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The World Is Flat

The World Is Flat. A Brief History of The Twenty-First Century Thomas L. Friedman. Presented By: Michael Edwards Manlu Liu Ping Yan. Thomas L. Friedman. Columnist for the NY Times Won third Pulitzer Prize in 2002

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The World Is Flat

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  1. The World Is Flat A Brief History of The Twenty-First Century Thomas L. Friedman Presented By: Michael Edwards Manlu Liu Ping Yan

  2. Thomas L. Friedman • Columnist for the NY Times • Won third Pulitzer Prize in 2002 • Served as chief economic correspondent in the Washington bureau and was the chief White House correspondent. • Other publications: • "From Beirut to Jerusalem" won the National Book Award for non-fiction in 1989 • "The Lexus and the Olive Tree" (2000) won the 2000 Overseas Press Club award for best nonfiction book on foreign policy • "Longitudes and Attitudes: The World in the Age of Terrorism" (2002) • Received a B.A. degree in Mediterranean studies from Brandeis University in 1975. In 1978 he received a Master of Philosophy degree in Modern Middle East studies from Oxford. University of Arizona: MIS 696A

  3. While we were sleeping, what happened: • Order drive through food in Missouri via Colorado call center • Your tax return is completed in India • Your Jet Blue reservation is taken by Betty in her house coat and slippers in Salt Lake City • Dad’s X-rays read overseas at 2:00 a.m. • US share of papers in Physical Review fell from 61% in 1983 to 29% in 2003 University of Arizona: MIS 696A

  4. “It’s not the strongest of the species that survives… nor the most intelligent…but the one most responsive to change.” - Charles Darwin University of Arizona: MIS 696A

  5. How the World Became FlatTwo: The Ten Forces That Flattened the World - Summary • Flattener #1: 11/9/89 The events of November 9, 1989, tilted the worldwide balance of power toward democracies and free markets • Flattener #2: 8/9/95 The August 9, 1995, offering sparked massive investment in fiber-optic cables and connected the world University of Arizona: MIS 696A

  6. How the World Became FlatTwo: The Ten Forces That Flattened the World - Summary • Flattener #3: Work Flow Software The rise of apps from PayPal to VPNs enabled faster, closer coordination among far-flung employees. • Flattener #4: Open-Sourcing Self-organizing communities, Linux, launched a collaborative revolution. University of Arizona: MIS 696A

  7. How the World Became FlatTwo: The Ten Forces That Flattened the World - Summary • Flattener #5: Outsourcing Migrating business functions to India saved money and a third world economy India - emerging IT center • Flattener #6: Offshoring Contract manufacturing elevated China to economic prominence Asia - sourcing center of the world University of Arizona: MIS 696A

  8. How the World Became FlatTwo: The Ten Forces That Flattened the World - Summary • Flattener #7: Supply-Chaining Robust networks of suppliers, retailers, and customers increased business efficiency. See Wal-Mart. • Flattener #8: Insourcing Logistics giants took control of customer supply chains, helping mom-and-pop shops go global. See UPS and FedEx. University of Arizona: MIS 696A

  9. How the World Became Flat Two: The Ten Forces That Flattened the World - Summary • Flattener #9: In-forming/Searching Power searching allowed everyone to use the Internet as a "personal supply chain of knowledge." See Google. • Flattener #10: The Steroids Wireless technologies pumped up collaboration, making it mobile and personal. University of Arizona: MIS 696A

  10. How the World Became FlatRecap • Berlin Wall • Netscape • Work Flow • Outsourcing • Offshoring • Open-Sourcing • Insourcing • Supply-Chaining • In-forming • Steroids Platform Collaboration University of Arizona: MIS 696A

  11. How the World Became FlatThree: The Triple Convergence - Summary • All flatteners converged, creating a global playing field for multiple forms of collaboration • Both business and individuals moved from largely vertical means of creating value to more horizontal ones • Several billion people in India, China, and the former Soviet Union are given access to this new playing field University of Arizona: MIS 696A

  12. How the World Became FlatThree: The Triple Convergence - Summary The Other Triple Convergence • The dot-com bust • 9/11 • Enron, Tyco, WorldCom Because of these three, at the moment when the world was being flattened, most people missed it University of Arizona: MIS 696A

  13. How the World Became FlatFour: The Great Sorting Out - Summary • Multiple Personality Disorder • Where do companies stop and start? • From Command and Control to Collaborate and Connect • Multiple Identity Disorder • Who owns what? • Death of the salesman University of Arizona: MIS 696A

  14. America and the Flat WorldFive: America and Free Trade - Summary • America as a whole will benefit more by sticking to the basic principles of free trade. • Fiber-optic cable has allowed for knowledge work and services to become tradable. • American low-skilled workers will have to upgrade their education/knowledge skills to maintain their standard of living. • There is no limit to the number of idea-generated jobs in the world. University of Arizona: MIS 696A

  15. America and the Flat WorldFive: America and Free Trade - Summary • America integrated a broken Europe and Japan into the global economy after WWII, and our standard of living has increased every decade. • “It’s easier to see people being laid off than being hired.” • Donaldson Co., Inc. • Economists compare China’s and India’s entry into the global economy to the railroad lines first connecting New Mexico to California. University of Arizona: MIS 696A

  16. America and the Flat WorldFive: America and Free Trade - Impressions • Although the overall viewpoint that a free and open society is beneficial in the long run, what about the details? • “It won’t happen overnight, so some American knowledge workers may be affected in the transition, but the effect will not be permanent.” • Detroit and the automotive industry University of Arizona: MIS 696A

  17. America and the Flat WorldSix: The Untouchables - Summary • Untouchables are people whose jobs cannot be outsourced. • You must be specialized • Skills that are in high demand and non-fungible • You must be anchored • Must be done in a specific location, involving face-to-face contact • Being adaptable and knowing how to “learn how to learn” will be the most important asset. University of Arizona: MIS 696A

  18. America and the Flat WorldSix: The Untouchables - Summary • The American system is ideally suited for nurturing individuals who can compete and thrive in a flat world: • Every state has institutions trying to generate economic growth and innovation • Best-regulated and most efficient capital markets for turning ideas into products • Security and regulation of our capital markets • Openness of American society • Quality of American intellectual property protection • Flexible labor laws • Largest domestic consumer market • Political stability • One of the great meeting points in the world University of Arizona: MIS 696A

  19. America and the Flat WorldSix: The Untouchables - Impressions • How does everyone become an untouchable? • Is it realistic that every fungible part of every job will be outsourced for efficiency? University of Arizona: MIS 696A

  20. America and the Flat WorldSeven: The Quiet Crisis - Summary • The “quiet crisis” is the steady erosion of America’s scientific and engineering base. • The source of our success is our ability to constantly innovate new products, services, and companies • The Perfect Storm: the U.S. is falling behind in its capacity for scientific discovery, innovation, and economic development. • In the 2005, the budget of the NSF was cut by 1.9%, or $105 million. University of Arizona: MIS 696A

  21. America and the Flat WorldSeven: The Quiet Crisis - Summary Dirty Little Secret #1: The Numbers Gap • The generation of scientist and engineers that were motivated to go into science are reaching retirement and are not being replaced. • The number of jobs that require S&E will grow; the number of people prepared will decline; and the availability of people from other countries will decline. University of Arizona: MIS 696A

  22. America and the Flat WorldSeven: The Quiet Crisis - Summary Dirty Little Secret #2: The Ambition Gap • When jobs are sent abroad, there is a 75% savings in wages and a 100% increase in productivity. • Average kids in U.S. grow up in a wealthy country with many opportunities and have a sense of entitlement. University of Arizona: MIS 696A

  23. America and the Flat WorldSeven: The Quiet Crisis - Summary Dirty Little Secret #3: The Education Gap • Many jobs that go abroad today are high-end research jobs. • At Intel International Science and Engineering Fair, US had 65,000 participants. China had six million. • Federal funding for research in physical and mathematical sciences and engineering declined by 37% between 1970 and 2000. University of Arizona: MIS 696A

  24. America and the Flat WorldSeven: The Quiet Crisis - Impressions • The dropping enrollment of the MIS department. • Demographics of our group. University of Arizona: MIS 696A

  25. America and the Flat WorldEight: This is Not a Test - Summary • Meeting the “flat” challenge requires a comprehensive, energetic, and focused response. • National peril is a lot easier to convey than individual peril. • Compassionate flatism: • Leadership • Muscle Building • Cushioning • Social Activism • Parenting University of Arizona: MIS 696A

  26. America and the Flat WorldEight: This is Not a Test - Summary • Compassionate flatism: • Leadership • We need politicians who are able to both explain and inspire • Lifetime employment vs. lifetime employability • Legacy project of alternative energy and conservation • Muscle Building • Workers need portable benefits and opportunities for lifelong learning  mobile and adaptable • Everyone should have a chance to be educated beyond high school University of Arizona: MIS 696A

  27. America and the Flat WorldEight: This is Not a Test - Summary • Cushioning • Wage insurance • Model proposed by Kletzer and Litan • Social Activism • McDonald’s socially responsible food supply • HP-Dell-IBM supply chain standards University of Arizona: MIS 696A

  28. America and the Flat WorldEight: This is Not a Test - Summary • Parenting • We need a new generation of parents willing to administer tough love • Education, in addition to cognitive skills, must include character building • Push young people to go beyond comfort zones, do things right, and endure short-term pain for long-term gain. “A crisis is a terrible thing to waste” University of Arizona: MIS 696A

  29. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Summary • Two examples of where people were when they first discover that the world is flat • Some statuettes of Mexico’s patron saint, the Virgin of Guadalupe, were being imported into Mexico from China • plastic Chinese-made Ramadan lanterns crippled the traditional Egyptian workshop • When developing countries start thinking about the challenge of flatism, the first thing they need to do is engage in some brutally honest introspection University of Arizona: MIS 696A

  30. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Summary • Reform wholesale • Broad macroeconomic reform • Initiated by leaders in countries like China, Russia, Mexico, Brazil, and India • They pushed their countries into more exported-oriented, free-market strategy, the top down • As the world started to get smaller and flatter, reform wholesale was no longer sufficient to keep countries on a sustainable growth path University of Arizona: MIS 696A

  31. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Summary • Reform retailer • Looking at four key aspects of your society – infrastructure, regulatory institutions, education, and culture, upgrading each one to remove as many friction points as possible • Enable the great number of people to have the best legal and institutional framework • Reform from the bottom up • Push the reform in a democratic context University of Arizona: MIS 696A

  32. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Summary • Culture matters: glocalization • As the world goes flat, and more and more of the tools of collaboration get distributed and commoditized, the gap among different cultures will make difference • The more you have a culture that naturally glocalizes, the greater advantage you will have in a flat world • This explain why so many Muslim countries have been struggling as the world goes flat • Culture tolerance is one of the greatest virtues a country and community can have, tolerance breeds trust, and trust is the foundation of innovation and entrepreneurship • Culture can change University of Arizona: MIS 696A

  33. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Summary • The intangible things • A society’s ability and willingness to pull together and sacrifice for the sake of economic development and the presence in a society of leaders with the vision to see what need to be done in terms of development and the willingness to use power to push for change rather than to enrich themselves and preserve the status quo • How much your culture prizes education • Comparison of Mexico and China University of Arizona: MIS 696A

  34. Developing Countries and the Flat WorldNine: The Virgin of Guadalupe - Impressions • Current situation: developing countries like China, Russia, Mexico, Brazil, and India are taking advantage of globalization, and catching up rapidly • Problem • more difficult to reform retail than reform wholesale • Different cultures in different countries affect the future development • Future trend of different countries will also rely on different leaderships University of Arizona: MIS 696A

  35. Companies and the Flat WorldTen: How Companies Cope - Summary • Rule 1: when the world goes flat – and you are feeling flattened – reach for a shovel and dig inside yourself. • Rule 2: And the small shall act big… • Rule 3: And the big shall act small… • Rule 4: The best companies are the best collaborators. • Rule 5: In a flat world, the best companies stay healthy by getting regular chest X-rays and then selling the results to their clients • Rule 6: the best companies outsource to win, not to shrink. • Rule 7: outsourcing isn’t just for Benedict Arnolds. It’s also for idealists University of Arizona: MIS 696A

  36. Companies and the Flat WorldTen: How Companies Cope - Impressions • If a company want to grow and flourish in a flat world, you better learn how to change and align itself with it University of Arizona: MIS 696A

  37. Geopolitics and the Flat WorldEleven: The Unflat World – Summary • There is absolutely no guarantee that everyone will use these new technologies, or the triple convergence, for the benefit of themselves, their countries, or humanity. • No guns or cell phones allowed • Too sick • There is no question that poverty causes ill health, but ill health also traps people in poverty, which in turn weakens them and keeps them from grasping the first rung of the ladder to middle-class hope • Too disempowered • They have just enough information to know that the world is flattening around them and that they aren’t really getting any of the benefits • The antiglobalization movement lost touch with the true aspirations of the world’s poor University of Arizona: MIS 696A

  38. Geopolitics and the Flat WorldEleven: The Unflat World – Summary • Too frustrated • One of the intended consequences of the flat world is that it puts different societies and cultures in much greater direct contact with one another • Muslim world and Muslim communities are threatened, frustrated, and even humiliated by this close contact. • Too many Toyotas • Natural resource constraint • We will be strengthening the very worst political systems in the world – like Sudan, Iran, and Saudi Arabia University of Arizona: MIS 696A

  39. Geopolitics and the Flat WorldEleven: The Unflat World - Impressions • How the flattening could go wrong is a subject • To approach it by trying to answer the following questions: • What are the biggest constituencies, forces, or problems impeding this flattening process, and how might we collaborate better to overcome them? University of Arizona: MIS 696A

  40. Geopolitics and the Flat WorldTwelve: The Dell Theory of Conflict Prevention • How these classic geopolitical threats might be moderated or influenced by the new forms of collaboration fostered and demanded by the flat world – particularly supply chaining • No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain • How these classic geopolitical threats might be moderated or influenced by the new forms of collaboration fostered and demanded by the flat world (like mainland versus Taiwan) University of Arizona: MIS 696A

  41. Conclusion: ImaginationThirteen: 11/9 Versus 9/11 – Summary • 11/9 versus 9/11 • The dismantling of the Berlin Wall on 11/9 was brought about by people who dare to imagine a different, more open world. • The destructive imagination of 9/11 brought down the World Trade Center,closing its Window on the World restaurant forever and putting up new invisible and concrete walls • eBay • eBay didn’t just create an online market. It created a self-governing. • India • The second largest Muslim country • No Indian Muslims that we know of in al_Qaeda, in America’s Guantanamo Bay post-9/11 prison camp. No Indian Muslim have been found fighting alongside the jihadists in Iraq • Reason: the secure, free-market, democratic context of India University of Arizona: MIS 696A

  42. Conclusion: ImaginationThirteen: 11/9 Versus 9/11 – Summary • The curse of oil • If America and its allies will not collaborate in bringing down the price of crude oil, their aspirations for reform in all these areas will be stillborn • Just one good example • Aramex, the only one Arab company that developed a world-class business strong enough to get itself listed on Nasdaq • From untouchables to untouchables • An Indian man started a software firm , sold it in 1998, and decided to come back to India and use his American-made fortune to try to change India from the bottom up, So he started a journalism school • Interviewed with three young Palestinian militants, who spent a lot of their time imagining how to unleash their anger, not realizing their potential University of Arizona: MIS 696A

  43. Conclusion • The IT Revolution of the last 20 years was only the warm-up – the real revolution is starting now. • The most important attribute is creative imagination, which has always been, and should always be, America’s great strength. University of Arizona: MIS 696A

  44. Final Thoughts • Individual overall impressions – Ping: • the idea of this book is not that novel, in fact, free trade marketand the emergence of the economy of China and India have been talked about for some while. • http://www.washingtonpost.com/wp-dyn/articles/A17314-2005Mar31.html • Individual overall impressions – Michael: • Verbalizes issues that we’re aware of, but with a greater sense or urgency • Written from an overhead, long-term point of view, but the devil is in the details • Individual overall impressions – Manlu: • This world is going to be more and more global. As MIS PhD students, we should think about how we could take advantage of this trend • The problems regarding the untouchable groups will become a serious issue if the flattened world can not be handled well. University of Arizona: MIS 696A

  45. If you need more … MIT World has streaming video of a presentation given May 16, 2005. http://mitworld.mit.edu/video/266/ University of Arizona: MIS 696A

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