The World is flat | Thomas Friedman
Thomas Friedman describes in his book how the world became flat (at least became flat in most of the parts in the world). By flat he means you can basically compete with anyone form anywhere. People in India can do simple accounting tasks for US companies directly in India, there is not need for them to work from the US.
He gives us 10 flatteners in detail which in his opinion made the world flat:
1. 09/11/1989 - The fall of the Berlin wall opened the East to the world (2 billion more people to reach)
2. 09.08.1995 - Netscapes public release - the first web browser came to live / Internet / XML / SOAP protocols are born)
3. Work Flow Software
4. Uploading
5. Outsourcing (eg. from IBM to Infosys, Wipro)
6. Offshoring
7. Supply Chaining (eg. Wal Mart, Zara)
8. Insourcing (UPS is helping companies with their processes, small players can act big)
9. Informing
10. The steroids
In the following I will just give some notes I made while reading the book:
Insourcing:
UPS - they would be the 11th biggest airlines in the world with the number of airplanes they have. (270)
On any given day in the year they have 2% of the worlds GDP in their cars.
They help small companies with their deliveries and even with all their inhouse processes that can be completely hosted and done by UPS. In case you would see Joeys Pizza delivery this could be a branded UPS driver doing everything (take order, process order, deliver order) for them - syncronized.
Competition:
Outsourcing to India kills jobs in the US? It only kills the easy jobs, so that countries who outsource can take the next step in the development and help other poor countries start developing on the low end.
How can we then prepare our kids to step up and be educated to do more sophistaced jobs?
5 key points:
1. Ability to learn how to learn
2. Learn to navigate, get correct information (eg. is WIKIPEDIA always correct?)
3. CQ + PQ > IQ (CQ - curiosity and PQ - passion factor is more important than IQ, obviously I guess you should have a certain IQ threshold)
4. Stress liberals arts (connects the dots, leavened math by art, music etc.)
5. Nurtures right brain (left side of brain only does sequential stuff which can be repeated)
What can a country do to help giving people the right environment (infrastructure, education, governance, environment) not only to do the above but also to create new businesses:
IFC study: Doing Business in 2004:
The study conducted looked at the below five factors:
1) Start a business
2) Hire and fire workes
3) Enforce a contract
4) Get credit
5) Close a business that goes bankrupt
Not amazingly that the general conditions differ greatly between countries.
It takes two days to start a business here in Australia, but 203 in Haiti and 215 in the Democratic Republic of Congo. In Syria the captial requirement is equivalent to fifty six times the income per captia.
He gave some example on starting businesses. The most striking was the example about microcrediting. Yunus gave money to beggars to make him a sales person. Instead of going to beg he sold little sweets to richer people. He bought more sweets with the money he earned and started his own little business.
Feed a person a fish and you fed that person only for a day. Teach a person to fish and you have fed that person for a liftetime. Help that person to grow a fishing business and you will have fed not only his family but also half the village.
Supply Chaining: Wal Mart has one of the biggest and most efficient supply changes in the world, but also a lot of market power to enforce strict and cheap supply of goods.
Conversion International- one of the biggest enviormental NGOs in the world teamed up with McDonald to build social responsible supply chains and to force suppliers to accept provided guidelines. Almost with not cost for them the global brand can be improved. Same for HP-DELL-IBM, they have a unified code of social responsibility.
tj