Raghuram Rajan, the director of research for the International Monetary Fund, sits on the board of a company that puts Indian students to work tutoring students in Singapore. The students, from the Indian Institute of Technology in Madras, go online to help students in Singapore, from grades six to twelve, on their math homework. They also help teachers in Singapore develop lesson plans and prepare PowerPoint presentations or other jazzy ways for them to teach math. The company, called Heymath.com, is paid for by the schools in Singapore. Cambridge University in England is also part of this equation, providing the overall quality controls and certifying the lesson plans and teaching methods.
“Everyone wins,” says Rajan. “The company is run by two Indians who worked for Citibank and CSFB in London and came back to India to start this business... Cambridge University is making money from a company that has created a whole new niche. The Indian students are making pocket money. And the Singapore students are learning better.” Meanwhile, the underlying software is probably being provided by Microsoft and the chips by Intel, and the enriched Indian students are probably buying cheap personal computers from Apple, Dell, or HP. But you can't really see any of this. “The pie grew, but no one saw it,” said Rajan.
An essay in the McKinsey Quarterly, “Beyond Cheap Labor: Lessons for Developing Economies” (January 2005), offers a nice example of this: “In northern Italy's textile and apparel industry... the majority of garment production has moved to lower-cost locations, but employment remains stable because companies have put more resources into tasks such as designing clothes and coordinating global production networks.”
It is so easy to demonize free markets-and the freedom to outsource and offshore-because it is so much easier to see people being laid off than being hired. But occasionally a newspaper tries to dig deep into the issue. My hometown paper, the Minneapolis Star Tribune, did just that. It looked at exactly how the Minnesota economy was being affected by the flattening of the world, actually daring to run an article on September 5, 2004, headlined, “Offshore Jobs Bring Gains at Home.” The article, date-lined Wuxi, China, began like this: “Outside the air is dank, dusty and hot as tropical fever. Inside, in an environment that's dry, spotless and cool, hundreds of former farm laborers covered head to toe in suits looking like something out of NASA are performing work for Bloomington-based Donaldson Co. Inc.... In Donaldson's case, the company has twice as many workers in China-2,500-as the 1,100 it has in Bloomington. The Chinese operation not only has allowed Donaldson to keep making a product it no longer could make at a profit in the United States, it also has helped boost the company's Minnesota employment, up by 400 people since 1990. Donaldson's highly paid engineers, chemists and designers in Minnesota spend their days designing updated filters that the Chinese plant will make for use in computers, MP3 players and digital video recorders. The falling disk-drive prices made possible by Chinese production are feeding demand for the gadgets. 'If we didn't follow [the trend], we'd be out of business,' said David Timm, general manager of Donaldson's disk-drive and microelectronics unit. In Minnesota, Global Insight estimates that 1,854 jobs were created as a result of foreign outsourcing in 2003. By 2008, the firm expects nearly 6,700 new jobs in Minnesota as a consequence of the trend.”
Economists often compare China's and India's entry into the global economy to the moment when the railroad lines crossing America finally connected New Mexico to California, with its much larger population. “When the railroad comes to town,” noted Vivek Paul, the Wipro president, “the first thing you see is extra capacity, and all the people in New Mexico say those people-Californians-will wipe out all our factories along the line. That will happen in some areas, and some companies along the line will go out of business. But then capital will get reallocated. In the end, everyone along the line will benefit. Sure, there is fear, and that fear is good because that stimulates a willingness to change and explore and find more things to do better.”
It happened when we connected New York, New Mexico, and California. It happened when we connected Western Europe, America, and Japan. And it will happen when we connect India and China with America, Europe, and Japan. The way to succeed is not by stopping the railroad line from connecting you, but by upgrading your skills and making the investment in those practices that will enable you and your society to claim your slice of the bigger but more complex pie.
SIX: The Untouchables
So if the flattening of the world is largely (but not entirely) unstoppable, and holds out the potential to be as beneficial to American society as a whole as past market evolutions have been, how does an individual get the best out of it? What do we tell our kids?
There is only one message: You have to constantly upgrade your skills. There will be plenty of good jobs out there in the flat world for people with the knowledge and ideas to seize them.
I am not suggesting this will be simple. It will not be. There will be a lot of other people out there also trying to get smarter. It was never good to be mediocre in your job, but in a world of walls, mediocrity could still earn you a decent wage. In a flatter world, you really do not want to be mediocre. You don't want to find yourself in the shoes of Willy Loman in Death of a Salesman, when his son Biff dispels his idea that the Loman family is special by declaring, “Pop! I'm a dime a dozen, and so are you!” An angry Willy retorts, “I am not a dime a dozen! I am Willy Loman, and you are Biff Loman!”
I don't care to have that conversation with my girls, so my advice to them in this flat world is very brief and very blunt: “Girls, when I was growing up, my parents used to say to me, ”Tom, finish your dinner—people in China and India are starving.“ My advice to you is: Girls, finish your homework-people in China and India are starving for your jobs.”
The way I like to think about this for our society as a whole is that every person should figure out how to make himself or herself into an untouchable. That's right. When the world goes flat, the caste system gets turned upside down. In India untouchables may be the lowest social class, but in a flat world everyone should want to be an untouchable. Untouchables, in my lexicon, are people whose jobs cannot be outsourced.
So who are the untouchables, and how do you or your kids get to be one? Untouchables come in four broad categories: workers who are “special,” workers who are “specialized,” workers who are “anchored,” and workers who are “really adaptable.”
Workers who are special are people like Michael Jordan, Bill Gates, and Barbra Streisand. They have a global market for their goods and services and can command global-sized pay packages. Their jobs can never be outsourced.
If you can't be special-and only a few people can be-you want to be specialized, so that your work cannot be outsourced. This applies to all sorts of knowledge workers-from specialized lawyers, accountants, and brain surgeons, to cutting-edge computer architects and software engineers, to advanced machine tool and robot operators. These are skills that are always in high demand and are not fungible. (“Fungible” is an important word to remember. As Infosys CEO Nandan Nilekani likes to say, in a flat world there is “fungible and nonfungible work.” Work that can be easily digitized and transferred to lower-wage locations is fungible. Work that cannot be digitized or easily substituted is nonfungible. Michael Jordan's jump shot is nonfungible. A bypass surgeon's technique is nonfungible. A television assembly-line worker's job is now fungible. Basic accounting and tax preparation are now fungible.)
If you cannot be special or specialized, you want to be anchored. That status applies to most Americans, everyone from my barber, to the waitress at lunch, to the chefs in the kitchen, to the plumber, to nurses, to many doctors, many lawyers, entertainers, electricians, and cleaning ladies. Their jobs are simply anchored and always will be, because they must be done in a specific location, involving face-to-face contact with a customer, client, patient, or audience. These jobs generally cannot be digitized and are not fungible, and the market wage is set according to the local market conditions
. But be advised: There are fungible parts of even anchored jobs, and they can and will be outsourced-either to India or to the past-for greater efficiency. (Yes, as David Rothkopf notes, more jobs are actually “outsourced to the past,” thanks to new innovations, than are outsourced to India.) For instance, you are not going to go to Bangalore to find an internist or a divorce lawyer, but your divorce lawyer may one day use a legal aide in Bangalore for basic research or to write up vanilla legal documents, and your internist may use a nighthawk radiologist in Bangalore to read your CAT scan.
This is why if you cannot be special or specialized, you don't want to count on being anchored so you won't be outsourced. You actually want to become really adaptable. You want constantly to acquire new skills, knowledge, and expertise that enable you constantly to be able to create value-something more than vanilla ice cream. You want to learn how to make the latest chocolate sauce, the whipped cream, or the cherries on top, or to deliver it as a belly dancer-in whatever your field of endeavor. As parts of your work become commoditized and fungible, or turned into vanilla, adaptable people will always learn how to make some other part of the sundae. Being adaptable in a flat world, knowing how to “learn how to learn,” will be one of the most important assets any worker can have, because job churn will come faster, because innovation will happen faster.
Atul Vashistha, CEO of NeoIT, a California consulting firm that specializes in helping U.S. firms do outsourcing, has a good feel for this: “What you can do and how you can adapt and how you can leverage all the experience and knowledge you have when the world goes flat-that is the basic component [for survival]. When you are changing jobs a lot, and when your job environment is changing a lot, being adaptable is the number one thing. The people who are losing out are those with solid technical skills who have not grown those skills. You have to be skillfully adaptable and socially adaptable.”
The more we push out the boundaries of knowledge and technology, the more complex tasks that machines can do, the more those with specialized education, or the ability to learn how to learn, will be in demand, and for better pay. And the more those without that ability will be less generously compensated. What you don't want to be is a not very special, not very specialized, not very anchored, or not very adaptable person in a fungible job. If you are in the low-margin, fungible end of the work food chain, where businesses have an incentive to outsource to lower-cost, equally efficient producers, there is a much greater chance that your job will be outsourced or your wages depressed.
“If you are a Web programmer and are still using only HTML and have not expanded your skill set to include newer and creative technologies, such as XML and multimedia, your value to the organization gets diminished every year,” added Vashistha. New technologies get introduced that increase complexity but improve results, and as long as a programmer embraces these and keeps abreast of what clients are looking for, his or her job gets hard to outsource. “While technology advances make last year's work a commodity,” said Vashistha, “reskilling, continual professional education and client intimacy to develop new relationships keeps him or her ahead of the commodity curve and away from a potential offshore.'”
My childhood friend Bill Greer is a good example of a person who faced this challenge and came up with a personal strategy to meet it. Greer is forty-eight years old and has made his living as a freelance artist and graphic designer for twenty-six years. From the late 1970s until right around 2000, the way Bill did his job and served his clients was pretty much the same.
“Clients, like The New York Times, would want a finished piece of artwork,” Bill explained to me. So if he was doing an illustration for a newspaper or a magazine, or proposing a new logo for a product, he would actually create a piece of art-sketch it, color it, mount it on an illustration board, cover it with tissue, put it in a package that was opened with two flaps, and have it delivered by messenger or FedEx. He called it “flap art.” In the industry it was known as “camera-ready art,” because it needed to be shot, printed on four different layers of color film, or “separations,” and prepared for publication. “It was a finished product, and it had a certain preciousness to it,” said Bill. “It was a real piece of art, and sometimes people would hang them on their walls. In fact, The New York Times would have shows of works that were created by illustrators for its publications.”
But in the last few years “that started to change,” Bill told me, as publications and ad agencies moved to digital preparation, relying on the new software-namely, Quark, Photoshop, and Illustrator, which graphic artists refer to as “the trinity”-which made digital computer design so much easier. Everyone who went through art school got trained on these programs. Indeed, Bill explained, graphic design got so much easier that it became a commodity. It got turned into vanilla ice cream. “In terms of design,” he said, “the technology gave everyone the same tools, so everyone could do straight lines and everyone could do work that was halfway decent. You used to need an eye to see if something was in balance and had the right typeface, but all of a sudden anyone could hammer out something that was acceptable.”
So Greer pushed himself up the knowledge ladder. As publications demanded that all final products be presented as digital files that could be uploaded, and there was no longer any more demand for that precious flap art, he transformed himself into an ideas consultant. “Ideation” was what his clients, including McDonald's and Unilever, wanted. He stopped using pens and ink and would just do pencil sketches, scan them into his computer, color them by using the computer's mouse, and then e-mail them to the client, which would have some less skilled artists finish them.
“It was unconscious,” said Greer. “I had to look for work that not everyone else could do, and that young artists couldn't do with technology for a fraction of what I was being paid. So I started getting offers where people would say to me, 'Can you do this and just give us the big idea?' They would give me a concept, and they would just want sketches, ideas, and not a finished piece of art. I still use the basic skill of drawing, but just to convey an idea-quick sketches, not finished artwork. And for these ideas they will still pay pretty good money. It has actually taken me to a different level. It is more like being a consultant rather than a JAFA (Just Another Fucking Artist). There are a lot of JAFAs out there. So now I am an idea man, and I have played off that. My clients just buy concepts.” The JAFAs then do the art in-house or it gets outsourced. “They can take my raw sketches and finish them and illustrate them using computer programs, and it is not like I would do it, but it is good enough,” Greer said.
But then another thing happened. While the evolving technology turned the lower end of Greer's business into a commodity, it opened up a whole new market at the upper end: Greer's magazine clients. One day, one of his regular clients approached him and asked if he could do morphs. Morphs are cartoon strips in which one character evolves into another. So Martha Stewart is in the opening frame and morphs into Courtney Love by the closing frame. Drew Barrymore morphs into Drew Carey. Mariah Carey morphs into Jim Carrey. Cher morphs into Britney Spears. When he was first approached to do these, Greer had no idea where to begin. So he went onto Amazon.com and located some specialized software, bought it, tried it out for a few days, and produced his first morph. Since then he has developed a specialty in the process, and the market for them has expanded to include Maxim magazine, More, and Nickelodeon-one a men's magazine, one a middle-aged women's magazine, and one a kids' magazine.
In other words, someone invented a whole new kind of sauce to go on the vanilla, and Greer jumped on it. This is exactly what happens in the global economy as a whole. “I was experienced enough to pick these [morphs] up pretty quickly,” said Greer. “Now I do them on my Mac laptop, anywhere I am, from Santa Barbara to Minneapolis to my apartment in New York. Sometimes clients give me a subject, and sometimes I just come up with them. Morphing used to be one of those really high-end things you saw on TV, and then they came out with this cons
umer [software] program and people could do it themselves, and I shaped them so magazines could use them. I just upload them as a series of JPEG files... Morphs have been a good business for different magazines. I even get fan mail from kids!”
Greer had never done morphs until the technology evolved and created a new, specialized niche, just when a changing market for his work made him eager to learn new skills. “I wish I could say it was all intentional,” he confessed. “I was just available for work and just lucky they gave me a chance to do these things. I know so many artists who got washed out. One guy who was an illustrator has become a package designer, some have gotten out of the field altogether; one of the best designers I know became a landscape architect. She is still a designer but changed her medium altogether. Visual people can adapt, but I am still nervous about the future.”
I told Greer his story fit well into some of the terms I was using in this book. He began as a chocolate sauce (a classic illustrator), was turned into a vanilla commodity (a classic illustrator in the computer age), upgraded his skills to become a special chocolate sauce again (a design consultant), then learned how to become a cherry on top (a morphs artist) by fulfilling a new demand created by an increasingly specialized market.
Greer contemplated my compliment for a moment and then said, “And here all I was trying to do was survive-and I still am.” As he got up to leave, though, he told me that he was going out to meet a friend “to juggle together.” They have been juggling partners for years, just a little side business they sometimes do on a street corner or for private parties. Greer has very good hand-eye coordination. “But even juggling is being commoditized,” he complained. “It used to be if you could juggle five balls, you were really special. Now juggling five balls is like just anteing up. My partner and I used to perform together, and he was the seven-ball champ when I met him. Now fourteen-year-old kids can juggle seven balls, no problem. Now they have these books, like Juggling for Dummies, and kits that will teach you how to juggle. So they've just upped the standard.”
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