thomas friedman - the world is flat

7/27/2019 Thomas Friedman - The World is Flat

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Thomas Friedman. The World is Flat . (2004)

Notes:

Chapter I - When I was sleeping

India. Was this the New World, the Old World, or the Next World?

When Columbus set sail, he apparently assumed the Earth was round, which was why he was

convinced that he could get to India by going west. He miscalculated the distance, though. Hethought the Earth was a smaller sphere than it is.

He could confirm that the world was indeed round.

When I set sail, so to speak, I too assumed that the world was round, but what I encountered

in the real India.

I actually found India and thought many of the people I met there were Americans.

I returned home and shared my discover)' only with my wife, and onlyin a whisper. “Honey,” I confided, “I think the world is flat.”

The Infosys campus is reached by a pockmarked road, with sacred cows,horse-drawn carts, and motorized rickshaws all jostling alongside ourvans. Once you enter the gates of Infosys, though, you are in a differentworld.

Glass-and-steel buildings seem to sprout up like weeds each week.

Nilekani explained proudly, pointing to the biggest flat-screen TV I hadever seen. Infosys, he said, can hold a virtual meeting of the key playersfrom its entire global supply chain for any project at any time on thatsupersize screen.

“We could be sitting here, somebody from New York, London, Boston, SanFrancisco, all live. And maybe the implementation is in Singapore, so theSingapore person could also be live here... That's globalization,” saidNilekani.

“Outsourcing is just one dimension of a much more fundamental thinghappening today in the world,” Nilekani explained. “What happened overthe last [few] years is that there was a massive investment in technology,especially in the bubble era, when hundreds of millions of dollars wereinvested in putting broadband connectivity around the world, underseacables, all those things.”

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At the same time, he added, computers became cheaper and dispersed allover the world, and there was an explosion of software-e-mail, searchengines like Google, and proprietary software that can chop up any pieceof work and send one part to Boston, one part to Bangalore, and one partto Beijing, making it easy for anyone to do remote development.

When all of these things suddenly came together around 2000, addedNilekani, they “created a platform where intellectual work, intellectualcapital, could be delivered from anywhere. It could be disaggregated,delivered, distributed, produced, and put back together again-and thisgave a whole new degree of freedom to the way we do work, especiallywork of an intellectual nature... And what you are seeing in Bangaloretoday is really the culmination of all these things coming together.”

Nilekani uttered a phrase that rang in my ear. He said to me, “Tom, theplaying field is being leveled.” He meant that countries like India are nowable to compete for global knowledge work as never before-and that

America had better get ready for this.

As I left the Infosys campus that evening and bounced along the roadback to Bangalore, I kept chewing on that phrase: “The playing field isbeing leveled.”

My God, he's telling me the world is flat!

Columbus sailed over the horizon, using the rudimentary navigationaltechnologies of his day, and returned safely to prove definitively that theworld was round.

The world was flat-as flat as that screen on which he can host a meetingof his whole global supply chain.

He was citing this development as a good thing, as a new milestone inhuman progress and a great opportunity.

The fact that we had made our world flat!

In the back of that van, I scribbled down four words in my notebook: “Theworld is flat.”

The global competitive playing field was being leveled. The world wasbeing flattened.

Clearly, it is now possible for more people than ever to collaborate andcompete in real time with more other people on more different kinds of work from more different corners of the planet and on a more equalfooting than at any previous time in the history of the world-using

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computers, e-mail, networks, teleconferencing, and dynamic newsoftware.

That was what I discovered on my journey to India and beyond. And thatis what this book is about. When you start to think of the world as flat, alot of things make sense in ways they did not before. But I was alsoexcited personally, because what the flattening of the world means is thatwe are now connecting all the knowledge centers on the planet togetherinto a single global network, which-if politics and terrorism do not get inthe way-could usher in an amazing era of prosperity and innovation.

The playing field is not being leveled only in ways that draw in andsuperempower a whole new group of innovators. It's being leveled in away that draws in and superempowers a whole new group of angry,frustrated, and humiliated men and women.

Before 9/11,1 was focused on tracking globalization and exploring the

tension between the “Lexus” forces of economic integration and the“Olive Tree” forces of identity and nationalism.

Globalization had gone to a whole new level. If you put The Lexus and theOlive Tree and this book together, the broad historical argument you endup with is that that there have been three great eras of globalization.

The first lasted from 1492-when Columbus set sail, opening trade betweenthe Old World and the New World-until around 1800.1 would call this eraGlobalization 1.0. It shrank the world from a size large to a size medium.Globalization 1.0 was about countries and muscles. That is, in

Globalization 1.0 the key agent of change, the dynamic force driving theprocess of global integration was how much brawn-how much muscle,how much horsepower, wind power, or, later, steam power.

In this era, countries and governments (often inspired by religion orimperialism or a combination of both) led the way in breaking down wallsand knitting the world together, driving global integration. Focus: mycountry.

The second great era, Globalization 2.0, lasted roughly from 1800 to2000, interrupted by the Great Depression and World Wars I and II. Thisera shrank the world from a size medium to a size small.

Globalization 2.0, the key agent of change, the dynamic force drivingglobal integration, was multinational companies. These multinationalswent global for markets and labor, spearheaded first by the expansion of the Dutch and English joint-stock companies and the Industrial Revolution.

In the first half of this era, global integration was powered by fallingtransportation costs, thanks to the steam engine and the railroad, and in

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the second half by falling telecommunication costs-thanks to the diffusionof the telegraph, telephones, the PC, satellites, fiber-optic cable, and theearly version of the World Wide Web.

It was during this era that we really saw the birth and maturation of aglobal economy, in the sense that there was enough movement of goodsand information from continent to continent for there to be a globalmarket, with global arbitrage in products and labor. Focus: my company.

The Lexus and the Olive Tree was primarily about the climax of this era,an era when the walls started falling all around the world, and integration,and the backlash to it, went to a whole new level. But even as the wallsfell, there were still a lot of barriers to seamless global integration.

And that is why I argue in this book that around the year 2000 we entereda whole new era: Globalization 3.0. Globalization 3.0 is shrinking the worldfrom a size small to a size tiny and flattening the playing field at the same

time.

And while the dynamic force in Globalization 1.0 was countries globalizingand the dynamic force in Globalization 2.0 was companies globalizing, thedynamic force in Globalization 3.0-the thing that gives it its uniquecharacter-is the newfound power for individuals to collaborate andcompete globally.

And the lever that is enabling individuals and groups to go global so easilyand so seamlessly is not horsepower, and not hardware, but software- allsorts of new applications-in conjunction with the creation of a global fiber-

optic network that has made us all next-door neighbors. Individuals must,and can, now ask, where do I fit into the global. Focus: individual orgroups.

Globalization 3.0 is different in that Globalization 1.0 and 2.0 were drivenprimarily by European and American individuals and businesses.

It was Western countries, companies, and explorers who were doing mostof the globalizing and shaping of the system.

Globalization 3.0 is going to be more and more driven not only byindividuals but also by a much more diverse—non-Western, non-white-

group of individuals.

Individuals from every corner of the flat world are being empowered.Globalization 3.0 makes it possible for so many more people to plug andplay, and you are going to see every color of the human rainbow takepart.

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This empowerment of individuals to act globally is the most importantnew feature of Globalization 3.0.

Key words in history of globalization: countries, companies, andindividuals.

We are entering a phase where we are going to see the digitization,virtualization, and automation of almost everything.

The gains in productivity will be staggering for those countries,companies, and individuals who can absorb the new technological tools.

And we are entering a phase where more people than ever before in thehistory of the world are going to have access to these tools- as innovators,as collaborators, and, alas, even as terrorists.

I call this new phase Globalization 3.0 because it followed Globalization

2.0, but I think this new era of globalization will prove to be such adifference of degree that it will be seen, in time, as a difference in kind.

Everywhere you turn, hierarchies are being challenged from below ortransforming themselves from top-down structures into more horizontaland collaborative ones.

“Globalization is the word we came up with to describe the changingrelationships between governments and big businesses,” said DavidRothkopf, a former senior Department of Commerce official in the Clintonadministration

“But what is going on today is a much broader, much more profoundphenomenon.”

If I am right about the flattening of the world, it will be remembered asone of those fundamental changes-like the rise of the nation-state or theIndustrial Revolution-each of which, in its day, noted Rothkopf, producedchanges in the role of individuals, the role and form of governments, theway we innovated, the way we conducted business, the role of women,the way we fought wars, the way we educated ourselves, the way religionresponded, the way art was expressed, the way science and researchwere conducted, not to mention the political labels we assigned to

ourselves and to our opponents.

If the prospect of this flattening-and all of the pressures, dislocations, andopportunities accompanying it-causes you unease about the future, youare neither alone nor wrong.

Whenever civilization has gone through one of these disruptive,dislocating technological revolutions- like Gutenberg's introduction of the

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printing press-the whole world has changed in profound ways. But there issomething about the flattening of the world that is going to bequalitatively different from other such profound changes: the speed andbreadth with which it is taking hold.

This flattening process is happening at warp speed and directly orindirectly touching a lot more people on the planet at once. The faster andbroader this transition to a new era, the more likely is the potential fordisruption, as opposed to an orderly transfer of power from the oldwinners to the new winners.

By these types of forces may be a warning to all the businesses,institutions, and nation-states that are now facing these inevitable, evenpredictable, changes but lack the leadership, flexibility, and imaginationto adapt-not because they are not smart or aware, but because the speedof change is simply overwhelming them.

None of this will be easy. But this is our task. It is inevitable andunavoidable.

Chapter II - Ten Forces that flattens the World

II.1. Force 1: 9.11.1989 Berlin Wall goes down and Windows getsup

This chapter is about the forces that flattened the world and the multiplenew forms and tools for collaboration that this flattening has created.

Yes, in a wonderful kabbalistic accident of dates, the Berlin Wall fell on11/9.

The fall of the Berlin Wall on 11/9/89 unleashed forces that ultimatelyliberated all the captive peoples of the Soviet Empire.

The Cold War had been a struggle between two economic systems-capitalism and communism-and with the fall of the wall, there was onlyone system left and everyone had to orient himself or herself to it oneway or another. Henceforth, more and more economies would begoverned from the ground up, by the interests, demands, and aspirations

of the people, rather than from the top down, by the interests of somenarrow ruling clique.

Communism was a great system for making people equally poor.Capitalism made people unequally rich.

That is why the fall of the Berlin Wall was felt in so many more places than just Berlin, and why its fall was such a world-flattening event.

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In Europe alone, the fall of the wall opened the way for the formation of the European Union and its expansion from fifteen to twenty-fivecountries. That, in combination with the advent of the euro as a commoncurrency, has created a single economic zone out of a region once dividedby an Iron Curtain.

While the positive effects of the wall coming down were immediatelyapparent, the cause of the wall's fall was not so clear.

It was the information revolution that began in the early- to mid-1980s.

Totalitarian systems depend on a monopoly of information and force, andtoo much information started to slip through the Iron Curtain, thanks tothe spread of fax machines, telephones, and other modern tools of communication.

Each component of this information revolution was brought about byseparate evolutions: The phone network evolved from the desire of peopleto talk to each other over long distances. The fax machine evolved as away to transmit written communication over the phone network. The PCwas diffused by the original killer apps-spreadsheets and word processing.And Windows evolved out of the need to make all of this usable, andprogrammable, by the masses.

“The diffusion of personal computers, fax machines, Windows, and dial-upmodems connected to a global telephone network all came together inthe late 1980s and early 1990s to create the basic platform that started

the global information revolution,” argued Craig J. Mundie, the chief technology officer for Microsoft.

“People found that they really liked doing all these things on a computer,and they really improved productivity,” said Mundie. “They all had broadindividual appeal and made individual people get up and buy a Windows-enabled PC and put it on their desk, and that forced the diffusion of thisnew platform into the world of corporate computing even more. Peoplesaid, 'Wow, there is an asset here, and we should take advantage of it.'”

This period from 11/9 to the mid-1990s still led to a huge advance inpersonal empowerment, even if networks were limited. It was the age of

“Me and my machine can now talk to each other better and faster, so thatI personally can do more tasks” and the age of “Me and my machine cannow talk to a few friends and some other people in my company betterand faster, so we can become more productive.”

The walls had fallen and the Windows had opened, making the worldmuch flatter than it had ever been-but the age of seamless globalcommunication had not dawned.

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His name was Osama bin Laden and he had a different narrative. His viewwas that it was the jihadi fighters in Afghanistan, of which he was one,who had brought down the Soviet Empire by forcing the Red Army towithdraw from Afghanistan (with some help from U.S. and Pakistaniforces).

So, while we were dancing on the wall and opening up our Windows andproclaiming that there was no ideological alternative left to free-marketcapitalism, bin Laden was turning his gun sights on America.

In short, while we were celebrating 11/9, the seeds of another memorabledate—9/11—were being sown.

II.2. Force 2: 9.08.1995 When Netscape Went Public

By the mid-1990s, the PC-Windows network revolution had reached its

limits. If the world was going to become really interconnected, and reallystart to flatten out, the revolution needed to go to the next phase. And thenext phase, notes Microsoft's Mundie, “was to go from a PC-basedcomputing platform to an Internet-based platform.” The killer applicationsthat drove this new phase were e-mail and Internet browsing.

But it was the new killer app, the Web browser-which could retrievedocuments or Web pages stored on Internet Web sites and display themon any computer screen-that really captured the imagination.

The actual concept of the World Wide Web-a system for creating,

organizing, and linking documents so they could be easily browsed-wascreated by British computer scientist Tim Berners-Lee. He put up the firstWeb site in 1991, in an effort to foster a computer network that wouldenable scientists to easily share their research.

Other scientists and academics had created a number of browsers to surf this early Web, but the first mainstream browser-and the whole culture of Web browsing for the general public-was created by a tiny start-upcompany in Mountain View, California, called Netscape. Netscape wentpublic on August 9, 1995, and the world has not been the same since.

This Netscape-triggered phase drove the flattening process in several keyways: It gave us the first broadly popular commercial browser to surf theInternet. The Netscape browser not only brought the Internet alive butalso made the Internet accessible to everyone from five-year-olds toeighty-five-year-olds.

The more alive the Internet became, the more consumers wanted to dodifferent things on the Web, so the more they demanded computers,software, and telecommunications networks that could easily digitize

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words, music, data, and photos and transport them on the Internet toanyone else's computer. This demand was satisfied by another catalyticevent: the rollout of Windows 95.

Windows 95 would soon become the operating system used by mostpeople worldwide, and unlike previous versions of Windows, it wasequipped with built-in Internet support, so that not just browsers but all PCapplications could “know about the Internet” and interact with it.

What Netscape did was bring a new killer app-the browser-to this installedbase of PCs, making the computer and its connectivity inherently moreuseful for millions of people.

the Internet boom, because every investor looked at the Internet andconcluded that if everything was going to be digitized-data, inventories,commerce, books, music, photos, and entertainment-and transported andsold on the Internet, then the demand for Internet-based products and

services would be infinite.

This development, in turn, wired the whole world together, and, withoutanyone really planning it, made Bangalore a suburb of Boston.

Today we take this browser technology for granted, but it was actuallyone of the most important inventions in modern history.

Nothing did stop it, and that is why Netscape played another hugelyimportant flattening role: It helped make the Internet truly interoperable.

As a result, after quite a few “format wars” among the big companies, bythe late 1990s the Internet computing platform became seamlesslyintegrated. Soon anyone was able to connect with anyone else anywhereon any machine. It turned out that the value of compatibility was muchhigher for everyone than the value of trying to maintain your own littlewalled network. This integration was a huge flattener, because it enabledso many more people to get connected with so many more other people.

The first commercial installation of a fiber-optic system was in 1977, afterwhich fiber slowly began to replace copper telephone wires, because itcould carry data and digitized voices much farther and faster in largerquantities.

The most important benefit of fiber, though, derives from the dramaticallyhigher bandwidth of the signals it can transport over long distances.Optical fibers, by contrast, can carry very high-frequency optical pulses onthe same individual fiber without substantial signal degradation for many,many miles.

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It was actually the coincidence of the dot-com boom and the Telecommunications Act of 1996 that launched the fiber-optic bubble.

II.3. Force 3: Let’s do Lunch: Have your Application, Talk to myApplication

But for all of us to go to the next stage, to get more out of the Internet,the flattening process had to go another notch. We needed two things. Weneeded programmers to come along and write new applications- newsoftware-that would enable us really to get the maximum from ourcomputers as we worked with these digitized data, words, music, andpictures and shaped them into products. We also needed more magicpipes, more transmissions protocols that would ensure that everyone'ssoftware applications could connect with everyone else's softwareapplications. In short, we had to go from an Internet that just connectedpeople to people, and people to their own applications, to an Internet thatcould connect any of my software programs to any of your softwareprograms. Only then could we really work together.

The fact that all the departments within your company were seamlesslyinteroperable and that work could flow between them was a great boostto productivity-but this could happen only if all your company'sdepartments were using the same software and hardware systems.

More often than not, back in the 1980s and early 1990s, a company'ssales department was running Microsoft and the inventory departmentwas running Novell, and they could not communicate with each other. Sowork did not flow as easily as it should.

Thanks to different kinds of Web services-work flow, said Craig Mundie,Microsoft's chief technology officer, “the industry created a globalplatform for a global workforce of people and computers.”

I found this out writing my last book. Once Microsoft Word got establishedas the global standard, work could flow between people on differentcontinents much more easily, because we were all writing off the samescreen with the same basic toolbar.

Shared standards are a huge flattener, because they both force and

empower more people to communicate and innovate over much widerplatforms.

Genesis: The Flat World Platforms Emerges:At this point-the mid-1990s-the platform for the flattening of the world hasstarted to emerge. First, the falling walls, the opening of Windows, thedigitization of content, and the spreading of the Internet browserseamlessly connected people with people as never before.

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Then work flow software seamlessly connected applications toapplications, so that people could manipulate all their digitized content,using computers and the Internet, as never before.

When you add this unprecedented new level of people-to-peoplecommunication to all these Web-based application-to-application workflow programs, you end up with a whole new global platform for multipleforms of collaboration. This is the Genesis moment for the flattening of the world. This is when it started to take shape.

It would take more time to converge and really become flat, but this is themoment when people started to feel that something was changing.Suddenly more people from more different places found that they couldcollaborate with more other people on more different kinds of work andshare more different kinds of knowledge than ever before. “It is thecreation of this platform, with these unique attributes, that is the trulyimportant sustainable breakthrough that made what you call the

flattening of the world possible,” said Microsoft's Craig Mundie.

Indeed, thanks to this platform that emerged from the first threeflatteners, we were not just able to talk to each other more, we were ableto do more things together. This is the key point, argued Joel Cawley, theIBM strategist. “We were not just communicating with each other morethan ever, we were now able to collaborate-to build coalitions, projects,and products together-more than ever.”

The next six flatteners represent the new forms of collaboration which thisnew platform empowered. As J show, some people will use this platform

for open-sourcing, some for outsourcing, some for offshoring, some forsupply-chaining, some for insourcing, and some for in-forming. Each of these forms of collaboration was either made possible by the newplatform or greatly enhanced by it. And as more and more of us learn howto collaborate in these different ways, we are flattening the world evenmore.

II.4. Force 4: Open-sourcing, Self-Organizing CollaborativeCommunities

The word “open-source” comes from the notion that companies or ad hocgroups would make available online the source code-the underlyingprogramming instructions that make a piece of software work-and then letanyone who has something to contribute improve it and let millions of others just download it for their own use for free.

In order to explain how this form of collaboration works, why it is aflattener and why, by the way, it has stirred so many controversies andwill be stirring even more in the future, I am going to focus on just two

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basic varieties of open-sourcing: the intellectual commons movement andthe free software movement.

The intellectual commons form of open-sourcing has its roots in theacademic and scientific communities, where for a long time self-organizedcollaborative communities of scientists have come together throughprivate networks and later the Internet to pool their brainpower or shareinsights around a particular science or math problem.

Marc Andreessen, who invented the first Web browser, agreed: “Open-source is nothing more than peer-reviewed science. Sometimes peoplecontribute to these things because they make science, and they discoverthings, and the reward is reputation. Sometimes you can build a businessout of it, sometimes they just want to increase the store of knowledge inthe world. And the peer review part is critical-and open-source is peerreview. Every bug or security hole or deviation from standards isreviewed.”

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