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constructive criticism of Friedman’s The World is Flat

Wednesday 3 February, 2010

Over the holidays I took some downtime to catch up on reading a book I should have read a long time ago, Thomas Friedman’s The World is Flat. Far be it for me to criticize a guy as smart as him, but I do think he missed a few things.  The book is essentially a treatise on the threat to supply chains world-wide, with which I wholeheartedly agree.  Where I diverge is the way he presents his findings & how he positions some of the changes on which he reports.

Friedman stirs up a hornet’s nest by couching his observations as a supply side threat while the flattening of the world is just as much a demand side marketing opportunity.  The way Tom presents it, the only 1’s who are leveraging the opportunities of the flat world are the Indian offshoring companies which are growing like gangbusters.  If the world is flat for them, it’s just as flat for us.  The difference is they’re taking advantage of it & we’re not.  That has to change.

Friedman describes a lot of big American companies which outsource more & more critical functions to India, China, & eastern Europe & talks about some of the big companies in those countries which are taking advantage of the flattening world as well.  He mentions a few small companies which are being threatened by the new environment, but very few which are leveraging flatness.  Again, the opportunities in a flat world are even more available for small companies these days, but he mentions only the threats & not the opportunities.  They’re there.  I think he simply spoke with his circle of contacts who are primarily from big companies & used them as a proxy for everyone else.  Small companies are becoming more & more important today, so we need to recognize the  world is not just flat for the big guys.

Finally, I think Friedman understated the global price effect of the proliferation of the internet, coinciding with China, India, & eastern Europe all coming on line at the same time.  Whether we realize it or not, it’s created a paradigm shift downward in prices for all products & services because of the recent cheap production/service capacity dumped on the world market.  Whatever can be done more cheaply abroad will be done, which can now be done simply & easily because technology enables it.  I’ve had numerous conversations with potential partners from these countries & the dilemma I keep running into is:  I have bills to pay @ developed economy levels in $US.  They earn @ developing economy levels & have to pay me many of their billable hours for 1 of mine.  They have huge price advantages & are leveraging them as much as they can.  Their cost advantages are showing up everywhere & it’s not going to stop anytime soon.  We need to think about how to adapt to it.  The Germans & Italians continue to focus on adding value to manufacturing with increased specialization, skills, etc.  We’d be wise to consider doing the same.

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