The World is Flat

1. The World is Flat Book by Thomas L. Friedman Presentation by Koren, Li, and Matt

2. Ten Flattening Forces Uploading 11/9/89 – Fall of the Wall In-forming Supply-Chaining The Steroids 8/9/95 – Netscape went public Offshoring Work Flow Software Outsourcing Insourcing

3. 11/9/89 – Fall of the Wall Release of Windows 3.0 six months later Dial-up followed shortly after.

4. 11/9/89 – Fall of the Wall (Implications) Tipped the balance in favor of capitalism (creativity) “Flattened [the market] alternatives to free-market capitalism” Berlin wall blocked our view of the entire world as a global ecosystem. Now, I’m going to get you! I’m going to get you!

5. 8/9/95 – Netscape Went Public Allowed us to easily drive around the Internet. It’s hard to give credit for the Internet to a specific person One of the few things that was created by committee Netscape started the dot-com bubble FTP Netscape helped guarantee that open protocols would remain open. HTTP TCP Led to the overinvestment of telecommunications companies in fiber optic IP

6. Work Flow Software Work Flow Software Increased seamless communication Standardized Transmission Protocols XML/ SOAP WEB SERVICES/ PLATFORMS AJAX

7. Uploading • Allowed the creation of online communities • people could participate, instead of just observe • Open-Source • “nothing more than peer-reviewed science.” • Blogging • Citizen Journalists • Podcasting • Gold Corp (open-source answers) • Community-Uploaded Content (Wikipedia) Think of what we can find on the Internet now…

8. Outsourcing • “…always want to be the second buyer…” • America  India’s intelligence. • India  dot-com boom fiber-optic network • Brainpower from India  Brainpower in India • EXAMPLES • Healthscribe – medical transcriptions • Dictations to text via India • Y2K – made America ready to do on a blind-date with India India benefited more from dot-com bust than from boom

9. Offshoring + = Offshoring

10. Offshoring – So What is China? Threat = Customer Threcustunity Opportunity Services and Design High-grade, high-tech Product Manufacturing Low-grade Product Manufacturing Seeking lower labor costs

11. Offshoring – Challenges in China • Easy Part setting up shop in China • Hard Part  finding the right local managers • Finding the happy medium between too entrepreneurial and too bureaucratic.

12. Supply-Chaining Implications of Supply Chains: • Must take advantage of lowest global prices • otherwise your competitor will • Shifts concern to total cost of delivery • Therefore, must have global optimization “Making stuff – that’s easy. Supply chain, now that is really hard.” – Yossi Sheffi, Professor of Engineering Systems at MIT • Wal-Mart is its supply chain • Built out of necessity, not so much out of intention. • Coefficient of flatness • Replaced inventory with information

13. InsourcingEverything’s on the UPS & UPS • Toshiba • repairs laptops • Nike.com, Jockey.com • picks, inspects, packs, and delivers product • HP (in Europe and Latin America) • field service repairman • UPS’s Core Competency • Analyzes, re/designs, (even finances!), then manages parts of company supply chains. • End of Runway Services – push specialization to end of supply chain

14. In-forming The Democritization of Information “Google…equalizes access to information – it has no class boundaries, few education boundaries, few linguistic boundaries, and virtually no money boundaries.”

15. The Steroids Connectivity Computing Power Storage Sharing

16. Future Flatteners? • Financial Crisis • Healthcare Crisis • Energy Crisis • All of this might cause us to “clean out” regulation, government, etc. and following the Wikinomic trends by putting more power in the collaborative hands of the people. Much like India’s government changed only when it “had to.” • Micrologistics – transportation/shipping driven by the people. • True democracies – built on secure web-enabled system, the people will really start making the decisions • Agents

17. Triple Convergence 9/11 Web-Enabled Platform Horizontal Playing Field Dot-Com Bust Enron, Tyco, WorldCom New Players

18. Web-Enabled Platform 8/9/95 – Netscape went public In-forming Uploading Insourcing The Steroids Work Flow Software Offshoring Outsourcing Supply-Chaining 11/9/89 – Fall of the Wall Platforms tend to endure

19. Horizontal Playing Field “Command and Control” “Connect and Collaborate” - Wikinomics Bye, Bye, Hierarchies!

20. New Players North America, Western Europe, Japan 6 Billion 2.5 Billion India, China, Russia

21. The Great Sorting Out global market • Who owns what? • Legal barriers shifting • IP rights • made to protect • Dr. King’s brown-bag • Open source • who owns the SW • Sr. Executives are from all over the world • Headquarters in New York • Factories in Raleigh, NC and Beijing • Listed on Hong Kong stock exchange An American company?

22. Sorting Out: Can’t Have Everything Lower Prices Lower Phone Bill Mass Info Availability Job Protection Free Trade Higher Wages Human Operator Info Accuracy Global Competition Job Security

23. Tata Consulting Group Surya Kant – President, North America • Tata Group • $62.5 billion revenue • $3.6 billion profit • #5 in the world • Tata Consulting • Pioneered outsourcing before internet, fax or direct dial phones • 150,000 employees (Recruited 35,000 new employees in 2007) • Grew revenue from $500m in 2005 to $2bn in 2007

24. America and the Flat World

25. America and Free Trade • When you lose your job, the unemployment rate is not 5.2 percent, it’s 100 percent • “As the world gets flat, America as a whole will benefit more by sticking to the basic principles of free trade, as it always has, than by trying to erect walls.”

26. America and Free Trade Protectionists (Anti-outsourcing) Free Trade (Outsourcing) As lower-end service and manufacturing jobs move out of Europe, America and Japan to India, China and the former Soviet Union, the global pie grows larger and more complex • Fixed lump of labor in the world and once that lump is gobbled up, there won’t be any more jobs to go around

27. America and Free Trade In order to maintain or improve living standards, the American low-skilled workers will have to move vertically not horizontally

28. Untouchables “Special” Have a global market for their goods and services and can command global-sized pay packages

29. Untouchables “Specialized” Skills that are always in high demand and are not fungible • Brain surgeons • Specialized lawyers • Cutting-edge computer architects and software engineers

30. Untouchables “Anchored” Jobs must be done in a specific location, involving face-to-face contact with a customer, client, patient or audience

31. Untouchables “Old middle” Formerly middle-class jobs that were once deemed nonfungible (freely exchangeable)

32. Untouchables “New middle” • The Great Synthesizers • Mash-up disparate parts together • The Great Explainers • See the complexity but explain it with simplicity • The Great Leveragers • People who can not only catch a problem, but quickly come up with a solution that will fix the problem for good • The Great Adapters • Apply depth of skill to a progressively widening scope of situations, gaining new competencies, building relationships and assuming new roles

33. Untouchables “New middle” (cont.) • The Green People • Focus on renewable energies and environmentally sustainable systems • The Passionate Personalizers • Give a job something personal, something special, some real passion • Math Lovers • Come up with the right mathematical formulas and apply them, to get a jump of everyone else • The Great Localizers • Understand the emerging global infrastructure and adapt it to local needs and demands

34. The Right Stuff Put up walls of protection or keep marching forward to nurture individuals who can compete and thrive in a flat world?

35. The Right Stuff “Learn how to learn because what you know today will be out-of-date sooner than you think” • Navigation • Teach students how to navigate the virtual world • CQ + PQ > IQ • Curiosity Quotient + Passion Quotient matters even more than intelligence quotient • Stressing Liberal Arts • Teach people how to think horizontally and connect disparate dots

36. The Right Stuff • Right Brain • Focus education on developing right-brain skills • Now that foreigners can do left-brain work cheaper, we in the US must do right-brain work better. • Tubas and Test Tubes • Give students a broad collection of skills and learning experiences they need to thrive in the globally competitive conceptual age

37. The Right Stuff • The Right Country • America has the best-regulated and most efficient capital markets in the world for taking new ideas and turning them into products and services • Intellectual property protection • Flexible labor laws • Largest domestic consumer market • Political stability

38. The Quiet Crisis Dirty Little Secret #1: The Numbers Gap Steady erosion of America’s scientific and engineering base

39. The Quiet Crisis Dirty Little Secret #1: The Numbers Gap • 26% of all S&E degree holders in the labor force are age 50 or over. Among S&E doctorate holders in the labor force, 40% are age 50 or over.

40. The Quiet Crisis Dirty Little Secret #2: The Education Gap at the Top • Twenty-five percent of all college-educated workers in S&E occupations in 2003 were foreign born, as were 40% of doctorate holders in S&E occupations. • The United States continues to have the highest percentage of the population ages 25–64 with a bachelor’s degree or higher. However, among the population ages 25–34, the United States (30%) lags behind Norway (37%), Israel (34%), the Netherlands (32%), and South Korea (31%) in the percentage with at least a bachelor’s degree.

41. The Quiet Crisis Dirty Little Secret #2: The Education Gap at the Top • Total world article output between 1995 and 2005 • U.S. share fell from 34% to 29% • European Union share fell from 35% to 33% • Asia-10 share increased from 13% to 20% • Foreign-born scientists and engineers were 28% of all full-time doctoral S&E faculty in 2003, up from 21% in 1992. • In the physical sciences, mathematics, computer sciences, and engineering, 47% of full-time doctoral S&E faculty in research institutions were foreign born, up from 38% in 1992. • Men earned the majority of bachelor’s degrees awarded in engineering (80%), computer sciences (78%), and physics (79%).

42. The Quiet Crisis Dirty Little Secret #3: The Ambition Gap The “American Idol problem” • Many Americans can’t believe they aren’t qualified for high-paying jobs • Low education means low-paying jobs, plain and simple

43. The Quiet Crisis Dirty Little Secret #4: The Education Gap at the Bottom

44. The Quiet Crisis Dirty Little Secret #4: The Education Gap at the Bottom Proficiency Levels on Selected NAEP Tests for Students in Public Schools

45. The Quiet Crisis Dirty Little Secret #5: The Funding Gap

46. The Quiet Crisis Dirty Little Secret #6: The Infrastructure Gap

47. The Quiet Crisis Dirty Little Secret #6: The Infrastructure Gap

48. This is not a Test Meet the challenges of flatism • Summon the nation to get smarter and study harder in science, math and engineering • Build the infrastructure, safety nets and institutions that will help Americans become more employable in an age when no one can be guaranteed lifetime employment “Compassionate Flatism”

49. This is not a Test Leadership • Would be helpful if the politicians had a basic understanding of the forces that are flattening the world • Seem to go out of their way to “make their constituents stupid” – encouraging them to believe that certain jobs are “American jobs” and can be protected from foreign competition

50. This is not a Test "Do you think the recent economic expansion in countries like China and India has been generally good for the U.S. economy, or bad for the U.S. economy, or had no effect on the U.S. economy?“ CBS News Poll. July 31-Aug. 5, 2008. N=1,034 adults nationwide. MoE ± 3.