The World is Flat by Thomas L Friedman: An Analysis Essay
In 2005, Thomas L. Friedman’s book ‘The World is Flat: A Brief History of the Twenty-first Century, which was updated and expanded a year later, has been regarded as the sequel to his earlier book, ‘The Lexus and the Olive Tree,’ where Friedman first introduced a theory called the Golden Arches Theory of Conflict Prevention which provides that no countries that both had a McDonald’s had ever gone to war with each other. In ‘The World is Flat’ Friedman introduced a new theory called The Dell Theory of Conflict Prevention.
According to Friedman (2006), The Dell Theory provides that countries involved in the supply chain of Dell computers are unlikely to go to war with each other. This Dell Theory of Friedman is rooted in his notions of a Flat Earth. According to Friedman (2006), the Dell Theory provides that no two countries, which are both part of the same global chain, will ever fight a war against each other as long as they both remain a part of that supply chain. He uses the Dell supply chain as an example, wherein hundreds of Chinese, Taiwanese, Korean, and Japanese firms are part of Dell’s supply chain for desktops and laptops.
This supply chain allows these companies to become interdependent, and makes their government more wary about engaging in military actions that could disrupt the Dell supply chain. Any military activity, Friedman (2006) points out, from any of these countries, will disrupt the supply chain, which cannot tolerate even twenty-four hours of disruption. A country thus who loses its place in the supply chain will lose a lot, both economically and financially, sort of like pouring a cement down its own oil wells, as Friedman (2006) puts it.
In his book ‘The World is Flat’ Friedman uses the metaphor of a Flat Earth to describe the leveling of the world economic stage. In other words, Friedman does not actually believe that the world is topographically flat, but uses “flat” to refer to a level playing field. The main thesis in his book provides that a broad set of related trends converged together in the past decade, resulting in the opportunity for just about anyone to do almost anything today. Following Friedman’s logic of this Flat Earth as a level playing field, then Indians in Bangalore can write software as well as Americans in Baltimore, for instance.
For Friedman (2006), a Flat Earth means a Connected Earth – one wherein there are lowered trade and political barriers, and exponential technical advances in the digital revolution making business, and practically everything else, accessible to billions of people across the world Traditionally, the issue of globalization has been framed politically as a question of outsourcing, but Friedman takes it a step further and tries to understand the more complex relationships between and within national economies.
According to Friedman (2006), the flattening of the world and the latest phase of globalization (Globalization 3. ), represent a whole new level of “sourcing” wherein companies and individuals can more easily source whatever knowledge, production, innovation, research, or advice they need from anywhere in the world. Friedman (2006) in his book thus attempted to examine what companies were doing with regard to these new trends and to tried to identify general patterns. His primary references were two Indian entrepreneurs – Vivec Paul, the president of Wipro, and Nandan Nilekani, the CEO of Infosys, who are both heads of two of the most cutting-edge, high-tech/outsourcing companies in India.
He also examined key companies that are now globalizing and are good sources for understanding globalization, such as Wal-Mart and UPS which according to Friedman (2006) offer an amazing view of the flattening of the global playing field and the forces behind it. Friedman (2006) also discusses the Sputnik Moment for the US, which he defines as the nation’s time of crisis in engineering and science training. Geo-greenism, another term coined by Friedman (2006) in his book, is about energy independence through rediscovering science and technology.
Much on Friedman’s discussions on globalization, or Globalization 3. 0 as he calls it, is premised on US obsession with the Middle East, and Islamic terrorism. Viewing terrorism as a continuing threat, Friedman provides that countries of the Middle East have lagged behind in the age of globalization since it has been out of step in an era of free markets, free trade, and democratic politics. The world’s future is more likely to be shaped by the winners of the era, such as the US, but these winners must deal with the trends or flatteners that shape this next phase of globalization.
The metaphor of a flat world is thus used by Friedman to describe the next phase of globalization. According to Friedman (2006), barriers to entry are being destroyed as individuals or corporation collaborate and compete globally. Friedman’s (2006) Globalization 3. 0 is driven not by major corporations or giant trade corporations such as the World Bank, but by individuals – desktop freelancers and innovative startups all over the world, particularly in India and China, who can compete with – and win – not just for low-wage manufacturing and information labor, but more and more for highest-end research and design work as well.
In his book, Friedman (2006) discusses ten trends or flatteners which have resulted in this new age of globalization, or Flat Earth. In understanding the creation of the Flat Earth, Friedman (2006) relies heavily on the influences of technological forces. The first flattener is the end of communism, as exemplified by the fall of the Berlin Wall in 1989. The second flattener is the rise of the Internet, as exemplified the initial public offering of Netscape stock in 1995.
According to Friedman (2006), these two flatteners are two of the more influential trends that paved the way for a modern level playing field. He also discusses the open source movement as another major global flattener almost as important as the first two flatteners. He also discusses trends such as the growing roles of China and India, wireless communication, Wal-Mart’s supply chain management, and UPS’ branching out into businesses other than shipping packages.
Even though Wal-Mart and UPS both do not produce anything, and instead agglomerate or repackage other companies’ products, they nevertheless tap resources from the Flat World. For Friedman (2006), Wal-Mart’s great innovation is that it draw products from all over the world and gets them into stores at incredibly low prices through a global supply chain designed for efficiency. When an item is taken off the shelf in a Wal-Mart store in the US, another of that item will immediately be made in China. This shows perfect knowledge and transparency throughout that supply chain.
In the UPS, the global delivery system they’ve designed allows for delivery of their products with the same efficiency as that displayed by Wal-Mart, albeit called “end-of-runway services” by UPS. Before products are ship by UPS, the company will attach something, such as a new lens to the customer’s camera, or add a special logo to his or her tennis shoes, which UPS has designed for the customer, before they slap the product for delivery at the end of the runway (Friedman, 2006). What these two global supply chain systems point to is a very flat global playing field (Ibid).
According to Friedman (2006), the dot-com bubble and the subsequent dot-com bust played crucial roles in the creation of a Flat Earth. Telecommunications companies such as Global Crossing pursued ambitious plans to wire the world by laying fiber-optic cables across ocean floors, thereby connecting Bangalore, Bangkok and Beijing to advanced industrial countries. This excess supply of connectivity meant reduced telephone call costs, Internet connections costs, and data transmission costs that were so drastic that the telecommunications companies who laid down these cables went bankrupt.
However, the end result is that the world is now wired. The dot-com burst and the accompanying stock market crash made companies come up with plans to cut down on expenses, and brought forth the concept of outsourcing. Friedman (2006) discusses how businesses around the world reacted and adapted to these trends or flatteners, particularly the technological forces, and stresses on the importance of the development of work flow platforms.
In his interview with Microsoft’s chief technology officer, Craig J. Mundie, Friedman (2006), learns and shares with his readers how work flow platforms, which is software that allows all kinds of computer applications to connect and work together, allowing seamless cooperation by people working anywhere, is an important sustainable breakthrough that makes flattening of the world possible. Friedman gives concrete examples on how these work flow platforms function in the global business world.
For example, he talks about JetBlue’s system, wherein someone making a reservation is actually talking to an agent who is a housewife in Utah working part-time. Or that ordering at the drive-through McDonald’s in Interstate 55 near Cape Girardeau, Mo. , means being directed to a call center 900 miles away in Colorado Springs. Friedman focuses a lot of his discussion on India and China since, according to the author (2006), these are the two largest countries benefiting most from a Flat Earth.
He explains how China and India represent at the same time threats and opportunities to the developed world, since outsourcing to these countries will have the net effect of adding hundreds of millions of consumers to the world economy. Quoting a Morgan Stanley study, Friedman’s presents how the mid-1990s cheap imports from China saved American consumers over $ 600 billion and probably saved American companies even more since they used Chinese-sourced parts in their production. Between 1995 and 2002, China’s private sector increased productivity at 17 percent annually (Friedman, 2006).
In observing one of India’s greatest outsourcing companies, Infosys, Friedman (2006) wonders about the impact of the outsourcing trend to the millions of young American workers who lose their jobs to Indians who can do the same jobs and perform the same functions at a fraction of the wages. Yet despite this fear, Friedman (2006) indicates that he is aware there is no way of stopping this wave of outsourcing, since avoiding or overlooking this opportunity will most likely result in higher costs to an American company’s economic well-being.
He points out how countries that have kept the outside world away, in order to preserve their systems, jobs, culture, and traditions, have stagnated in terms of growth and development (Friedman, 2006). Friedman (2006) provides that from the US perspective, this resistance to the Flat World may be attributed to four factors. First, there is the 9/11 which distracted everyone in the country from worrying about the Flat World.
Second, the dot-com bust, as discussed earlier, where people erroneously equated globalization with the dot-com boom, and thus made people believe that globalization was over simply because the dot-com boom was over. The third factor is the infamous Enron case, where it made all CEOs guilty until proven innocent, resulting in employees, and even government administrations, avoiding interactions with CEOs.
The fourth factor is that the anti-globalization movement and intellectual leaders are still focusing on what Friedman describes the Globalization 2. (instead of Globalization 3. 0), and wasting away their energies on the International Monetary Fund, the World Bank, and conditionality, as if globalization is all about what the IMF and the World Bank impose and force on the developing world (Friedman, 2006). The solution, according to Friedman (2006), is to prepare for this new competition and this new Flat World order, and he gives recommendations on how the US and individual Americans can place themselves in a position to do better and to meet these new challenges.
For starters, according to Friedman (2006), people in advanced nations such as the US need to find ways to move up the value chain, and to learn or develop special skills that create superior products for which they can charge extra. He cites the UPS story as a good example of this response – it moved beyond merely delivering goods to repairing computers, and in effect managing a supply chain (Friedman, 2006).
The author also points to the impact of the dramatic erosion of the US science and technology base, wherein foreigners are imported to the country to do scientific work that its citizens no longer want to do or even know how to do. Nearly one in 5 scientists and engineers in the US is an immigrant, and 51 percent of doctorates in engineering go to foreigners (Friedman, 2006). Thus, Friedman (2006) provides that the individual’s role is a choice between becoming part of the Flat World, or staying outside of it, and not necessarily limited due to being confined to one geographical area.
In the US, many people are not part of the Flat Earth but still have political power and influence. Terrorists and criminals, Friedman (2006) points out, are early adopters, and have learned to use this flat plane to advance their goals, to recruit and inspire over the Internet, and to transfer orders and raise money over the Internet. People such as Osama Bin Laden, according to Friedman (2006), and terrorists everywhere else, have used and continue to use the Flat World as much as anybody else.
The individual’s job then is to soak up the tools of this global level playing field, and to use these collaborative tools in more constructive ways (Friedman, 2006). The Role of Leaders One of the themes of ‘The World is Flat’ is that due to the flattening of the world, and the level playing field, it has become harder to challenge corporate decisions from below top management, and top-down structure in Corporate America and elsewhere is flattening into horizontal corporate positions (Friedman, 2006).
For people who have been left out of this flattening process, the challenge is joining the flat world, and breaking down hierarchies. Friedman (2006) points out that business leaders in the US have caught on for the need to participate in the Flat Earth, but corporate efforts may be hampered by the lack of understanding of our political leaders for the need to participate in this level playing field. Friedman (2006) is of the opinion that most political leaders do not even realize that the world is flat, despite the fact that most leading US companies have been responding like crazy to this phenomena.
Friedman does not even policy planning staff at the State Department for his book, but instead goes to the policy planning staff at IBM, since he believes that most political leaders in the US just don’t get it (Friedman, 2006). Unlike business leaders who, according to Friedman (2006), are in the middle of it. These business leaders do not have much of a choice – they wouldn’t survive competing in an increasingly global market unless they understand how the level playing field works. As to political leaders, Friedman (2006) believes that they will most likely come to realize the relevance of the Flat World only after a crisis of some sort.
Yet he points out that there already is a crisis that political leaders have not been taking proper cognizance of. According to Friedman (2006), the US is producing less and less, and there are not enough young people entering science, technology, and engineering – fields which are essential for entrepreneurship and innovation in the 21st century. He refers to the “quiet crisis” in the US, a term coined by Shirley Ann Jackson from the Rensselaer Polytechnical Institute, and how this quiet crisis within the US will turn into a very big crisis ten to fifteen years from now without sufficient intervention from our political leaders.