Friedman begins in Bangalore, India, where he is surrounded by advertisements of American companies, such as; Pizza Hut, Epson, HP and Texas Instruments. Next, he encounters Indian business people working for American companies, with American accents and names. A visit to Infosys Technologies Ltd leaves Friedman in wonder at the massive conferencing system they have created that allows people from around the globe to congregate and collaborate in one giant room via technology.
As Friedman travels through Japan, China, and back to America, he demonstrates various examples of outsourcing and its impact, positive and negative, on the players involved.
In chapter 2, Friedman accentuates ten factors that led to globalization, the first being the falling of the Berlin Wall, which tipped the balance of power towards democratic free markets.
A second influence is identified as the launch of Internet. Browsers empowered everyone, and placed global information at the fingertips of the common man.
Next he claims that workflow software and standards enabled applications to talk to each other, thus facilitating the decline of closed, proprietary technology.
The development of open-source: self-organizing, collaborative communities evolved, enabling people to network across continents. This produced the likes of Linux, Firefox, Apache, etc.
Friedman’s fifth force was outsourcing, acquiring outside specialists and labor. With the new technology, outsourcing is possible by both small companies and individuals as well. In fact, he asserts it is essential in the new economy.
Friedman then contends that offshoring is a major contributor toward globalization. Companies send manufacturing to the best, fastest, and least expensive He uses the Chinese sector as a prime example of how developing countries are forced to try to keep up with their low cost solutions, resulting in better quality and cheaper products being produced worldwide.
Friedman’s seventh factor is the advent of fast, efficient, and effective supply chaining to deliver products from anywhere. His prime example is that of Wal-Mart, becoming the largest company in the world (detailed in Chapter 14).
In Friedman’s view, the eighth globalizing force is insourcing. This involves outside businesses working within the company. He underscores the rapid success of both UPS and Fedex, who don't just deliver packages – they now do logistics for businesses.
The ninth influence to globalization is what he calls in-forming. Such web search companies as Google and Yahoo deliver information quickly and effectively, anywhere, to anyone.
To round out his list, Friedman examines digital, mobile, personal, and the virtual. He credits the capacity of available, instant, worldwide, high-speed communications, whereby knowledge-work can be delivered fast from anywhere.
According to Friedman, when all of these merged, intellectual capital could be delivered from anywhere. It could be disaggregated, delivered, distributed, produced and put back together again. This brought whole new degrees of freedom to the way work is done.
The author insists that this confluence is as revolutionary as Gutenberg’s printing press. The availability of software and broadband Internet has leveled the landscape. It has created a “flat" political, economic, and cultural playing field allowing the powerless to pursue wealth, provided they have the skills, infrastructure and drive to do it.
Friedman explains what the "flat world" means to companies, communities, and individuals, and how societies can adapt. The future will not resemble the past. According to him, outsourcing is inevitable won't be held at bay. To succeed in the future, individuals and companies must develop strategies that fit global realities.
Chapter 3 underscores “triple convergence.” Friedman explains that a synergy has been created, resulting in a paradigm shift in the way business is conducted. The convergence includes:
1. The creation of a global, web-enabled playing field that allows multiple forms of collaboration, the sharing of knowledge and work, without regard to distance or geography, and soon even language.
2. Global companies lose physical limitations. Employees are now a vast, global pool of specialists, arranged according to needs.
3. New opportunities are created for individuals to compete against anyone, anywhere in the world using the new, "flat" rules.
Friedman points out that if we believe globalization is something “out there,” we are grossly mistaken – it is in our schools, companies, and institutions. The shift has resulted in old org-charts becoming quickly outdated. Inside and outside the company, jobs are being outsourced around town and around the world.
Friedman’s essential message is that "flattening" poses both a threat and progress. Not only to survive, but thrive in the new environment, Americans must embrace the new reality and adapt to the new business terrain. Those who are not good enough to compete in this different kind of business climate will be sitting out, watching others.
Friedman says that to compete, American’s need better education, pervasive high-speed broadband connections, and more globally aware government policies.
Connecting all the knowledge pools of the world means that we are on the cusp of an incredible period of innovation. Since almost everyone now has the tools to participate in innovation, there is no longer any need for anyone to immigrate to the industrialized world.
In chapter 4, Friedman examines the blurring boundaries between companies and workers, relationships between communities, and the businesses that operate within them. He gives multiple examples how individuals and small companies are empowered to compete with large ones, such that identities become harder to define. The traditional roles of consumer, employee, citizen, taxpayer and shareholder have become blurred and intertwined.
In chapter 5, Friedman concludes that erecting borders would be detrimental to our goals and that Americans must be prepared to compete globally. He encourages better education and training, as Americans now compete not only with each other, but with the most brilliant minds around the globe. He identifies the workers that will suffer, as those unable to keep ahead of the globalization trend. Then offers large-scale remedies to this problem. He asserts in the new economy, workers must adapt to changing market forces and specialize in niches.
In chapter 6, Friedman addresses on what education should be focused, in training the next generation. He identifies broad categories of workers, “untouchables,” who will have job security in the flat world. In summary, he holds the workforce of the future must be able to find niches of labor. The market doesn't just expand, it becomes more complex. It produces more and more niches, and in those niches you're not competing against the whole world. You may be competing against one other company or yourself.
Friedman asserts that viable workers need to be able to adapt and move horizontally. This increases their value, as they wear multiple hats. And if they are laid off because other ways were discovered of how to do their job cheaper or more efficiently, they'll be that much more marketable somewhere else.
In chapter 7, Friedman explores the educational requirements needed to survive in the flattened world. He stresses the importance of self-learning and learning to learn. He recommends building right-brain (creative, aesthetic) skills, or those that cannot be duplicated by a computer, and explores different vehicles to higher learning, including music.
Next, the author uses multiple examples of a complacency as paralyzing as the Sputnik crises, where America’s children are being left behind other nations in their performance of math and science. He contends there is a perfect storm that could lead to America falling behind in innovation, science and technology.
In a call to action, chapter 9, Friedman says that much of our problem boils down to three gaps: a decline in relative ambition, a numbers gap in science and engineering, and an education gap. Certainly one of the motivations in outsourcing is to access better skills. In 2001, India graduated one million more from college than we, and they speak English. China now has 6 times the number of graduate students majoring in engineering than the U.S., and it takes 15 years to train a good engineer.
His call is for us to wake up before we fall too far behind. As a nation, we should have to do our homework and run faster, because there are millions of internationals starving for our jobs.
What makes all this significant is that now some 3-billion people from Asia and elsewhere don’t have to leave home to participate. Even if his claim of such a broadening is exaggerated, at least 10% of these are now active. That’s twice the current U.S. workforce. Competitive motivations are at work, as some nations are in a race to the top. Thus there are no guarantees that America or the West will continue to lead the way.
In chapter 11, Friedman gives many examples of companies that are willing to change. These are more likely to do things than have things done to them.
There is commoditization in a wide range of industries, where everything is the same and supply is plentiful. Clients are flooded with options. Each company is driven to be more creative and innovative, or risk falling behind. Through this business model, globalization forces the big to act small. Companies must be willing to collaborate and focus on niche markets, outsourcing non-essentials. The best companies use outsourcing as a method of growth, not to shrink their workforce. Outsourcing allows them to provide more and better services.
In the chapters 10, 12-15, Friedman recognizes the disempowered, for which the new progress has yet to occur. He examines disadvantaged groups, and the forces that keep them from moving forward. For him, disempowered people are those who live in areas touched by the flattening of the world but lack the means to benefit from it. For example, in India only 2% of the entire population are involved in high-tech and manufacturing for export sectors, the rest in abject poverty.
The author makes a compelling argument that globalization is seen by many as Americanization, creating a backlash by those who felt they would be steamrolled and homogenized into being mini-Americans.
But as new forms of communication and innovation create a global platform for sharing work, entertainment, and opinion, Friedman argues that globalization serves more to enrich and preserve culture than to destroy it, as each person is given their own voice and vehicle of expression. The bad will always be there with the good. As humanitarians and businesses connect online to share ideas, so do terrorists and predators.
Finally, Friedman argues that two countries invested in a business together by being part of the same global supply-chain are less likely to go to war. Case in point, Asia, as opposed to much of the Middle East, has become more stable because they are part of many supply chains and therefore more interested in doing good business.
What should we do in the light of this new era of globalization?
Rule #1: When the world goes flat—and you are feeling flattened- don’t try to build walls.
Rule #2: And the small shall act big. … One way small companies flourish in the flat world is being quick to take advantage of all the new tools for collaboration to reach farther, faster, wider, and deeper.
Rule #3: And the big shall act small. … One way that big companies flourish in the flat world is by enabling their customers to act really big.
Rule #4: The best companies are the best collaborators. In the flat world, more and more business will be done through collaborations within and between companies. The next value creation—whether in technology, marketing, biomedicine, or manufacturing—are becoming so complex that no single firm is going to be able to master them alone.
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 innovate faster and more cheaply in order to grow larger, gain market share and hire more and different specialists.
Rule #7: Outsourcing isn’t just for Benedict Arnolds. It’s also for idealists.
Published one time for exclusively educational purposes. Resource for the compendium provided by The World is Flat by Thomas Friedman (Farrar, Straus and Giroux, 2005).