this die...and I brought the book into the office to add more. Royce, oversimplifying the entire book into those two basic points is like saying the US Constitution gives Americans their freedom. You are technically correct, but not helpful in the least.
ReplyDeleteFriedman talks about the Triple Convergence starting with the ten flatteners he mentions before connecting everyone in the world. The second are the flanking technologies catching up; that is a computer in an office is good, but a computer with Excel and Word actually allow the individual to be more productive. The third aspect is everyone developing new processes and habits. Once everyone is using Excel, it becomes even better.
ReplyDeleteFriedman goes on to describe the Numbers Gap (more science and technology jobs opening up, fewer American scientists and engineers), the Ambition Gap (Indians and Chinese feel fortunate to have the job, they are becoming more productive than American workers) and the Education Gap (young American students are not choosing to go into math and science, so these problems will only continue to get bigger). These all contribute to a Quiet Crisis where the US is still in the lead, but is not moving forward nearly as fast as other countries and there is no law that says the US has to be the biggest economy in the world.
To answer your question Royce, I would say that there hasn't been anything that made me say 'woah' rather, this book seems incredibly practical and informative. It is filled with anecdotes, like a McDonald's in Missouri actually outsourced the drive-thru ordering to Denver. A call center takes the order and a picture, then sends the order to the kitchen in Missouri. This has improved accuracy in orders, decreased complaints, and reduced the average time per customer, which is HUGE in the fast food industry. From the practical perspective, he calls on leaders to encourage more children into math and science like Kennedy did in the 60's. Creating NASA and putting a man on the moon, was actually less important than getting millions of kids interested in technology who have developed the technologies we have seen emerge over the last two decades. He discusses the importance of portable retirement plans and portable health care (a little tie in) for allowing Americans to continually strive to further their skills and move up in an industry. How a person's right to lifetime employment cripples a company, but a company's promise to make you lifetime employable by providing opportunity to further your own skills is necessary for the company to attract talent and for the talent to compete globally. He calls on parents to stop coddling children and giving everyone a Little League participation trophy and actually teach them hard work and eliminating a sense of entitlement.
Friedman shares a story of how HP figured out how to sell digital cameras to a village with no electricity.
I am going to lead us astray for a second and ask why there is all this alarmism over America potentially not being the leader in science and engineering? Or the global economic leader? We have like 1/4th the number of people that China has and that India has. At some point that's going to catch up with you, no?
ReplyDeleteI whole heartedly support President Obama's education idea.
ReplyDeleteI think this is big enough where we should talk about it on a new post. Would you care to do the honors?
ReplyDeleteMy idea of software taking over for low-level intellectual positions is coming to fruition.
ReplyDeleteWill robots steal your job?