"The World is Flat"
If you have not yet been exposed to this excellent book, perhaps it is time.
The book "The World is Flat" by Thomas L. Friedman
discusses the ideas of the flattening or globalization of the world, and how this contributes to required new thinking on most managerial and leadership issues. It discusses "outsourcing" in a way that makes most think that we ALL may get "outsourced" one day soon.
A couple sources you may want to scan include an interview with the author in Wired Magazine, May 2005.
Or, for those who are Wikipedia fans, the summary encyclopedia entry.
Gene A. Wright
posted by Gene A. Wright @ 8:00 AM
9 Comments:
This is great book, and it changed my thoughts on Outsourcing.
I did not read the book, but from the interview I’m intrigued by the “McDonald’s Theory of Conflict Prevention.” No two countries that a are a part of the same major global supply chain will fight against each other and risk disrupting that chain. In other words, we’re all in this together – as our economies become increasingly dependant on each other with increasing globalization.
I've read the book and here are my thoughts on it...
It is apparent that the convergence that was so often talked about in the last millennium is now a reality. It is clear that by the end of this decade we will be living in a fully converged world.
Of particular interest to me involved in engineering and science education in the United States is the section entitled "The Quiet Crisis." The premise is that the erosion of the scientific and engineering base in the United States is taking us on a steady path toward losing preeminent position as innovators of new products, services, and companies. It is "quiet" both because it is not a single, spectacular event that grabs headlines and because the erosion has not yet reached a critical point. Perhaps most disturbing is the set of examples describing what is happening in the rest of the world relative to the focus on engineering and science.
This book brings into focus trends and events that most readers would recognize but perhaps have not thought about in the larger context of flattening the world. Thinking about how the world is changing is a healthy exercise for all of us and certainly is both invigorating and sobering.
SM
I have not read this book but did go through the interview and have to say that I have some personal opinions on the flattening of the world and what the US is doing with it.
It is a fact that the world is becoming a much flatter world and that there are many new opportunities to work with people and suppliers that 10 years ago would have been almost impossible. The biggest question that I have is: What is the US doing with these opportunities and or threats? I work for a major manufacturing firm and see the leaders looking for the quick returns and not looking at the long term costs. As these new partners in our supply chain develop, the costs increase and the advantage for being there disappears. In the mean time, the manufacturing capabilities that were highly developed and used for years are disappearing as they are deemed to be not competitive. And yet, we do not approach the existing suppliers to try and develop them to be competitive and think out of the box. Isn't that what great leaders do? Think out of the box and make threats into great opportunities? I have seen very little thinking out of the box and believe it is a travisty.
The US has always had issues like this with new opportunities. Edward Deming tried telling the US that there were great opportunities with improving quality and he was told to go away. He went to Japan and they embraced him and then they came back to beat us at our own game. It seems like we up for another round as we aren't smart enough to learn from our own mistakes.
I may sound like I am totally against flattening the world but I do also believe that it does open up markets and it does spread the wealth of intelligence. We just need to understand how to make intelligent decisions for doing what we are doing instead of chasing a couple of pennies across the ocean. In the long run, our country will be stronger and much better off because of the flattening but I fear we are going to stumble along the way a few times.
I have not read the book as of yet, still waiting for my copy to be shipped. I do like what Friedman has to say. We have been trying to capture a part of that global market through outsourcing, but moving cautiously. I’ve listed my thoughts.
Advantages of outsourcing are:
Mgrs. Viewpoint
• Outsourcing allows my firm to focus on core activities. Core competencies as defined by management are manufacturing of gears, housings, and shafts. Other parts can be outsourced because no special knowledge is required to manufacture these components only right-sized equipment.
• By outsourcing my can focus on key strategic objectives.
• Risks are shared between my company and the outsourcing firm.
Cost Viewpoint
• My company would see lower or overhead costs.
• Outsourcing would enable my company to reduce its investment in technology for manufacturing of components and focus on core manufacturing processes. Instead of $15MM in capital investment this year, only $4.8MM would need to be invested.
• Outsourcing enables a transfer from fixed cost into variable cost.
Operational viewpoint
• Increase access to resources – specialized knowledge of suppliers.
• Improved quality.
• Outsourcing enables my company to tap suppliers, much needed, existing capacity.
• My company would benefit from the flexibility in adjusting staffing levels.
Disadvantages of outsourcing:
Mgrs. Viewpoint
• Loss of control over manufacturing functions.
• Loss of control over suppliers without a proper quality system and audit of incoming materials.
• Potential violations of intellectual rights. Off-shoring could possibly open new markets for knock-off aftermarket parts.
• Anticipated benefits exceed actual benefits.
Cost Viewpoint
• Failure to realize cost savings.
• Costs associated with reverting to in-sourcing. If the outsourcing endeavor fails costs could be incurred with in-sourcing parts.
Operational viewpoint
• Dependence on suppliers to deliver.
• Responsible for the quality of work by the supplier.
• Lowered moral of permanent employees.
-jjr
I have not read the book as of yet, still waiting for my copy to be shipped. I do like what Friedman has to say. We have been trying to capture a part of that global market through outsourcing, but moving cautiously. I’ve listed my thoughts.
Advantages of outsourcing are:
Mgrs. Viewpoint
• Outsourcing allows my firm to focus on core activities. Core competencies as defined by management are manufacturing of gears, housings, and shafts. Other parts can be outsourced because no special knowledge is required to manufacture these components only right-sized equipment.
• By outsourcing my can focus on key strategic objectives.
• Risks are shared between my company and the outsourcing firm.
Cost Viewpoint
• My company would see lower or overhead costs.
• Outsourcing would enable my company to reduce its investment in technology for manufacturing of components and focus on core manufacturing processes. Instead of $15MM in capital investment this year, only $4.8MM would need to be invested.
• Outsourcing enables a transfer from fixed cost into variable cost.
Operational viewpoint
• Increase access to resources – specialized knowledge of suppliers.
• Improved quality.
• Outsourcing enables my company to tap suppliers, much needed, existing capacity.
• My company would benefit from the flexibility in adjusting staffing levels.
Disadvantages of outsourcing:
Mgrs. Viewpoint
• Loss of control over manufacturing functions.
• Loss of control over suppliers without a proper quality system and audit of incoming materials.
• Potential violations of intellectual rights. Off-shoring could possibly open new markets for knock-off aftermarket parts.
• Anticipated benefits exceed actual benefits.
Cost Viewpoint
• Failure to realize cost savings.
• Costs associated with reverting to in-sourcing. If the outsourcing endeavor fails costs could be incurred with in-sourcing parts.
Operational viewpoint
• Dependence on suppliers to deliver.
• Responsible for the quality of work by the supplier.
• Lowered moral of permanent employees.
-jjr
I have not read the book yet; it’s on my pile of books to read this year. So may of Friedman’s points are accurate to what I have observed and experienced. Three years ago the company I work for set up some manufacturing operations in China. I am absolutely amazed at how quickly they (China) have taken ownership of the responsibility. The Engineers I work with, while in China, are smart and energetic. They make about $6,000 a year. From what I hear, the same resource in India costs less. I appreciated the question and answer regarding “Americans have grown addicted to their high salaries, and now they are going to have to earn them.” I am aware enough to realize that this covers all boundaries, blue and white collar. Let’s not kid ourselves, I’m not a big union guy, but I don’t forget that it’s the union wages that created the wages that I now enjoy.
It’s a good thing I like rollercoaster’s. As much as I look forward to the next decade of globalization, it’s going to be an interesting ride to remain a legitimate competitive threat.
I do not want to discredit the writings of Thomas Friedman, but he has been able to put a new spin on the same philosophy that other pioneers, like Dr. Robert Spitzer, President Emeritus of MSOE, were discussing in the mid-eighties. I believe that Friedman is capitalizing because the release of his books and publications are occurring at a point in history where his predictions are coming to fruition forcing its acceptance among the political, economical, and social environments of the US and abroad.
Moving forward, I believe that more companies will attempt to privatize their companies in an effort to better implement long-term strategies instead of short-term initiatives. If the goal is innovation, creative efforts to meet the vision of the organization cannot succumb to the expectations of shareholders to increase the bottom line in the short-term. This pertains to the political arena in the US. Americans have lost their perspective and resolve, and public opinion swings back and forth like a pendulum. Because ‘The World is Flat’, the world no longer revolves around US. This country needs to unite under strong, sustained leadership; otherwise, the rest of the world will surpass US economically, scientifically, and militarily while we squabble amongst ourselves.
mpk
I have just started listening to this book on CD, so I haven't gotten into the thick of it yet. However, I have had discussions with friends about the book and the idea that the world is flat, in many economic perspectives. I am interested to see how the book proves or disproves some of our theories.
I'm glad that Friedman does discuss the "unflat" world. When I first mentioned the book to a good friend of mine, their first reaction was that the idea was insane, stating that "there are just too many third-world nations out there for the concept to take full shape." We discussed how just with social classes, the trade agreements have the ability to create such dividing lines, at which there is no way the poor can be at the rich level. I am interested in the solutions that Friedman suggests.
Also, I am not necessarily sure that the US worker's mentality is really to blame. I think that the fact that the US is quickly falling behind other countries such as China and India is very political in nature. I also have to wonder how much our own government has "helped" this happen. For some reason, it appears that the more money the US government and US private citizens give to other countries, those same countries seem to "catch up to us" all the faster. For example, Japan was a disaster area after WWII. The US contributed the money and labor to rebuild Japan and its economy. They took off and have beat the US in many areas. China's economy and education levels have really grown since it joined the WTO in the mid-90's. Growth of economy and education is great, but there is a great price to pay somewhere, and I think the US government overall has been naive in thinking that charitable giving will not come back to bite you in some important areas.
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