DoCoMo is now working with other Japanese companies on an arrangement by which you may be walking down the street and see a poster of a concert by Madonna in Tokyo. The poster will have a bar code and you can buy your tickets by just scanning the bar code. Another poster might be for a new Madonna CD. Just scan the bar code with your cell phone and it will give you a sample of the songs. If you like them, scan it again and you can buy the whole album and have it home-delivered. No wonder my New York Times colleague in Japan, Todd Zaun, who is married to a Japanese woman, remarked to me that there is so much information the Japanese can now access from their Internet-enabled wireless phones that “when I am with my Japanese relatives and someone has a question, the first thing they do is reach for the phone.”
I'm exhausted just writing about all this. But it is hard to exaggerate how much this tenth flattener-the steroids-is going to amplify and further empower all the other forms of collaboration. These steroids should make open-source innovation that much more open, because they will enable more individuals to collaborate with one another in more ways and from more places than ever before. They will enhance outsourcing, because they will make it so much easier for a single department of any company to collaborate with another company. They will enhance supply-chaining, because headquarters will be able to be connected in real time with every individual employee stocking the shelves, every individual package, and every Chinese factory manufacturing the stuff inside them. They will enhance insourcing-having a company like UPS come deep inside a retailer and manage its whole supply chain, using drivers who can interact with its warehouses, and with every customer, carrying his own PDA. And most obviously, they will enhance informing-the ability to manage your own knowledge supply chain.
Sir John Rose, the chief executive of Rolls-Royce, gave me a wonderful example of how wireless and other steroids are enhancing Rolls-Royce's ability to do work flow and other new forms of collaboration with its customers. Let's say you are British Airways and you are flying a Boeing 777 across the Atlantic. Somewhere over Greenland, one of your Rolls-Royce engines gets hit with lightning. The passengers and pilots might be worried, but there is no need. Rolls-Royce is on the case. That Rolls-Royce engine is connected by transponder to a satellite and is beaming data about its condition and performance, at all times, down into a computer in Rolls-Royce's operations room. That is true of many Rolls-Royce airplane engines in operation. Thanks to the artificial intelligence in the Rolls-Royce computer, based on complex algorithms, it can track anomalies in its engines while in operation. The artificial intelligence in the Rolls-Royce computer knows that this engine was probably hit by lightning, and feeds out a report to a Rolls-Royce engineer.
“With the real-time data we receive via satellites, we can identify an 'event' and our engineers can make remote diagnoses,” said Rose. “Under normal circumstances, after an engine gets hit by lightning you would have to land the plane, call in an engineer, do a visual inspection, and make a decision about how much damage might have been done and whether the plane has to be delayed in order to do a repair.
“But remember, these airlines do not have much turnaround time. If this plane is delayed, you throw off the crews, you drop out of your position to fly back home. It gets very costly. We can monitor and analyze engine performance automatically in real time, with our engineers making decisions about exactly what is needed by the time the plane has landed. And if we can determine by all the information we have about the engine that no intervention or even inspection is needed, the airplane can return on schedule, and that saves our customers time and money.”
Engines talking to computers, talking to people, talking back to the engines, followed by people talking to people-all done from anywhere to anywhere. That is what happens when all the flatteners start to get tur-bocharged by all the steroids.
Can you hear me now?
THREE: The Triple Convergence
What is the triple convergence? In order to explain what I mean, let me tell a personal story and share one of my favorite television commercials.
The story took place in March 2004. I had made plans to fly from Baltimore to Hartford on Southwest Airlines to visit my daughter Orly, who goes to school in New Haven, Connecticut. Being a tech-sawy guy, I didn't bother with a paper ticket but ordered an e-ticket through American Express. As anyone who flies regularly on Southwest knows, the cheapo airline has no reserved seats. When you check in, your ticket says simply A, B, or C, with the As boarding first, the Bs boarding second, and the Cs boarding last. As veterans of Southwest also know, you do not want to be a C. If you are, you will almost certainly end up in a middle seat with no space to put your carry-ons in the overhead bin. If you want to sit in a window or aisle seat and be able to store your stuff, you want to be an A. Since I was carrying some bags of clothing for my daughter, I definitely wanted to be an A. So I got up early to make sure I got to the Baltimore airport ninety-five minutes before my scheduled departure. I walked up to the Southwest Airlines e-ticket machine, stuck in my credit card, and used the touch screen to get my ticket-a thoroughly modern man, right? Well, out came the ticket and it said B.
I was fuming. “How in the world could I be a B?” I said to myself, looking at my watch. “There is no way that many people got here before me. This thing is rigged! This is fixed! This is nothing more than a slot machine!”
I stomped off, went through security, bought a Cinnabon, and glumly sat at the back of the B line, waiting to be herded on board so I could hunt for space in the overhead bins. Forty minutes later, the flight was called. From the B line, I enviously watched all the As file on board ahead of me, with a certain barely detectable air of superiority. And then I saw it.
Many of the people in the A line didn't have normal e-tickets like mine. They were just carrying what looked to me like crumpled pieces of white printer paper, but they weren't blank. They had boarding passes and bar codes printed on them, as if the As had downloaded their boarding passes off the Internet at home and printed them out on their home printers. Which, I quickly learned, was exactly what they had done. I didn't know it, but Southwest had recently announced that beginning at 12:01 a.m. the night before a flight, you could download your ticket at home, print it out, and then just have the bar code scanned by the gate agent before you boarded.
“Friedman,” I said to myself, looking at this scene, “you are so twentieth-century... You are so Globalization 2.0.” In Globalization 1.0 there was a ticket agent. In Globalization 2.0 the e-ticket machine replaced the ticket agent. In Globalization 3.0 you are your own ticket agent.
The television commercial is from Konica Minolta Business Technologies for a new multipurpose device it sells called bizhub, a piece of office machinery that allows you to do black-and-white or color printing, copy a document, fax it, scan it, scan it to e-mail, or Internet-fax it—all from the same machine. The commercial begins with a rapid cutting back and forth between two guys, one in his office and the other standing at the bizhub machine. They are close enough to talk by raising their voices. Dom is senior in authority but slow on the uptake-the kind of guy who hasn't kept up with changing technology (my kind of guy!). He can see Ted standing at the bizhub machine when he leans back in his chair and peers out his office doorway.
Dom: (At his desk) Hey, I need that chart. Ted: (At the bizhub) I'm e-mailing it now.
Dom: You're e-mailing from the copy machine?
Ted: No, I'm e-mailing from bizhub.
Dom: Bizhub? Wait, did you make my copies yet?
Ted: Right after I scan this.
Dom: You're scanning at an e-mail machine?
Ted: E-mail machine? I'm at the bizhub machine.
Dom: (Bewildered) Copying?
Ted: (Trying to be patient) E-mailing, then scanning, then copying.
Dom: (Long pause) Bizhub?
VO: (Over an animated graphic of bizhub illustrating its multiple functions) Amazing versatility and affordable color. That's bizhub, from Konica M
inolta.
(Cut to Dom alone at the bizhub machine, trying to see if it will also dispense coffee into his mug.)
Southwest was able to offer its at-home ticketing, and Konica Minolta could offer bizhub, because of what I call the triple convergence. What are the components of this triple convergence? The short answer is this: First, right around the year 2000, all ten of the flatteners discussed in the previous chapter started to converge and work together in ways that created a new, flatter, global playing field. As this new playing field became established, both businesses and individuals began to adopt new habits, skills, and processes to get the most out of it. They moved from largely vertical means of creating value to more horizontal ones. The merger of this new playing field for doing business with the new ways of doing business was the second convergence, and it actually helped to flatten the world even further. Finally, just when all of this flattening was happening, a whole new group of people, several billion, in fact, walked out onto the playing field from China, India, and the former Soviet Empire. Thanks to the new flat world, and its new tools, some of them were quickly able to collaborate and compete directly with everyone else. This was the third convergence. Now let's look at each in detail.
Convergence I
All ten flatteners discussed in the previous chapter have been around, we know, since the 1990s, if not earlier. But they had to spread and take root and connect with one another to work their magic on the world. For instance, at some point around 2003, Southwest Airlines realized that there were enough PCs around, enough bandwidth, enough computer storage, enough Internet-comfortable customers, and enough software know-how for Southwest to create a work flow system that empowered its customers to download and print out their own boarding passes at home, as easily as downloading a piece of e-mail. Southwest could collaborate with its customers and they with Southwest in a new way. And somewhere around the same time, the work flow software and hardware converged in a way that enabled Konica Minolta to offer scanning, e-mailing, printing, faxing, and copying all from the same machine. This is the first convergence.
As Stanford University economist Paul Romer pointed out, economists have known for a long time that “there are goods that are complementary-whereby good A is a lot more valuable if you also have good B. It was good to have paper and then it was good to have pencils, and soon as you got more of one you got more of the other, and as you got a better quality of one and better quality of the other, your productivity improved. This is known as the simultaneous improvement of complementary goods.”
It is my contention that the opening of the Berlin Wall, Netscape, work flow, outsourcing, offshoring, open-sourcing, insourcing, supply-chaining, in-forming, and the steroids amplifying them all reinforced one another, like complementary goods. They just needed time to converge and start to work together in a complementary, mutually enhancing fashion. That tipping point arrived sometime around the year 2000.
The net result of this convergence was the creation of a global, Web-enabled playing field that allows for multiple forms of collaboration-the sharing of knowledge and work-in real time, without regard to geography, distance, or, in the near future, even language. No, not everyone has access yet to this platform, this playing field, but it is open today to more people in more places on more days in more ways than anything like it ever before in the history of the world. This is what I mean when I say the world has been flattened. It is the complementary convergence of the ten flatteners, creating this new global playing field for multiple forms of collaboration.
Convergence II
Great, you say, but why is it only in the past few years that we started to see in the United States the big surges in productivity that should be associated with such a technological leap? Answer: Because it always takes time for all the flanking technologies, and the business processes and habits needed to get the most out of them, to converge and create that next productivity breakthrough.
Introducing new technology alone is never enough. The big spurts in productivity come when a new technology is combined with new ways of doing business. Wal-Mart got big productivity boosts when it combined big box stores-where people could buy soap supplies for six months-with new, horizontal supply-chain management systems that allowed Wal-Mart instantly to connect what a consumer took off the shelf from a Wal-Mart in Kansas City with what a Wal-Mart supplier in coastal China would produce.
When computers were first introduced into offices, everyone expected a big boost in productivity. But that did not happen right away, and it sparked both disappointment and a little confusion. The noted economist Robert Solow quipped that computers are everywhere- except “in the productivity statistics.”
In a pathbreaking 1989 essay, “Computer and Dynamo: The Modern Productivity Paradox in a Not-Too Distant Mirror,” the economic historian Paul A. David explained such a lag by pointing to a historical precedent. He noted that while the lightbulb was invented in 1879, it took several decades for electrification to kick in and have a big economic and productivity impact. Why? Because it was not enough just to install electric motors and scrap the old technology-steam engines. The whole way of doing manufacturing had to be reconfigured. In the case of electricity, David pointed out, the key breakthrough was in how buildings, and assembly lines, were redesigned and managed. Factories in the steam age tended to be heavy, costly multistory buildings designed to brace the weighty belts and other big transmission devices needed to drive steam-powered systems. Once small, powerful electric motors were introduced, everyone hoped for a quick productivity boost. It took time, though. To get all the savings, you needed to redesign enough buildings. You needed to have long, low, cheaper-to-build single-story factories, with small electric motors powering machines of all sizes. Only when there was a critical mass of experienced factory architects and electrical engineers and managers, who understood the complementarities among the electric motor, the redesign of the factory, and the redesign of the production line, did electrification really deliver the productivity breakthrough in manufacturing, David wrote.
The same thing is happening today with the flattening of the world. Many of the ten flatteners have been around for years. But for the full flattening effects to be felt, we needed not only the ten flatteners to converge but also something else. We needed the emergence of a large cadre of managers, innovators, business consultants, business schools, designers, IT specialists, CEOs, and workers to get comfortable with, and develop, the sorts of horizontal collaboration and value-creation processes and habits that could take advantage of this new, flatter playing field. In short, the convergence of the ten flatteners begat the convergence of a set of business practices and skills that would get the most out of the flat world. And then the two began to mutually reinforce each other.
“When people asked, 'Why didn't the IT revolution lead to more productivity right away?' it was because you needed more than just new computers,” said Romer. “You needed new business processes and new types of skills to go with them. The new way of doing things makes the information technologies more valuable, and the new and better information technologies make the new ways of doing things more possible.”
Globalization 2.0 was really the era of mainframe computing, which was very vertical-command-and-control oriented, with companies and their individual departments tending to be organized in vertical silos. Globalization 3.0, which is built around the convergence of the ten flatteners, and particularly the combination of the PC, the microprocessor, the Internet, and fiber optics, flipped the playing field from largely top-down to more side to side. And this naturally fostered and demanded new business practices, which were less about command and control and more about connecting and collaborating horizontally.
“We have gone from a vertical chain of command for value creation to a much more horizontal chain of command for value creation,” explained Carly Fiorina. Innovations in companies like HP, she said, now come more and more often from horizontal collaboration among differ
ent departments and teams spread all across the globe. For instance, HP, Cisco, and Nokia recently collaborated on the development of a camera/ cell phone that beams its digitized pictures to an HP printer, which quickly prints them out. Each company had developed a very sophisticated technological specialty, but it could add value only when its specialty was horizontally combined with the specialties of the other two companies.
“How you collaborate horizontally and manage horizontally requires a totally different set of skills” from traditional top-down approaches, Fiorina added.
Let me offer just a few examples. In the past five years, HP has gone from a company that had eighty-seven different supply chains-each managed vertically and independently, with its own hierarchy of managers and back-office support-to a company with just five supply chains that manage $50 billion in business, and where functions like accounting, billing, and human resources are handled through a companywide system.
Southwest Airlines took advantage of the convergence of the ten flat-teners to create a system where its customers can download their boarding passes at home. But until I personally altered my ticket-buying habits and reengineered myself to collaborate horizontally with Southwest, this technological breakthrough didn't produce a productivity breakthrough for me or Southwest. What the bizhub commercial is about is the difference between the employee who understands the convergent technologies in the new bizhub machine (and how to get the most out of them) and the employee in the very same office who does not. Not until the latter changes his work habits will productivity in that fictional office go up, even though the office has this amazing new machine.
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