Before reading The World is Flat I wondered why so many companies were sourcing from Asia when we had such a low cost manufacturer right below us. It turns out they were also wondering why they were sourcing from Asia. It was interesting to see how traditionally low wage, low cost countries like Mexico are affected by the flat world. It also gives you an idea of what stands to happen to China. Eventually the will be standing in Mexico’s shoes wondering where all the money went.
So how do developing countries deal with the flat world? Freidman suggests introspection. They need to take a long hard look at themselves and seeing what their strengths and weakness are. They must ask themselves how to develop their talents to compete in a flat world. Developing countries must focus on four things in order to align themselves with the flat world. First, they must have the right infrastructure to connect their people with the flat world platform. This would arguably be the biggest step for any country, as it requires an upfront investment in internet bandwidth, mobile phones, modern airports and roads. The second step is to develop the right educational system. The system should get more people collaborating on the flat world platform. The third is the right governance. This would probably be the most difficult step this means having the right fiscal policy, laws, and bureaucracy. It may require a great change in traditions and government that may not be so widely accepted. Finally, each country needs to realize the importance of maintaining their environment. This is steps is bound to happen in developing country either out of necessity or the onset of social responsibility.
As the Berlin Wall fell many countries started to make these adaptations however it is in the area of better governance that we see the most important and drastic changes. Countries have focused on developing more market-friendly economic policies. Freidman refers to these changes as reform wholesale. These changes were made in a relatively small number of countries including China, Russia, Mexico, and India. All of these countries understood one important thing; that an open and competitive market is essential for success in the flat world.
Once a country has made wholesale reform, they are better able to make what Freidman refers to as retail reform. This is when countries can upgrade their infrastructure, education, and governance. Countries climb out of poverty when their people have the abilities and resources to start businesses, raise capital, and compete. These changes sound relatively simple and in theory can be accomplished by any developing country, Ireland being the perfect example. However, one barrier to change has been culture. Two important factors determine how well you country can adapt how open it is to foreign influence and how inward the culture is. For obvious reason a country open to foreign ideas and influence have the potential to thrive in the flat world. In addition, while it is important to maintain a cultural identity and investment in your culture it is also important to be open to growth and development.
Friday, November 30, 2007
Sunday, November 18, 2007
This is Not A Test
“For a country as wealthy as we are, it is amazing how little we are doing to enhance our natural competitiveness.” This quote hit the nail on the head. We need to meet this challenge head on as we did during the Cold War era. We need to pursue what Freidman calls “compassionate flatism.” We need a leader that realizes what Kennedy realized, “I believe we have all the resources and talent necessary, but the fact of the matter is we have never made the national decisions or marshaled the national resources required for such leadership.” Like we did then we must now create and accept “a firm commitment to a new course of action.” We need to prepare are selves for the new pressures of global competition and that is what compassionate flatism stands for. Freidman suggests five action areas:
Leadership: Americans do not understand what is happening in the flat world because our leaders do not. In China and India leaders are engineers and scientist so they understand what is happening in the flat world. Freidman actually suggests that Americans leaders are going out of their way to make us stupid! As quoted in the book, “No institutions will go through fundamental change unless it believes it is in deep trouble and needs to do something different to survive.” We are in deep trouble! The successful leader needs to educate us about our trouble and enable us to guide ourselves out of it.
Muscle Building: We need to lose the fat of lifetime employment and build the muscles of lifetime employability. The government and companies need to provide us with the tools to make ourselves lifetime employable! Freidman suggest these tools are portable benefits and opportunities for lifelong learning. He also promotes access to stock options. If you have these factors you are free to move to new industries created by the flat world and you are more personally invested in your job.
Cushioning: This idea explains that while we do need to lose fat some fat is necessary. Specifically, wage insurance is one fat that we need. This would compensate you for you lose of pay due to your loss of specific skills. When workers meet the three qualifications they would receive payment for two years covering half the drop in their income. I just wonder where the $8 billion in funding is supposed to come from.
Parenting: “There comes a time when you’ve got put away the Game Boys, turn off the television, shut off the iPod, and get your kids down to work.” I am glad someone said it. I think the main reason the kids in other countries are excelling over ours has a lot to do with the way we parent our children. We do not teach them anything, we don not make them do anything so they do not grow up to be anything. As Freidman suggest we need to encourage our kids to work hard! That is the bottom line. One final thing that struck a cord with me were his comments on the remarks made by Bill Cosby at the Rainbow Coalition. I agreed with every word he said and believed that he pointed out the reality of our situation. What caught me off guard is that people were offended by it. It seems we are working so hard to protect our feeling instead of focusing on building skills and character in our children.
Leadership: Americans do not understand what is happening in the flat world because our leaders do not. In China and India leaders are engineers and scientist so they understand what is happening in the flat world. Freidman actually suggests that Americans leaders are going out of their way to make us stupid! As quoted in the book, “No institutions will go through fundamental change unless it believes it is in deep trouble and needs to do something different to survive.” We are in deep trouble! The successful leader needs to educate us about our trouble and enable us to guide ourselves out of it.
Muscle Building: We need to lose the fat of lifetime employment and build the muscles of lifetime employability. The government and companies need to provide us with the tools to make ourselves lifetime employable! Freidman suggest these tools are portable benefits and opportunities for lifelong learning. He also promotes access to stock options. If you have these factors you are free to move to new industries created by the flat world and you are more personally invested in your job.
Cushioning: This idea explains that while we do need to lose fat some fat is necessary. Specifically, wage insurance is one fat that we need. This would compensate you for you lose of pay due to your loss of specific skills. When workers meet the three qualifications they would receive payment for two years covering half the drop in their income. I just wonder where the $8 billion in funding is supposed to come from.
Parenting: “There comes a time when you’ve got put away the Game Boys, turn off the television, shut off the iPod, and get your kids down to work.” I am glad someone said it. I think the main reason the kids in other countries are excelling over ours has a lot to do with the way we parent our children. We do not teach them anything, we don not make them do anything so they do not grow up to be anything. As Freidman suggest we need to encourage our kids to work hard! That is the bottom line. One final thing that struck a cord with me were his comments on the remarks made by Bill Cosby at the Rainbow Coalition. I agreed with every word he said and believed that he pointed out the reality of our situation. What caught me off guard is that people were offended by it. It seems we are working so hard to protect our feeling instead of focusing on building skills and character in our children.
The Quiet Crisis
had trouble deciphering this chapter. The other chapters I knew from the first paragraph what point Freidman was trying to express. All I got out of the first couple of paragraphs was that Americans have become fat, complacent, and lazy. It seems that we all developed an ungrounded superiority complex that has caused us to lag behind. This I guess is what caused our quiet crisis. The U.S. is suffering in the arena of science and technology. What is important here is that the U.S. could see itself fall behind as an innovator. Freidman believes any country has to develop three basic things to remain competitive: the right infrastructure, the right education programs, and the right ambition. He describes our gaps in these areas as our dirty little secrets.
Dirty Secret 1: The numbers gap refers to the expanding gap between the number of people leaving science and technology industries and the number of people entering these fields. To me the key to this is simple, we promote the sciences again. How we can expect an industry to grow if it is not promoted. This is basic marketing to me. Provide the incentive and people will gravitate. (I would say the abundance of jobs in this area would be incentive enough because we are not completely oblivious to the labor market)
Dirty Secret 2: The numbers gap is clearly caused by the education gap. Because we are not promoting math, science, and engineering in our young people they are not pursuing it. There is no doubt about we are struggling in the math and science arena and evidence seems to suggest that things will only get worse. What bothers me is that though numbers clearly show we are falling behind nothing is being done about. We are already at the point where our college graduates can barely read …….very SCARY!
Dirty Secret 3: We also have an ambition gap. As the text pointed out, not only is work in India cheaper but it is generally done better. The reason for this is clear. They work harder and better because they have the need and desire to do so. For some strange reason we have lost that desire.
Dirty Secret 4: The next problem is one I noticed while I was growing up. That was the education gap at the bottom. Because education is left up to individual school districts the educational levels vary based upon the residents of the district. This meant that wealthier districts provided better educations than less affluent areas. The problem here is the substandard education many districts provide do not prepare their student to compete in a flat world.
Dirty Secret 5: I find the funding gap that we have created unbelievable. Logically, if we are to continue to be a leader in technological developments we must invest heavily in the area. By some twist of fate funding for research in physical and mathematical science has decreased over the years. The solution here is so obvious I need not discuss it. (If it isn’t that obvious read pg.363)
Dirty Secret 6: This entire chapter has infuriated me. Each of these dirty little secrets served to upset me more and more. Well, Freidman saved the best for last! This upsets me because it should not be a reality. As we sit around focusing on tax cuts and the “war on terror” the rest of the of the world is whizzing by approximately 40 times faster. Broadband and information technologies are critical to advancing productivity and innovation but we seem uninterested in developing are capabilities. The infrastructure gap needs to close and it needs to close now if we are to remain competitive!
Dirty Secret 1: The numbers gap refers to the expanding gap between the number of people leaving science and technology industries and the number of people entering these fields. To me the key to this is simple, we promote the sciences again. How we can expect an industry to grow if it is not promoted. This is basic marketing to me. Provide the incentive and people will gravitate. (I would say the abundance of jobs in this area would be incentive enough because we are not completely oblivious to the labor market)
Dirty Secret 2: The numbers gap is clearly caused by the education gap. Because we are not promoting math, science, and engineering in our young people they are not pursuing it. There is no doubt about we are struggling in the math and science arena and evidence seems to suggest that things will only get worse. What bothers me is that though numbers clearly show we are falling behind nothing is being done about. We are already at the point where our college graduates can barely read …….very SCARY!
Dirty Secret 3: We also have an ambition gap. As the text pointed out, not only is work in India cheaper but it is generally done better. The reason for this is clear. They work harder and better because they have the need and desire to do so. For some strange reason we have lost that desire.
Dirty Secret 4: The next problem is one I noticed while I was growing up. That was the education gap at the bottom. Because education is left up to individual school districts the educational levels vary based upon the residents of the district. This meant that wealthier districts provided better educations than less affluent areas. The problem here is the substandard education many districts provide do not prepare their student to compete in a flat world.
Dirty Secret 5: I find the funding gap that we have created unbelievable. Logically, if we are to continue to be a leader in technological developments we must invest heavily in the area. By some twist of fate funding for research in physical and mathematical science has decreased over the years. The solution here is so obvious I need not discuss it. (If it isn’t that obvious read pg.363)
Dirty Secret 6: This entire chapter has infuriated me. Each of these dirty little secrets served to upset me more and more. Well, Freidman saved the best for last! This upsets me because it should not be a reality. As we sit around focusing on tax cuts and the “war on terror” the rest of the of the world is whizzing by approximately 40 times faster. Broadband and information technologies are critical to advancing productivity and innovation but we seem uninterested in developing are capabilities. The infrastructure gap needs to close and it needs to close now if we are to remain competitive!
The Right Stuff
It is clear that with this new flat world education is the key to survival. It is important to transform educational systems so as that workers can actually get jobs that exist in their societies. So now many are asking, "how do we educate our children?”
According to Friedman the first skill you must develop is “learning how to learn”. In other words what you know will become out of date quickly so you must constantly learn and develop new skills. To me this is a given as it has always been the key to remaining competitive.
The next thing he point out are navigation skills. I had not even thought of this much less how important this was. It will be important for us and our children to effectively navigate the virtual world and separate the noise from the facts. As Freidman points out this has always been important but today more and more people are getting from news sites that are not edited.
CQ + PQ > IQ embodies Friedman’s third theme of passion and curiosity. This mean that that your curiosity quotient and passion quotient are more important than your intelligence quotient. Basically if you have these factors you have a competitive advantage in the job market. These people are self-educators and self-motivators and essentially this is the key to success in the flat world.
Stressing liberal arts means teaching your kids to essentially think outside the box. Friedman describes it as teaching people early to think horizontally. I think this important because today we see math and science as main focus while the arts and music seem dispensable. I like Freidman believe these areas are essential for innovation.
Finally, Friedman discuses how we need to help our students develop the ability to think horizontally. They need to mesh together different perspective to produces a third one. This would essentially involve using the right brain so it is important to nurture that. This is simple if we want our children to become untouchables we have to help them develop both left and right brain skills. It will be nice to see this come to fruition as we have traditionally focused on our analytical left-brain abilities.
The final piece of the puzzle is how we make this happen. What does all this really mean for education? I think the example he gave with Georgia Tech really does set a standard. We have to begin changing our policies and the way we look at students. The goal after is not just to produce an engineer but a good one. Therefore, we need to promote our test tubes and out tubas!
According to Friedman the first skill you must develop is “learning how to learn”. In other words what you know will become out of date quickly so you must constantly learn and develop new skills. To me this is a given as it has always been the key to remaining competitive.
The next thing he point out are navigation skills. I had not even thought of this much less how important this was. It will be important for us and our children to effectively navigate the virtual world and separate the noise from the facts. As Freidman points out this has always been important but today more and more people are getting from news sites that are not edited.
CQ + PQ > IQ embodies Friedman’s third theme of passion and curiosity. This mean that that your curiosity quotient and passion quotient are more important than your intelligence quotient. Basically if you have these factors you have a competitive advantage in the job market. These people are self-educators and self-motivators and essentially this is the key to success in the flat world.
Stressing liberal arts means teaching your kids to essentially think outside the box. Friedman describes it as teaching people early to think horizontally. I think this important because today we see math and science as main focus while the arts and music seem dispensable. I like Freidman believe these areas are essential for innovation.
Finally, Friedman discuses how we need to help our students develop the ability to think horizontally. They need to mesh together different perspective to produces a third one. This would essentially involve using the right brain so it is important to nurture that. This is simple if we want our children to become untouchables we have to help them develop both left and right brain skills. It will be nice to see this come to fruition as we have traditionally focused on our analytical left-brain abilities.
The final piece of the puzzle is how we make this happen. What does all this really mean for education? I think the example he gave with Georgia Tech really does set a standard. We have to begin changing our policies and the way we look at students. The goal after is not just to produce an engineer but a good one. Therefore, we need to promote our test tubes and out tubas!
The Untouchables
This chapter begins by reinforcing a comment I made on an earlier blog. Thanks to globalization 3.0, we are no longer just competing with other M.B.A.’s in the U. S. We are competing globally with Indian and Chinese students as well. For us this means we have to work much harder to be successful. My question is, is that enough? According to Friedman, it is we must simply focus on developing our skill sets so that they are efficient in the global market.
Friedman outlines what we could do to be competitive in the global market. According to him, the key is figuring out how to make yourself an untouchable. These are people whose jobs cannot be outsourced, digitized, or automated. These jobs fall into three broad categories.
Special or Specialized: These are you athletes, musicians, authors, and surgeons. These jobs are so specialized they cannot be outsourced and they have a global market so they earn global wages. Not very many of this will fit into this category because all of these jobs require you to have a level of innate ability that we do not all posses.
Localized or Anchored: These are jobs that must be done in a specific location so they are considered untouchable. There are many jobs in this category such as servers, plumbers, cooks, repairmen, cleaning ladies, nannies and sales clerks. Do you notice a trend with these jobs? They are numerous but necessarily the most desirable. Granted there are some desirable positions in this category I believe they are outnumbered. I wonder if people think, “why go to college and study accounting where there is no job security when I could go to cosmetology school and be ensured employment?”
Middle Class Jobs: These are not the traditional middle jobs of course because they are being outsourced whenever possible. These are the “new middle jobs”. Managers will now have to be horizontal collaborators. Every job will have a local aspect but it is important that they have the ability to collaborate globally. One key field that Friedman mentions is managers who can orchestrate 24/7/7 supply chains. (I guess that makes me a little happy because my focus is on supply chain.)
There are a couple more of these “new middle” type jobs that I felt really stood out.
The Great Explainers: These are people who see complexity and explain it with simplicity. If you can explain something well you can see the opportunities better.
The Green People: With the world developing so quickly and people wanting so many things the world will need many “green jobs”. These jobs will involve sustaining the environment or creating renewable energies.
The Passionate Personalizer: These are people that add the special personal touch to routine middle jobs. Basically anyone that can change an old middle service job and add something special to it there is a chance it will not be outsourced. I like this the most because that means there is hope for some of the people not aware of changes in the flat world.
Friedman outlines what we could do to be competitive in the global market. According to him, the key is figuring out how to make yourself an untouchable. These are people whose jobs cannot be outsourced, digitized, or automated. These jobs fall into three broad categories.
Special or Specialized: These are you athletes, musicians, authors, and surgeons. These jobs are so specialized they cannot be outsourced and they have a global market so they earn global wages. Not very many of this will fit into this category because all of these jobs require you to have a level of innate ability that we do not all posses.
Localized or Anchored: These are jobs that must be done in a specific location so they are considered untouchable. There are many jobs in this category such as servers, plumbers, cooks, repairmen, cleaning ladies, nannies and sales clerks. Do you notice a trend with these jobs? They are numerous but necessarily the most desirable. Granted there are some desirable positions in this category I believe they are outnumbered. I wonder if people think, “why go to college and study accounting where there is no job security when I could go to cosmetology school and be ensured employment?”
Middle Class Jobs: These are not the traditional middle jobs of course because they are being outsourced whenever possible. These are the “new middle jobs”. Managers will now have to be horizontal collaborators. Every job will have a local aspect but it is important that they have the ability to collaborate globally. One key field that Friedman mentions is managers who can orchestrate 24/7/7 supply chains. (I guess that makes me a little happy because my focus is on supply chain.)
There are a couple more of these “new middle” type jobs that I felt really stood out.
The Great Explainers: These are people who see complexity and explain it with simplicity. If you can explain something well you can see the opportunities better.
The Green People: With the world developing so quickly and people wanting so many things the world will need many “green jobs”. These jobs will involve sustaining the environment or creating renewable energies.
The Passionate Personalizer: These are people that add the special personal touch to routine middle jobs. Basically anyone that can change an old middle service job and add something special to it there is a chance it will not be outsourced. I like this the most because that means there is hope for some of the people not aware of changes in the flat world.
America and Free Trade
chapter poses a very good question. Should there still be free trade in flat world. One could argue that individual Americans would be better off if the government restricted free trade. One could also argue that we need to do what is best for America regardless of the effects on the individual. This group would argue that country as a whole benefits if there are no restrictions on outsourcing, supply-chaining, and offshoring As far as Ricardo’s theory on Free Trade is concerned I think this works best when we speak of trading goods. Trading where you have a comparative cost advantage does not work as well when discussing knowledge work and services. When trading goods freely you do lose some jobs to a country that produce those more efficiently but that in turns encourages a more educated population. When you start to freely move knowledge based jobs where do we turn. What is the next step for us? The only result I really see from this is mass unemployment. I am not arguing that outsourcing should be eliminated but regulated. I guess this makes me a protectionist.
Freidman took another stance he supports the idea that more Americans would be better off if we do not erect barriers to outsourcing than if we do. He says that we not only need to maintain a free trade policy we not to promote education so that we can compete in this new flat world. He also argues that though we would suffer a “transition phase” there is no reason to believe the changes will be permanent as long as the global pie keeps growing. To convince me I need hard evidence to support that the “dip” in our economy would not permanent. I also would need a guarantee that this “dip” would not be long standing. If there is no hard evidence, there is no justification for taking the risk!
The one factor of his argument that I did agree completely with is that by encouraging outsourcing to countries such as India and China we drive up the wages. When the wages rise to American/ European range it levels out the playing field. Though this takes time this is the long-run positive outcome I hope to see with the flat world.
Freidman took another stance he supports the idea that more Americans would be better off if we do not erect barriers to outsourcing than if we do. He says that we not only need to maintain a free trade policy we not to promote education so that we can compete in this new flat world. He also argues that though we would suffer a “transition phase” there is no reason to believe the changes will be permanent as long as the global pie keeps growing. To convince me I need hard evidence to support that the “dip” in our economy would not permanent. I also would need a guarantee that this “dip” would not be long standing. If there is no hard evidence, there is no justification for taking the risk!
The one factor of his argument that I did agree completely with is that by encouraging outsourcing to countries such as India and China we drive up the wages. When the wages rise to American/ European range it levels out the playing field. Though this takes time this is the long-run positive outcome I hope to see with the flat world.
The Great Sorting Out
The link between Friedman’s “The Great Sorting Out” and Marxist theory is uncanny. The connection is real. Marx was one of the first to visualize the global market without the complication of national boundaries. The way Marx describes the industrial revolution and how it flattened the world mirrors what is happening today in the IT revolution. Though the IT revolution is leading to a frictionless and efficient global market, it does have a downside. As I stated in earlier posts this could result in an overall loss of identity. The quote “Some sources of friction are worth protecting, even in the face of a global economy that threatens to flatten them” reflects what I believe to be the ideal outlook on the global economy.
So how are we sorting it out? Ok so I thought the story of Indiana outsourcing to the low priced India firm was humorous but what does this mean? As Friedman put it “Who is exploiting Whom?” Are we taking advantage of them by paying lower prices or are they taking away our opportunities? I thought the reaction by the Indiana politicians was wasteful, time consuming, and costly. However, I am sure many do not see it that way. As Freidman put it with horizontal collaboration, it is difficult to see who is on top and who is on the bottom.
The same way different people and process need to be sorted out so do the relationships between companies and communities. In the global market, companies cannot survive being bound to a single nation. It seems the companies are becoming global as well. Not in the old-fashioned sense of seeking cheap labor or research globally but a true global organization such as Lenovo-IBM. This company is headquartered in New York with factories everywhere from Raleigh to Beijing. The top management of the company is mixed with American and Chinese citizens. This company is not specifically tied to any one nation and is truly global company. Overall Friedman points out that investors are indifferent about where profits come from as long as companies are sustainable.
The section on Who owns What struck a cord within this chapter as it discusses the issues of intellectual property in the flat world. Freidman suggests that intellectual property law has to adjust or we as a society will not get the benefits or be protected from the drawback of a flat world. Currently there are two sides of the fence. One side suggests protecting inventor’s proprietary interests, which provide incentive for innovation. The other side would argue the free flow intellectual assets. Freidman suggests the obvious solution, which is a balance between the two. Though this seems the most logical solution, I do not believe it is feasible or realistic.
So how are we sorting it out? Ok so I thought the story of Indiana outsourcing to the low priced India firm was humorous but what does this mean? As Friedman put it “Who is exploiting Whom?” Are we taking advantage of them by paying lower prices or are they taking away our opportunities? I thought the reaction by the Indiana politicians was wasteful, time consuming, and costly. However, I am sure many do not see it that way. As Freidman put it with horizontal collaboration, it is difficult to see who is on top and who is on the bottom.
The same way different people and process need to be sorted out so do the relationships between companies and communities. In the global market, companies cannot survive being bound to a single nation. It seems the companies are becoming global as well. Not in the old-fashioned sense of seeking cheap labor or research globally but a true global organization such as Lenovo-IBM. This company is headquartered in New York with factories everywhere from Raleigh to Beijing. The top management of the company is mixed with American and Chinese citizens. This company is not specifically tied to any one nation and is truly global company. Overall Friedman points out that investors are indifferent about where profits come from as long as companies are sustainable.
The section on Who owns What struck a cord within this chapter as it discusses the issues of intellectual property in the flat world. Freidman suggests that intellectual property law has to adjust or we as a society will not get the benefits or be protected from the drawback of a flat world. Currently there are two sides of the fence. One side suggests protecting inventor’s proprietary interests, which provide incentive for innovation. The other side would argue the free flow intellectual assets. Freidman suggests the obvious solution, which is a balance between the two. Though this seems the most logical solution, I do not believe it is feasible or realistic.
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