The World is Flat

by Thomas Friedman

It is now possible for more people than ever to collaborate and compete in real time with more other people on more different kinds of work from more different corners of the planets than at any previous time in the history of the world. 

Globalization 3.0 is newfound power for individuals to collaborate and compete globally.  The lever that is enabling individuals and groups to go global is software and applications.  There are 70,000 accounting graduates in India who go to work for $100 a month.  Any activity where we can digitize the value change and move the work around will get moved around.  There will be better and easier transfers of CAT scans so you can quickly get a second opinion from a doctor half-a-world away. 

 

The wages and rents in Bangalore are one-fifth of what they are in Western capitals.  Most of the young people I interviewed give all or part of their salary to their parents.  Many of them have starting salaries that are higher than their parents’ retiring salaries.  Our 4,000 associates spread out in Bangalore take home $200 a month, which grows to $300 to $400 a month in six months.  We provide transportation, lunch and dinner, life insurance, medical insurance and other benefits.  The total cost of each call center operators is about $500 a month to make start and then $600 to $700 a month after six or seven months. 

 

He started a company called B2K with a division called Brickwork, which offers basic global executives their own personal assistant in India.  You can give your personal remote executive assistant their assignments when you are leaving work at the end of the day in New York City and that will be ready for you in the next morning.  Because of the time difference they could work on it while you sleep.  Your own personal remote executive assistant costs around $1,500.00 to $2,000.00 a month.  The brainpower you can hire dollar for dollar is substantial. 

 

Ohmae has contracts with more than 70,000 housewives in Japan, some of them are specialists in medical or legal terminology to do data entry work at home.  JetBlue outsources its entire reservation system to housewives in Utah.  It’s all by word of mouth.  David Nielman founder of JetBlue calls it homesourcing in between baby sitting, exercising, writing novels and cooking dinner.  At Morris Air there were 250 people in their home.  There were 30% more productive.  They take 30% more bookings just by being happier.  They were more loyal and less attrition.  Home reservationists work 25 hours a week and come into JetBlue office for 4 hours a month.  Homesourcing to Salt Lake City and outsourcing to Bangalore were just flipsides of the same coin - sourcing. 

 

It is possible for individuals to source work anywhere.  We are going to see the digitization, virtualization and automation of almost everything.  More people than ever are going to have access to these tools as innovators and as collaborators. 

 

Every layer of innovation gets built on the next.  A 14 year old in Romania or Vietnam has all the information and all the software easily available to apply knowledge however they want.  The next Npster is going to come out of left field.  Work could flow anywhere.  It was the ability to enable applications to speak to applications that would make outsourcing possible.  Thanks to different kind of web services the industry created a global platform for global workforce. 

 

Work flow platforms are enabling us to do for the service industry what Henry Ford did for manufacturing.  This is not a trivial revolution this is the major one.  It allows for a boss to be somewhere and his employees to be somewhere else.  It enables you to create virtual global offices and tasks with talents sitting in different parts of the world.  We are now able to collaborate more than ever. 

 

Open sourcing is self-organizing collaborative communities.  Building always from the bottom up rather than accepting formats from the top down.  The word open source comes from those companies who make available online the source code.  The source is shared constantly improved and made available for free to anyone.  In return every user who comes up with improvements is encouraged to make that available to every other user for free.  Open source is a community of online volunteers who share their insights with one another and to the public for free.  They do it because they want something the market doesn’t offer them, for the psychic buzz of creating the collaborative product. 

 

Brian Behlendorf created Apache and now CollabNet had started focused on creating software for companies that want to use an open source approached innovation.  We had a software project but the coordination directions were emergent behavior based on whoever showed up and wanted to write code. 

 

The commercial future belongs to those who know how to make the richest chocolate sauce, the sweetest, lightest whipped cream, or how to put them all together into a Sunday.  There is no future in vanilla for most companies in the world.  This emerging era is characterized by collaborative innovation of many people working in gifted communities.  The news profession has bloggers, and there is an open source newsroom.  This is open source intelligence gathering.  We have got a huge pool of highly motivated people who go up there and use tools to find stuff.  We have got an army of citizen journalists out there.  Wikipedia is the people’s encyclopedia.  They provide the ability to track the status, review changes and discuss issues.  They function as social software.  It works by consensus with users adding and modifying content while trying to reach common ground. 

 

The SourceForge website has 86,000 programs in process.  There will be no project too small for some members of this workforce to take on copy or modify for free.  Someone out there will be trying to produce the free versions of every kind of software or drug or music.  The open source approach represents a new post capitalist model of production. 

 

Informing is ability to build and deploy your own personal supply chain, a supply chain of information knowledge and entertainment.  Informing is about self-collaboration becoming your own self-directed and self-empowered researcher, editor and selector of entertainment without having to go to library or movie theater or through network television.  Informing is searching for knowledge.  It is about seeking like-minded people and communities.  People are searching for more obscured things; people are publishing more obscure things. 

 

I just Google their phone numbers and their home addresses came up.  The companies you want to bet on are those that learn to collaborate with their users and offer them shows and advertisements trailers just for them.  They are building collaborative systems that enable customers to pull on their own.  Searching is empowering.  It’s about self-empowerment.  In late 2004, Google began its service whereby if you are walking around Bethesda in Maryland and are in the mood for sushi you just send Google an SMS message on your cell phone that says sushi 20817.  Informing though also involves searching for friend, allies, and collaborators.  Yahoo group has about 300 million users and 4 million active groups.  These groups have 13 million unique individuals accessing them each month from all over the world.  In the edge of the superpower search everyone is the celebrity. 

 

Certain new technologies are steroids because they are amplifying and turbo charging all the other flatteners, digital, mobile, virtual and personal.  We believe that the mobile phone will become the central controller of a person’s life. 

 

The components of triple convergence first around 2000 alternative flatteners started to converge.  The merge of this new playing field for doing business with new ways of doing business was the second convergence and finally all this happened when a whole new group of people China, India and the former Soviet Union came out to the playing field.  This is new global playing field for multiple forms of collaboration.  WPP looks at all its employees as a vast pool of individual specialists who could be assembled horizontally into collaborative teams depending on the unique demands at any given project and that team would become a new company with its own name. 

 

It is a triple convergence of new players on a new playing field developing new processes and habits for horizontal collaboration that I believe is most important towards shaping global economies.  Giving so many people access to all these tools of collaboration along with abilities through search engines and the web to access the information ensures that the next generation of innovations will come from all over the planet. 

 

The scale of the global community that is soon going to be able to participate in outsource discovery innovations is something that the world has simply never seen before.  New players are stepping onto the playing field legacy free.  They don’t have to worry about the sunken cost of all systems.  It means that they can move very fast.  Many Chinese skipped over the land mine phase of phones.  South Koreans put Americans to shame in terms of Internet usage.  What’s happening now shows the tip of iceberg.  Everyone is going to have to improve themselves and be able to compete. 

 

A change is underway that would be remembered in time like the meteor that hit the earth and killed all the dinosaurs.  From command and control to collaborate and connect, my eye kept looking at all these Indians and telling me something else:  Oh my god there is so many of them and they all look so serious so eager for work and they just keep coming wave after wave.  Telling the world can it possibly be good for my daughters and millions of other young Americans that these Indians can do the same jobs as they can for a fraction of the wages.  Infosys India received 1 million applications from Indians for 9,000 tech jobs.  What the manual labor has to sell could be bought by only one factory at a time.  While what the software writer or a drug inventor has to sell, idea based products, can be sold to everyone in the global market at once.  Produce idea-based goods that could be sold globally and connect all the knowledge pools in the world. 

 

Raghuram Rajan sits on the board of company that puts Indian citizens toward tutoring students in Singapore on their math homework.  It is called heymath.com.  You have to constantly upgrade your skills.  I tell my girls, girl finish your homework, people in China and India are starving for your jobs. 

 

In China today Bill Gates is Britney Spears.  In America today, Britney Spears is Britney Spears – and that is our problem.  Young Chinese, Indians and Poles are not racing up to the bottom.  They are racing up to the top.  They do not want to work for us.  They don’t even want to be us.  They want to dominate us.  In a sense that they want to be creating the companies in the future that people all through the world will admire and clamor to work for. 

 

There comes a time when you’ve got to put away the Game Boys, turn off the TV set, put away the iPod, and get your kids down to work.  A crisis is a terrible thing to waste.  The more you have a culture that naturally glocalizes the more your culture easily absorbs foreign ideas and best practices and helps those with firm tradition.  The greater advances you have in a flat world.  You are dealing with people on the basis of talents. 

 

In the flat world a lot more people are interacting with lot of other people they don’t know and may never meet.  Trust is the foundation of innovation and entrepreneurship.  Increase the level of trust then only good things happen. 

 

Bahrain was the first Arab country to discover oil and the first one to run out of oil.  China does not just want to get rich.  It wants to get powerful.  China doesn’t just want to learn how to make GM cars and wants to be GM and put GM out of business.  Anyone who doubts that should spend time with the young Chinese. 

 

One way small companies flourish is by learning to act really big.  Starbucks learns from its customers and today 8% of all drinks Starbucks sells include Soya milk.  We then dream up the different concoctions the customers did.  Starbucks just collaborated with them. 

 

The self-directed consumer the big companies should adapt their technology and processes to empower the self-directed consumer could act very small by enabling their customers to act very big.  Venture capitalists today want to know how your start a business is going to take advantage of the smartest most efficient people you can find anywhere in the world.  Micro multi-nationals are the way with the future. 

 

Your first management job could be mailed in the specialties of the knowledge team that is one-third India, one-third China and a sixth each in Palo Alto and Boston.  In Cambodia Hockenstein pays typists $75.00 a month.  Digital Divide data now has a 170 employees in three offices.  The Gates Foundation launched 14 grand challenges and got 16,000 proposals from scientists in 75 countries.  The flat world puts different societies in much greater contact with one another.  It connects people to people much faster than the people and culture can often prepare them.  Most of the extremists have chosen to attack the very thing that keeps open societies open innovating and flattening and that is trust.

 

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