Thomas L Friedman The World Is Flat A Brief History Of The 21St Century(Financial Times and Goldman Sachs Business Book of the Year Award).doc

The World is FlatThomas L FriedmanTo Matt and Kay and to RonContentsHow the World Became FlatOne: While I Was Sleeping / 3Two: The Ten Forces That Flattened the World / 48 Flattener#l. 11/9/89Flattener #2. 8/9/95Flattener Flattener Flattener Flattener Flattener Flattener Flattener FlattenerWork Flow Software Open-Sourcing Outsourcing Offshoring Supply-Chaining Insourcing In-formingThe Steroids Three: The Triple Convergence / 173 Four: The Great Sorting Out / 201America and the Flat WorldFive: America and Free Trade / 225 Six: The Untouchables / 237Seven: The Quiet Crisis / 250 Eight: This Is Not a Test / 276Developing Countries and the Flat WorldNine: The Virgin of Guadalupe / 309 Companies and the Flat World Geopolitics and the Flat World Eleven: The Unflat World / 371Twelve: The Dell Theory of Conflict Prevention / 414 Conclusion: ImaginationThirteen: 11/9 Versus 9/11 / 441 Acknowledgments I 471 Index I 475:How the World Became Flat: ONEWhile I Was SleepingYour Highnesses, as Catholic Christians, and princes who love and promote the holy Christian faith, and are enemies of the doctrine of Mahomet, and of all idolatry and heresy, determined to send me, Christopher Columbus, to the above-mentioned countries of India, to see the said princes, people, and territories, and to learn their disposition and the proper method of converting them to our holy faith; and furthermore directed that I should not proceed by land to the East, as is customary, but by a Westerly route, in which direction we have hitherto no certain evidence that anyone has gone.- Entry from the journal of Christopher Columbus on his voyage of 1492No one ever gave me directions like this on a golf course before: "Aim at either Microsoft or IBM." I was standing on the first tee at the KGA Golf Club in downtown Bangalore, in southern India, when my playing partner pointed at two shiny glass-and-steel buildings off in the distance, just behind the first green. The Goldman Sachs building wasn't done yet; otherwise he could have pointed that out as well and made it a threesome. HP and Texas Instruments had their offices on the back nine, along the tenth hole. That wasn' t all. The tee markers were from Epson, the printer company, and one of our caddies was wearing a hat from 3M. Outside, some of the traffic signs were also sponsored by Texas Instruments, and the Pizza Hut billboard on the way over showed a steaming pizza, under the headline "Gigabites of Taste!"4No, this definitely wasn' t Kansas. It didn' t even seem like India. Was this the New World, the Old World, or the Next World?I had come to Bangalore, India' s Silicon Valley, on my own Columbus-like journey of exploration. Columbus sailed with the Nina, the Pinta, and the Santa Maria in an effort to discover a shorter, more direct route to India by heading west, across the Atlantic, on what he presumed to be an open sea route to the East Indies-rather than going south and east around Africa, as Portuguese explorers of his day were trying to do. India and the magical Spice Islands of the East were famed at the time for their gold, pearls, gems, and silk-a source of untold riches. Finding this shortcut by sea to India, at a time when the Muslim powers of the day had blocked the overland routes from Europe, was a way for both Columbus and the Spanish monarchy to become wealthy and powerful. 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. Rethought the Earth was a smaller sphere than it is. He also did not anticipate running into a landmass before he reached the East Indies. Nevertheless, he called the aboriginal peoples he encountered in the new world "Indians." Returning home, though, Columbus was able to tell his patrons, King Ferdinand and Queen Isabella,that although he never did find India, he could confirm that the world was indeed round.I set out for India by going due east, via Frankfurt. I had Lufthansa business class. I knew exactly which direction I was going thanks to the GPS map displayed on the screen that popped out of the armrest of my airline seat. I landed safely and on schedule. I too encountered people called Indians. I too was searching for the source of India' s riches. Columbus was searching for hardware-precious metals, silk, and spices-the source of wealth in his day. I was searching for software, brainpower, complex algorithms, knowledge workers, call centers, transmission protocols, breakthroughs in optical engineering-the sources of wealth in our day. Columbus was happy to make the Indians he met his slaves, a pool of free manual labor. I just wanted to understand why the Indians I met were taking our work, why they had become such an important pool for the outsourcing5of service and information technology work from America and other industrialized countries. Columbus had more than one hundred men on his three ships; I had a small crew from the Discovery Times channel that fit comfortably into two banged-up vans, with Indian drivers who drove barefoot. When I set sail, so to speak, I too assumed that the world was round, but what I encountered in the real India profoundly shook my faith in that notion. Columbus accidentally ran into America but thought he had discovered part of India. I actually found India and thought many of the people I met there were Americans. Some had actually taken American names, and others were doing great imitations of American accents at call centers and American business techniques at software labs.Columbus reported to his king and queen that the world was round, and he went down in history as the man who first made this discovery. I returned home and shared my discover)' only with my wife, and only in a whisper."Honey," I confided, "I think the world is flat."How did I come to this conclusion? I guess you could say it all started in Nandan Nilekani' s conference room at Infosys Technologies Limited. Infosys is one of the jewels of the Indian information technology world, and Nilekani, the company' s CEO, is one of the most thoughtful and respected captains of Indian industry. I drove with the Discovery Times crew out to the Infosys campus, about forty minutes from the heart of Bangalore, to tour the facility and interview Nilekani. The Infosys campus is reached by a pockmarked road, with sacred cows, horse-drawn carts, and motorized rickshaws all jostling alongside our vans. Once you enter the gates of Infosys, though, you are in a different world. A massive resort-size swimming pool nestles amid boulders and manicured lawns, adjacent to a huge putting green. There are multiple restaurants and a fabulous health club. Glass-and-steel buildings seem to sprout up like weeds each week. In some of those buildings, Infosys employees are writing specific software programs for American or European companies; in others, they are running the back rooms of majorAmerican- and European-based multinationals-everything from computer maintenance to specific research projects to answering customer calls routed there from all over the world. Security is tight, cameras monitor the doors, and if you are working for American Express, you cannot get into the building that is managing services and research for General Electric. Young Indian engineers, men and women, walk briskly from building to building, dangling ID badges. One looked like he could do my taxes. Another looked like she could take my computer apart. And a third looked like she designed it!After sitting for an interview, Nilekani gave our TV crew a tour of Info-sys' s global conferencing center-ground zero of the Indian outsourcing industry. It was a cavernous wood-paneled room that looked like a tiered classroom from an Ivy League law school. On one end was a massive wall-size screen and overhead there were cameras in the ceiling for teleconferencing. "So this is our conference room, probably the largest screen in Asia-this is forty digital screens put together," Nilekani explained proudly, pointing to the biggest flat-screen TV I had ever seen. Infosys, he said, can hold a virtual meeting of the key players from its entire global supply chain for any project at any time on that supersize screen. So their American designers could be on the screen speaking with their Indian software writers and their Asian manufacturers all at once. "We could be sitting here, somebody from New York, London, Boston, San Francisco, all live. And maybe the implementation is in Singapore, so the Singapore person could also be live here. . . That's globalization," said Nilekani. Above the screen there were eight clocks that pretty well summed up the Infosys workday: 24/7/365. The clocks were labeled US West, US East, GMT, India, Singapore, Hong Kong, Japan, Australia."Outsourcing is just one dimension of a much more fundamental thing happening today in the world," Nilekani explained. "What happened over the last few years is that there was a massive investment in technology, especially in the bubble era, when hundreds of millions of dollars were invested in putting broadband connectivity around the world, undersea cables, all those things." At the same time, he added, computers became cheaper and dispersed all over the world, and there was an explosion of software-e-mail, search engines like Google, and7proprietary software that can chop up any piece of work and send one part to Boston, one part to Bangalore, and one part to Beijing, making it easy for anyone to do remote development. When all of these things suddenly came together around 2000, added Nilekani, they "created a platform where intellectual work, intellectual capital, could be delivered from anywhere. It could be disaggregated, delivered, distributed, produced, and put back together again-and this gave a whole new degree of freedom to the way we do work, especially work of an intellectual nature . . . And what you are seeing in Bangalore today is really the culmination of all these things coming together."We were sitting on the couch outside of Nilekani' s office, waiting for the TV crew to set up its cameras. At one point, summing up the implications of all this, Nilekani uttered a phrase that rang in my ear. He said to me, "Tom, the playing field is beingleveled." He meant that countries like India are now able to compete for global knowledge work as never before-and that America had better get ready for this. America was going to be challenged, but, he insisted, the challenge would be good for America because we are always at our best when we are being challenged. As I left the Infosys campus that evening and bounced along the road back to Bangalore, I kept chewing on that phrase: "The playing field is being leveled."What Nandan is saying, I thought, is that the playing field is being flattened Flattened? Flattened? My God, he's telling me the world is flat!Here I was in Bangalore-more than five hundred years after Columbus sailed over the horizon, using the rudimentary navigational technologies of his day, and returned safely to prove definitively that the world was round-and one of India' s smartest engineers, trained at his country' s top technical institute and backed by the most modern technologies of his day, was essentially telling me that the world was flat-as flat as that screen on which he can host a meeting of his whole global supply chain. Even more interesting, he was citing this development as a good thing, as a new milestone in human progress and a great opportunity for India and the world-the fact that we had made our world flat!In the back of that van, I scribbled down four words in my notebook: "The world is flat." As soon as I wrote them, I realized that this was the8underlying message of everything that I had seen and heard in Bangalore in two weeks of filming. The global competitive playing field was being leveled. The world was being flattened.As I caine to this realization, I was filled with both excitement and dread. The journalist in me was excited at having found a framework to better understand the morning headlines and to explain what was happening in the world today. Clearly, it is now possible for more people than ever to collaborate and compete in real time with more other people on more different kinds of work from more different corners of the planet and on a more equal footing than at any previous time in the history of the world-using computers, e-mail, networks, teleconferencing, and dynamic new software. That is what Nandan was telling me. That was what I discovered on my journey to India and beyond. And that is what this book is about. When you start to think of the world as flat, a lot of things make sense in ways they did not before. But I was also excited personally, because what the flattening of the world means is that we are now connecting all the knowledge centers on the planet together into a single global network, which-if politics and terrorism do not get in the way-could usher in an amazing era of prosperity and innovation.But contemplating the flat world also left me filled with dread, professional and personal. My personal dread derived from the obvious fact that it' s not only the software writers and computer geeks who get empowered to collaborate on work in a flat world. It' s also al-Qaeda and other terrorist networks. The playing field is not being leveled only in ways that draw in and superempower a whole new group of innovators. It' s being leveled in a way that draws in and superempowers a whole new group of angry, frustrated, and humiliated men and women.Professionally, the recognition that the world was flat was unnerving because I realized that this flattening had been taking place while I was sleeping, and I had missed it. I wasn' t really sleeping, but I was otherwise engaged. 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-hence my 1999 book, The Lexus and the Olive Tree. But after 9/11, the olive tree wars became all9consuming for me. I spent almost all my time traveling in the Arab and Muslim worlds. During those years I lost the trail of globalization.I found that trail again on my journey to Bangalore in February 2004. Once I did, I realized that something really important had happened while I was fixated on the olive groves of Kabul and Baghdad. Globalization had gone to a whole new level. If you put The Lexus and the Olive Tree and this book together, the broad historical argument you end up with is that that there have been three great eras of globalization. The first lasted from 1492-when Columbus set sail, opening trade between the Old World and the New World-until around 1800.1