Globally, communication technology has made it possible for businesses to expand much faster and more easily than was the case before. Cultural research is much easier by means of the Internet and electronic communication. Expansion and research into market requirements are similarly facilitated and much cheaper than the case was before. These are but a few of the ways in which the world has become a "flatter" place for both American and global businesses.
The same phenomenon can be seen worldwide: foreign and domestic businesses abound equally within the same country. The most significant elements that Friedman uses in his book to explicate his "flat world" theory include the processes that flatten the world, and the elements of convergence.
According to the author, there are ten "flatteners." These ten events, discoveries, or elements have contributed to globalization in that they allowed both industrial and emerging markets to participate in current economy, and to profit from it. The first event is the collapse of the Berlin Wall. This event allowed a sector of German society that had been hidden from the global view to finally enter the mainstream economy. This event stands at the bottom of technological advances such as the implementation of Netscape, workflow software, and open sourcing.
Open sourcing refers to the collaboration of communities on online projects. Source software, blogs, and Wikipedia serve as examples of such community projects. The widespread use of the Internet has made it possible for all persons to upload information to the Internet and to contribute to the global knowledge base.
Outsourcing and Offshoring occur on the economic level of global business. These mean that businesses can now outsource their operations in ways that minimize production costs and increase profit margins. Foreign exchange rates can be used profitably in this way and create mutual benefits for the company and the countries being targeted for outsourcing and offshoring.
The global online environment has also allowed the evolution of the supply chain. Friedman names Wal-Mart as them most significant example of successful global supply chaining, with the flow between goods, services, and customers operating smoothly, like a river.
Insourcing is another flattener, that refers to a company performing services beyond its own on behalf of another company. In this, Friedman names UPS as an example in terms of the repair work they perform on behalf of Toshiba.
The ninth element, in-forming, is closely related to the open sourcing element, in that individuals are able to retrieve a vast amount of information by means of online search engines. Friedman mentions the rapid growth of the Google search engine, whose volume of searches has increased vastly over just three years. Finally, what Friedman refers to as "Steroids" include electronic equipment used in addition to computers, such as mobile phones, iPods and digital assistants, which allow people to remain in constant contact with others, as well as allowing a constant connection to the online environment. The decreasing prices of these devices also allow an increasing number of people to be so connected and to make use of the business opportunities offered in this way.
In addition to the ten flatteners, Freidman identifies the "triple convergence"; three elements that work together with the ten elements mentioned above in order to flatten the world. The first is the integration of various functions such as e-mail, faxing and printing into a single machine. This provided for a cheaper way to perform all the business functions needed within a company. The second element was a new business model that operated in terms of horizontal rather than vertical collaboration. The capability of the technologies involved help businesses to converge horizontally, with all levels of business people both learning and teaching each other, as well as making use of more opportunities than had ever been available before. The third element is the fall of the Berlin Wall that allowed countries such as India, China and Russia to open their economies to the world. This enhanced horizontal collaboration across the world and further leveled the playing field of the global economy.
For the business person, the flattening of the world holds both significant opportunities and challenges. In diagnosing change, for example, it is important to understand that the competitive edge has become increasingly difficult to find and maintain because of the vast brain power added to the global business environment. The business person can therefore no longer operate in isolation. The element of horizontal collaboration is important here. When strategically diagnosing the change process, the business person should investigate opportunities for horizontal collaboration. Similar global businesses can for example be investigated for this purpose. Elements such as products, services, and business philosophy can be used for the strategic decision-making process. The online environment facilitates this process and provides the opportunity to find the perfect collaboration opportunity.
Once collaboration opportunities have identified, the collaboration strategy can be formulated and implemented. Specifically, this means actions such as contacting potential candidates for collaboration, and identifying how collaboration could be mutually beneficial for the businesses involved. Collaborating horizontally provides the company with the opportunity to achieve a competitive edge by merging the creative powers of more than one mind and more than one culture. Each person and company involved in the collaboration brings different elements of value to the table, providing a bigger customer base for both.
In terms of strategic learning, horizontal collaboration provides businesses with the opportunity to learn from each other in terms of business strategy and culture. When two companies from different cultures for example collaborate, each can learn from the other the best strategies to enter the respective countries for business opportunities.
The challenges provided by the flattening economic environment created by globalization and information technology can be seen in both positive and negative terms. Negatively, it could mean that businesses who have historically dominated the marketplace now face new threats from new entrants into the playing field. This could have significant implications in terms of profit margins and business operations.
From the customer's point-of-view, this is a positive thing, as more competition means a higher quality of product or service at a lower price. In terms of the global economy, it also means that a much larger and horizontal workforce brings innovative ideas to the table. In terms of human evolution, this benefits humanity by finding solutions to global problems such as the greenhouse effect much faster than would otherwise have been the case.
Issues such as corporate responsibility and human rights also enjoy global attention in terms of business solutions, and drives the world towards a generally higher morality and a more collaborative paradigm.
Although Friedman tends to view the flattening world as a crisis for American businesses and employees who have historically depended upon the country's superior economy, it can also be seen as an opportunity to contribute American skills and expertise to the global marketplace. Horizontal collaboration can finally melt away divisions of culture and country and create a truly global village where people celebrate their differences instead of killing each other for them.
Friedman's book provides a metaphor for a world that both changes and returns to previous paradigms. The flat world is the perfect metaphor for the evolutionary process of humanity. It is as if humanity has moved in a spiral; away from the idea of the physical flat world, only to once again come to an understanding that the world can in fact be seen as flat.
In this way, the fractal view of change is relevant; the flat world is an ancient paradigm, but is applied in a different and improved way to the modern business world. It is now part of a horizontal collaboration for the benefit of all, in contrast to the past, where colonization killed and destroyed the livelihoods of whole nations.
Friedman, Thomas L. (2007). The World is Flat: A brief history of the 21st Century. Farrar, Strauss & Giroux.
Leamer, Edward E. (2006, Apr. 16). A Flat World, a Level Playing Field, a Small World After All, or None of the Above?
Matthews, Robert (2008). Mathematics: Finding the fractal solution. http://www.geocities.com/Omegaman_UK/fractal.html
School of Wisdom (2008). Fractal Geometry: The Story of Benoit B. Mandelbrot and the Geometry of Chaos. http://www.fractalwisdom.com/FractalWisdom/fractal.html