The world is flat talks about globalization and it goes through 3 phases of this process. So, the period between 1492 and 1800 he calls globalization 1.0. It’s a period fuelled by muscle power and the national economy. The bigger the country you came from, the greater the chances you would do well in international trade.
The second era lasted from 1800 until 2000 and, naturally, was called globalization 2.0. It was the era of multinational companies and decreasing the cost of transportation. Thanks to the steam engine, railroads, ships and then telecommunications to move goods and information from continent to continent, creating global markets.
Finally, globalization 3.0 is the period from 2000 to the present. The third phase is driven by empowered individuals from countries outside both the United States and Western Europe. Certainly, it is a result of convergence and creations of a global web-enabled playing field that allows for multiple forms of collaboration. As a result, sharing of knowledge and work in real time without regard to geographical dislocation made the world “flat”. We are going from vertical structures to horizontal in terms of how value will be created.
Next, the author of the book details 10 flatteners. In other words, 10 forces and events that came together responsible for creating the world we exist in.
So, the first one was the fall of the Berlin Wall in 1989. I know that it happened before 2000. Anyway, the fall was symbolic as it has shown that free-market economies were the way to get ahead and centrally-controlled communism was on the way out. Consequently, deregulation became very much in favour and bureaucratic control became something to avoid at all costs. A lot of countries opened up their economies towards the global marketplace.
The second flattener was in September 1995, and that was the day when Netscape went public. It brought the internet alive and made the company dominated the internet. Later, it also triggered the dot-com boom and its bubble as well as the first huge investment in fibre-optic cables.
The third flattener is called workflow. That’s were all the standards and all the software that basically connected all PCs. Hence, it was a revolution which happened in the workflow that allowed everyone’s application to connect everyone else’s applications. Suddenly, we had people able to connect and collaborate with people like never before. Cheaply like never before, thanks to the fibre-optic technology. A global platform for multiple forms of collaboration was launched.
The fourth one is outsourcing, which is nothing more than a new form of collaboration. This is sending jobs from one region or country to another, where wages are lower. The biggest beneficiary of that process was India as it had a large pool of educated people who speak English.
The next one is offshoring. A quick comparison is that when you move your HR or finance department and move it to another city or country, it is called outsourcing. It’s rather easy. Offshoring is where you take a whole factory and move it from Mexico, India or China. It is more sophisticated and long term process.
The sixth is open sourcing. It is also a new form of collaboration. Open sourcing is a process where, instead of a company, a community is in charge. Many people who share their efforts for free upload their work to a Web site where everyone can access it – like Wikipedia and Linux operating system.
The seventh was called supply chaining. Here the author uses the metaphor about Wal-Mart as a new form of collaboration. It is when you take supply chaining down to the last atom of efficiency. So when goods are taken off the shelf in a Wal-Mart and another is immediately made and shipped from China. Wal-Mart was the biggest company in America that didn’t make a thing, other than the supply chain.
Then, there is insourcing. In order to visualise it better, the author used the story about UPS. The company is capable to come inside your company and take over your whole internal logistics. The example given in the book is about Toshiba laptop. If your computer breaks, you call Toshiba . They say – bring it to the UPS store, they will ship it to us, we’ll fix it in 72 hours and we will send it back to you. What you don’t know is that the computer goes from the UPS Store to the UPS hub. There your Toshiba laptop is repaired by a UPS employee and it never touches Toshiba’s hands. And today this is a pretty common pattern as UPS or FedEx manage logistics for many companies.
The ninth is in-forming. Generally speaking, it is the ability to form our own, personalised supply chain of information and entertainment. It is what companies like Google, Yahoo or Amazon do. These companies allow you to search the internet for anything you need to know.
Finally, the last one are steroids, the technologies which amplify technologies. In this group we have wireless, voice over IP and file sharing such as BitTorrents. These steroids are turbocharging all new forms of collaboration so now I can work from anywhere totally mobile.
After talking about the aforementioned 10 flatteners, the book provides a framework for moving forward from where we are, with a special focus on the US perspective. So now we have to focus on:
- Free trade. The author describes here that economic competition between nations is not a zero-sum game. Globalization is expanding the size of the overall pie as it shrinks the amount of unqualify job, but on the other hand, it creates new, better-paid industries.
- Specialisation and modern skills as lower profiles might be outsourced or sent off-shore. These skills include collaboration, synthesis of information, communication, adaptability and engineering.
- Education as the future belongs to those who are really good at learning how to learn.
- Proactive attitude presented by governments, especially in terms of public education, empowerment and investments in infrastructure
- Political leadership as people need to be told what they must do to succeed in the future.
As a conclusion, I would like to cite Thomas Friedman – “Globalization 3.0, which brought to us the flattening world, is not just Globalization 2.0 intensified. This is a whole different model. It is not just about the ability of developing countries to tap into more markets or access more cheap labour. This is a difference in degree so great – the degree of low-cost interconnectivity, the degree of individual empowerment, the degree of global networks for collaboration – that it’s a difference in kind. That changes everything about who can compete and how they compete.”
The World Is Flat: A Brief History of the Twenty-first Century
by Thomas L. Friedman,
In the article I made use of a few authors’ interviews.
Size: 616 pages
Other information and reviews of this book on
Other useful links:
Friedman’s website: http://www.thomaslfriedman.com/
Thomas L. Friedman on Wikipedia: https://en.wikipedia.org/wiki/Thomas_Friedman
An interview with Thomas L. Friedman at McKinsey: https://www.mckinsey.com/featured-insights/future-of-work/thomas-l-friedman-and-james-manyika-the-worlds-gone-from-flat-to-fast-to-deep
Opposition to Thomas L. Friedman theory –> Skin in the Game by Nassim Nicholas Taleb